Opinion ID: 172071
Heading Depth: 3
Heading Rank: 2

Heading: The Employability Analysis Report

Text: Hartford terminated Ms. Farr’s disability benefits based, in part, on a November 2006 EAR, which identified no less than fifteen occupations within Ms. Farr’s physical capabilities and qualifications, including nursing. Ms. Farr contends there is an irreconcilable conflict between Hartford’s initial determination of disability, which depended on a finding that she could not perform her own occupation as a nurse, and the EAR’s identification of nursing as 2 We also reject Ms. Farr’s argument that she was somehow prejudiced by Hartford’s alleged late disclosure of Dr. Munhall’s revised report. Our review of the administrative record comports with the district court’s findings concerning Hartford’s disclosure of Dr. Munhall’s opinion. Specifically, in its November 27, 2006, denial letter, Hartford informed Ms. Farr that according to Dr. Munhall she could handle, finger, and feel frequently. Ms. Farr’s attorney acknowledged as much in his letter to Hartford, dated May 15, 2007, in which he challenged Dr. Munhall’s ultimate conclusions, but not, interestingly, his findings concerning Ms. Farr’s gross and fine motor skills. In short, we agree with the district court’s finding that Ms. Farr suffered no prejudice by virtue of Hartford’s late disclosure of an actual copy of the revised report. It is clear from the record that Hartford substantially complied with its obligation to produce documents under 29 C.F.R. § 2560.503-1(h)(2)(iii). See Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 634 (10th Cir. 2003) (noting our willingness “to overlook administrators’ failure to meet certain procedural requirements when the administrator has substantially complied with the regulations and the process as a whole fulfills the broader purposes of ERISA”). -10- one of the jobs she is capable of performing. The district court refused to hear this argument, however, because Ms. Farr had failed to raise it during her administrative appeal. “The court may not consider new arguments, from either party, in its determination of plaintiff’s claim[.]” App’x. at A32, (citing Flinders v. Workforce Stabilization Plan of Phillips Petroleum Co., 491 F.3d 1180 (10th Cir. 2007)). Ms. Farr contends the district court’s interpretation of Flinders was overly broad, arguing that it does not preclude a litigant from making new arguments on judicial review, but only from offering evidence outside the administrative record. Hartford continues to press its waiver argument under the rubric of administrative exhaustion. This circuit, like others, has recognized an exhaustion rule for ERISA claims derived not from an explicit statutory directive but from “ERISA’s overall structure of placing primary responsibility for claim resolution on fund trustees.” McGraw v. Prudential Ins. Co. of Am., 137 F.3d 1253, 1263 (10th Cir. 1998). We have, accordingly, applied a rule barring ERISA claims that were not previously pursued administratively (i.e., claim exhaustion). But we have not extended this rule to bar subsidiary arguments urged on judicial review in support of a claim itself fully exhausted in the administrative process (i.e., issue exhaustion). 3 3 We are aware of two circuit cases squarely addressing this issue. In both, the courts explicitly rejected an issue exhaustion requirement in the ERISA context. Wolf v. Nat’l Shopmen Pension Fund, 728 F.2d 182, 186 (3d Cir. 1984) (“The Pension Fund cites no case, nor are we aware of any case which holds that (continued...) -11- Flinders did not present this issue directly because it dealt with a plan administrator’s attempt during the litigation to offer a new rationale for its denial of benefits; it did not involve new arguments or theories advanced by the ERISA claimant. Reversing the district court’s award of summary judgment to the administrator, we concluded its denial of benefits must stand or fall solely on the rationale articulated at the administrative level. See id. at 1193. Therefore, we held it was improper for the district court to consider a novel justification advanced for the first time in litigation. We relied on a statutory provision mandating that an administrator’s denial of a claim must be in writing and must “[set] forth the specific reasons for such denial[.]” 29 U.S.C. § 1133(1); Flinders, 491 F.3d at 1190. And we reasoned this rule was intended to protect ERISA claimants from being “sandbagged by after-the-fact plan interpretations devised for purposes of litigation.” Flinders, 491 F.3d at 1191 (quotation omitted). In dicta, we noted our interpretation was “consistent with the converse rule that a claimant may not urge new grounds outside the administrative record that would support the award of benefits.” Id. (emphasis added). The question raised here is whether “new grounds” means simply new evidence or whether it includes 3 (...continued) a district court cannot decide a claim relying on a theory different from that presented to the Trustees of the Pension Fund. . . . [Plaintiff] should not be denied our consideration of this claim simply because she relies on an alternate theory.”); Vaught v. Scottsdale Healthcare Corp. Health Plan, 546 F.3d 620, 631 (9th Cir. 2008) (analogizing to social security cases and concluding that “issue exhaustion is not applicable in the ERISA context”). -12- arguments and theories, which would be tantamount to imposing an issue exhaustion requirement on ERISA plaintiffs. The parties have thus presented an interesting and complex issue, but as we conclude its resolution is not critical to the outcome of this case, we leave if for another day. Simply put, it is irrelevant to our disposition whether, at the time her benefits were terminated, Ms. Farr possessed the functional capacities to resume working as a nurse. Under the Plan, Hartford was entitled to terminate her benefits after two years if she could perform “Any Occupation,” Admin. R. at 102, and the EAR concluded she could perform many, both within and outside the health care industry, see id. at 206. As explained above and in the district court’s order, Ms. Farr has not effectively challenged the assumptions underlying the EAR’s conclusions, including that she can handle, finger, and feel frequently. Consequently, even if we accept her irreconcilable conflict argument, her opposition to the EAR does not reach far enough to materially undermine the overall determination under review, whether Hartford’s decision to terminate her benefits was arbitrary and capricious. On the record before us, we cannot say that it was. The judgment of the district court is therefore AFFIRMED. Entered for the Court Monroe G. McKay