Opinion ID: 76301
Heading Depth: 2
Heading Rank: 2

Heading: Deemed Denial

Text: 23 Torres argues that the denial of his application for benefits should be reviewed de novo, because the Insurers' failure to act on his claim within the time allotted by ERISA regulations (and by the insurance plan's own terms) constitutes a deemed denial. Because such a denial by operation of law necessarily entails no exercise of administrative judgment or discretion, Torres contends, no deference is due to the Plan Administrator. 24 The operative ERISA regulations pertaining to this case, the former 29 C.F.R. § 2560.503-1(e)(2), provided that, if an ERISA plan administrator did not act on a claim for benefits within the allotted time — at that time, 90 days from the date of receipt of the claim, with some possibility for extensions — the claim shall be deemed denied and the claimant shall be permitted to proceed to the review stage. 10 Here, in response to the Insurers' first motion for summary judgment (on the grounds that Torres failed to exhaust remedies), the district court held that the Insurers' delay in acting on Torres' claim constituted a deemed denial, thus excusing Torres' failure to exhaust the administrative review process before filing suit. In ruling on the instant motion for summary judgment, however, the court did not address Torres' contention that a deemed denial heightened the applicable standard of judicial review. 25 Some courts have held that, as Torres argues, a deemed denial receives no deference upon judicial review, since the plan administrator did not in fact exercise any discretion. See Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 631 (10th Cir.2003) (holding that when substantial violations of ERISA deadlines result in the claim's being automatically deemed denied on review, the district court must review the denial de novo, even if the plan administrator has discretionary authority to decide claims.); Jebian v. Hewlett Packard Co., 310 F.3d 1173 (9th Cir.2002) (reviewing denial de novo, where plan administrator did not issue decision until after deadline provided by plan had elapsed, and more than a month after beneficiary filed suit); Gritzer v. CBS, Inc., 275 F.3d 291 (3d Cir.2002) (extending no deference to plan administrator's post hoc justification for denying benefits, issued only after commencement of litigation). 11 Others, however, have held that the fact that the denial occurs by operation of ERISA regulations does not alter the otherwise-applicable standard of review. See McGarrah v. Hartford Life Ins. Co., 234 F.3d 1026 (8th Cir.2000) (holding that ERISA plan fiduciary's failure to respond to beneficiary's request for administrative review does not trigger heightened scrutiny, absent showing of extreme procedural irregularities); Daniel v. Eaton Corp., 839 F.2d 263, 267 (6th Cir.1988) (holding that, even though administrative review body failed to act on claimant's appeal of an initial denial, resulting in a deemed denial, the denial should be reviewed under the arbitrary-and-capricious standard, because the standard of review is no different whether the appeal is actually denied or is deemed denied) 26 We cannot tell from the record below why the district court refused Torres' request to apply the de novo standard in light of the deemed denial. The court's decision may have been based on a pure legal interpretation — i.e., that the district court believed that a deemed denial did not alter the applicable standard of review. However, the decision may also have turned on a more fact- and context-specific determination — e.g., that there were ongoing exchanges between the parties warranting time extensions, or that the Insurers here did issue a determination (albeit one well past the deadline, but before receiving notice of Torres' suit), which might arguably negate the purpose of applying de novo review to an ordinary deemed denial, in which there is no exercise of administrative discretion to be reviewed. Or, it may be that the district court simply ignored Torres' deemed denial argument. 27 In any event, because the district court has not addressed Torres' deemed denial argument, and because its resolution might be affected by the facts and circumstances, we prefer for the district court to address the issue in the first instance. On remand, the district court should address the issue and determine whether Torres' argument warrants further alteration of the appropriate standard of review.