*The HONORABLE RICHARD H. KYLE, United States District Judge

for the District of Minnesota, sitting by designation.

The HONORABLE CAROL E. JACKSON, United States District Judge 1

for the Eastern District of Missouri.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 96-2282

___________

Sharon Kinkead, *

*

Plaintiff - Appellant, *

*

v. *

* Appeal from the United States

Southwestern Bell Corporation * District Court for the

Sickness & Accident Disability * Eastern District of Missouri.

Benefit Plan; Southwestern *

Bell Corp. Long Term Disability *

Plan for Salaried Employees; *

Southwestern Bell Corporation, * 

*

Defendants - Appellees. *

___________

 Submitted: December 9, 1996

 Filed: April 9, 1997

___________

Before FAGG and LOKEN, Circuit Judges, and KYLE, District Judge. *

___________

LOKEN, Circuit Judge.

Sharon Kinkead appeals the district court's dismissal of her ERISA 1

benefit claims against Southwestern Bell Corporation (Bell) and two of its

employee benefits plans. Agreeing that Kinkead's suit is barred by her

failure to exhaust the plans' contractual appeal procedures, we affirm.
-2-

Following a traffic accident, Kinkead applied for short-term

disability benefits from the Bell plans in September 1989. On October 12,

Bell terminated her employment. On December 18, the plans' Benefit

Committee notified Kinkead of its decision that she was not entitled to

further benefits. Kinkead did not ask the Committee for further review of

this denial, as permitted by the plans and invited by the claim denial

notice. Instead, she sued Bell for retaliatory discharge in violation of

§ 510 of ERISA, 29 U.S.C. § 1140. After this claim was dismissed, see

Kinkead v. Southwestern Bell Tel. Co., 49 F.3d 454 (8th Cir. 1995), she

commenced this action to recover disability benefits allegedly due her

under the plans. See 29 U.S.C. § 1132(a)(1)(B). 

The district court granted defendants' motion to dismiss on the

ground that Kinkead failed to exhaust her contractual plan remedies.

Kinkead appeals, arguing that defendants' claim denial notice was

inadequate and, in any event, the plans do not require exhaustion of the

plan review procedures. Exhaustion is a threshold legal issue we review

de novo. See, e.g., Conley v. Pitney Bowes Corp., 34 F.3d 714 (8th Cir.

1994).

ERISA expressly provides that every employee benefit plan must

"provide adequate notice in writing" of each claim denial, and "afford a

reasonable opportunity . . . for a full and fair review" of each denial.

29 U.S.C. § 1133. The Department of Labor's implementing regulations

contain similar requirements. See 29 C.F.R. § 2560.503-1(f) and (g). Not

surprisingly, therefore, the Bell plans at issue contain provisions

requiring that participants be notified of claim denials and establishing

an internal procedure for further review.
The Bell plans grant such discretionary authority to the

2

Benefit Committee.

-3-

Federal courts applying ERISA have uniformly concluded that benefit

claimants must exhaust the review procedures mandated by 29 U.S.C.

§ 1133(2) before bringing claims for wrongful denial to court. See, e.g.,

Diaz v. United Agric. Employee Welfare Benefit Plan & Trust, 50 F.3d 1478

(9th Cir. 1995); Communications Workers of America v. American Tel. & Tel.

Co., 40 F.3d 426 (D.C. Cir. 1994). Such exhaustion serves many important

ERISA purposes. It "minimize[s] the number of frivolous ERISA lawsuits;

promote[s] the consistent treatment of benefit claims; provide[s] a

nonadversarial dispute resolution process; and decrease[s] the cost and

time of claims settlement." Makar v. Health Care Corp. of the MidAtlantic, 872 F.2d 80, 83 (4th Cir. 1989). Moreover, when a benefit plan

gives the decision-maker discretionary authority to determine claims, claim

denials are reviewed for abuse of discretion on the record considered by

the plan decision-maker. See Ravenscraft v. Hy-Vee Employee Benefit Plan

& Trust, 85 F.3d 398, 402 (8th Cir. 1996). In these situations,

2

exhaustion "enhance[s] the ability of trustees to interpret plan provisions

[and] help[s] assemble a factual record which will assist a court in

reviewing" claim denials. Conley, 34 F.3d at 718.

With these basic principles established, we turn to Kinkead's

specific contentions on appeal.

1. The denial notice. Kinkead first argues that the Benefit

Committee's claim denial letter failed to comply with the notice

requirements set forth in the plans, 29 U.S.C. § 1133(1), and 29 C.F.R.

§ 2560.503-1(f). Therefore, defendants may not enforce the contractual

exhaustion requirement. See Conley, 34 F.3d at 718 (exhaustion not

required when claim denial notice did not advise of 
-4-

appeal procedure and claimant had no actual knowledge of that procedure).

The Committee's letter notified Kinkead that it had examined her

file, "including a medical report from your doctor and the opinion of our

Medical Advisor," and was denying her claim "because medical evidence does

not substantiate you were disabled." The letter advised that the Committee

"relied upon the provisions of Article 4, Paragraph 4.1 of the Plan" and

went on to quote that provision. Regarding review procedures, the letter

stated:

You have the right to request that your claim denial be

reviewed and to review pertinent documents relating to the

denial. If you wish your denial of claim for benefits to be

reviewed, you or your authorized agent may submit a written

request for review to [the Benefit Committee's Secretary]. A

request for review must be submitted within sixty (60) days of

your receipt of this letter. It is important that any

additional information you would like to be considered at the

time of review accompany your written request. 

The Committee's letter adequately described the claim review process.

It advised Kinkead she had a right to further review and to examine the

Committee's file. It told her where and when to submit a request for

review and whether she could submit additional information. Thus, this

case is distinguishable from Conley, where the claim denial notice made no

mention of an appeal process. Kinkead argues that she was entitled to a

clear statement that she must exhaust this review procedure. But neither

the statute, the Department's regulations, nor any prior case imposes such

a notice requirement. Given the practical reasons favoring exhaustion,

claimants with notice of an available review procedure should know that

they must take advantage of that procedure if they wish to bring wrongful

benefit denial claims to court. 
-5-

Kinkead further argues that the Committee's denial letter failed to

provide a sufficiently detailed analysis of the reasons for denying her

claim, as we required in Brumm v. Bert Bell NFL Retirement Plan, 995 F.2d

1433, 1436-37 (8th Cir. 1993); Cox v. Mid-America Dairymen, Inc., 965 F.2d

569, 573-74 (8th Cir. 1992); and Richardson v. Central States, S.E. & S.W.

Areas Pension Fund, 645 F.2d 660, 665 (8th Cir. 1981). But in these cases,

we were reviewing, on the merits, final claim denial letters that did not

provide an adequate explanation of the plan administrator's discretionary

decision. See Collins v. Central States, S.E. & S.W. Areas Health &

Welfare Fund, 18 F.3d 556, 561 (8th Cir. 1994) (final denial notice

adequate if it "permit[s claimant] to challenge the denial in federal court

and for us to review it"). Here, on the other hand, we deal with an

initial claim denial notice. At this early stage of the claim process,

administrative efficiency is a virtue, so long as disappointed claimants

are advised of their right to pursue the plan's review procedures.

Therefore, the initial claim denial need not be extensive, provided that

it explains the basis for the adverse initial decision sufficiently to

permit the claimant to prepare an informed request for further review. 

In this case, the Committee's letter notified Kinkead that her claim

was denied "because medical evidence does not substantiate you were

disabled." The letter told her what medical reports the Committee had

considered and advised her that she could review these documents and submit

additional information with her request for further review. The letter was

sufficient to trigger an appeal process that Kinkead was required to

exhaust. 

2. The Plans' Exhaustion Requirement. Kinkead next argues that the

Bell plans create an optional review procedure, not a 
Kinkead relies on Conley for the proposition that benefit

3

plans must explicitly require exhaustion. But the contractual duty

to exhaust was conceded in Conley; we considered only whether that

duty should be imposed on a claimant who had no notice or knowledge

of the plan's claim review procedure.

-6-

procedure that claimants must exhaust. The district court's opinion

expressly states that Kinkead did not raise this issue in opposing

defendants' motion to dismiss. In her reply brief to this court, Kinkead

asserts that the district court overlooked her "response to defendants'

reply in support of motion to dismiss," a pleading she did not include in

the record on appeal. We conclude that this issue is not properly

preserved. 

In addition, while we agree that the need to exhaust is a question

of contract interpretation, see Schneider Moving & Storage Co. v. Robbins,

466 U.S. 364 (1984), benefit plans are required by law to include a claim

review procedure, and the duty to exhaust furthers important ERISA

purposes. In these circumstances, any plan claim review procedure that

meets the requirements of 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1(f)

and (g) will trigger the judicially imposed duty to exhaust that remedy.3

The judgment of the district court is affirmed. Appellees' motion

for costs and attorney's fees is denied.

KYLE, District Judge, dissenting.

I respectfully dissent from the majority’s conclusion that the plans

were not required to advise Kinkead that, after being notified that her

application for benefits had been denied, she 
I concur with the majority’s conclusions that the Committee’s 4

claim denial letter adequately described the claim review process

and provided a sufficiently detailed analysis of the reasons for

denying Kinkead’s claim. 

-7-

must exhaust their appeal procedures before filing suit in federal court.4

The Court writes that “neither the statute, the Department’s

regulations, nor any prior case imposes such a notice requirement.” ERISA

itself, however, does not contain any exhaustion requirement. The statute

is silent on this issue; exhaustion is a judicially created requirement.

See Conley v. Pitney Bowes, 34 F.3d 714, 716 (8th Cir. 1994). 

The opinion states that: “[G]iven the practical reasons favoring

exhaustion, claimants with notice of an available review procedure should

know that they must take advantage of that procedure if they wish to bring

wrongful benefit denial claims to court.” (Emphasis added). While there

are practical reasons favoring exhaustion, it does not, in my view, follow

that claimants should know that they must take advantage of those

procedures if they wish to file a lawsuit to enforce their benefits. We

are not necessarily dealing with sophisticated employees or lawyers

specializing in ERISA claims. Requiring the plan to clearly advise a

claimant of the consequences of not exhausting the administrative review

process would not place a substantial burden on the plan administrators,

but it would explain the adverse consequences to an uninformed claimant.

In summary, I believe that a plan should be required to clearly

inform a claimant that its internal review procedures must be exhausted

before, and as a condition of, seeking judicial relief. The plans under

review here failed to so inform Kinkead. 
-8-

Accordingly, I would reverse the Order of the District Court and allow

Kinkead to proceed with her ERISA benefit claims against Bell and its two

plans. 

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.