Opinion ID: 2977052
Heading Depth: 5
Heading Rank: 2

Heading: Procedure for Receiving Benefits

Text: The parties dispute whether there exists a reasonably ascertainable procedure for obtaining benefits. Defendants claim that this prong of the Dillingham test has not been met because UTCU had no “ongoing administrative scheme.” Plaintiff counters that the ongoing scheme requirement applies only to severance cases and that Hughes’ assertion of a claim for benefits is sufficient proof that a reasonably ascertainable procedure existed to survive summary judgment. In Fort Halifax Packing Company, Inc. v. Coyne, 482 U.S. 1 (1987), the Supreme Court held that a Maine statute that required certain employers to make a one-time severance payment to employees in the event of a plant closing was not pre-empted by ERISA. The Fort Halifax majority found an ongoing administrative scheme necessary for a “plan” within the definition of ERISA to exist: The Maine statute neither establishes, nor requires an employer to maintain, an employee benefit plan. The requirement of a one-time, lump-sum payment triggered by a single event requires no administrative scheme whatsoever to meet the employer’s obligation. . . . To do little more than write a check hardly constitutes the operation of a benefit plan. 15 Nos. 07-3102, 07-3211 Fort Halifax, 482 U.S. at 12. This language can be read very broadly to exclude all arrangements that call for lump-sum payments from the ambit of ERISA. However, the Fort Halifax court addressed this concern by explaining that death benefits would still fit within this definition of a plan. Id. at 15 n.9. The Court noted that even though death benefits are generally paid in a lump sum, since it is predictable that former employees will die at various points in the future, the employer has to provide a mechanism for making “payments to survivors on an ongoing basis. The ongoing, predictable nature of this obligation therefore creates the need for an administrative scheme to process claims and pay out benefits, whether those benefits are received by beneficiaries in a lump sum or on a periodic basis.” Id. Thus, a benefits arrangement that provides for a lump-sum payment to an employee may qualify as an ERISA benefits plan if the employer is potentially required to pay out benefits on a regular basis. This Court has recognized that the ongoing administrative scheme requirement is a lesser hurdle than the reasonably ascertainable claims procedure requirement. WCI, 170 F.3d at 604 (“In our view, Dillingham requires more than just the existence of an administrative scheme. If a reasonable person cannot ascertain the claims procedures in a purported plan, then the plan is not an ‘employee benefit plan’ under ERISA.”). Even when benefits are due in a lump-sum payment in a non-severance benefits scheme, there remains the possibility that benefits will need to be calculated and paid through the claims procedure at any time. See Fort Halifax, 482 U.S. at 15 n.9. See also Kolkowski, 448 F.3d at 849 (noting that an ongoing administrative scheme existed in part because the severance package “covered every involuntary termination over a two-year period”). Thus, the 16 Nos. 07-3102, 07-3211 claims procedure, a requirement for all ERISA benefits plans, in itself constitutes an ongoing administrative scheme. In Hughes’ case, the district court agreed with Defendants that no reasonably ascertainable claims procedure existed. Hughes argues that a genuine dispute of material fact remains regarding the existence of a claims procedure because Hughes made multiple attempts to claim benefits. Hughes asserts that since he presented a claim for benefits, a jury could infer that a claims procedure existed. A specific claims procedure need not be set out in writing in order for the third Dillingham factor to be satisfied. See Dillingham, 688 F.2d at 1372 (“ERISA does not, however, require a formal, written plan.”). As evidence of the existence of a procedure for receiving benefits, courts have been willing to accept past practices of plaintiffs in pursuing claims. In particular, when prior requests for benefits have been awarded as the result of a plaintiff taking action to present his claim to a plan administrator, courts have found that a reasonably ascertainable claims procedure exists. See, e.g., Deibler v. UFCW, 973 F.2d 206, 210 (3d Cir. 1992); Whitfield v. Torch Oper. Co., 935 F. Supp. 822, 828 (E.D. La. 1996). However, there is little guidance in the case law regarding the inference to be drawn when no claims have been processed or have resulted in the award of benefits. In discussing whether a claims procedure exists, the parties focus on the question of whether there is a specific person an applicant for benefits should contact to make a claim. This emphasis seems to be misguided because in situations where benefits are awarded automatically upon the occurrence of a stated contingency, this Court has not required the identity of the person to whom the claim is presented to be clear. Kolkowski, 448 F.3d at 850. As the Dillingham court specified, 17 Nos. 07-3102, 07-3211 this Court must look to all the surrounding circumstances to determine whether the claims procedure is reasonably ascertainable. In the instant case, there is little doubt that no claims procedure existed for deferred compensation benefits since there was no clear indication of the amount of compensation deferred, no specification of when the deferral was to end, and no indication of how the benefits would be received. On the other hand, the death benefits were more clearly set forth, specifying the amount of the benefit and the person to whom the benefit should be disbursed (Natalie Hughes). Even though there is more precision regarding this benefit, Plaintiff has given no evidence of how the death benefit is to be claimed. In fact, Hughes attempted to claim the benefit as a disability benefit before his death, exhibiting some uncertainty regarding the nature and claims procedure for this benefit. Even if this Court takes Hughes’ actions in attempting to claim benefits into account, the evidence shows that no reasonably ascertainable claims procedure existed. Plaintiff claims that even if no reasonably ascertainable claims procedure exists, a plan may by governed by ERISA. For this contention, Plaintiff cites 29 C.F.R. § 2560.503-1(l): Failure to establish and follow reasonable claims procedures. In the case of the failure of a plan to establish or follow claims procedures consistent with the requirements of this section, a claimant shall be deemed to have exhausted the administrative remedies available under the plan and shall be entitled to pursue any available remedies under section 502(a) of the Act on the basis that the plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim. Plaintiff argues that this Department of Labor regulation implies that a benefits scheme may be governed by ERISA despite its failure to establish a claims procedure. However, we believe that it would be more reasonable to interpret 29 C.F.R. § 2560.503-1(l) as explaining that exhaustion of remedies will not be required when claim procedures are deficient instead of interpreting the 18 Nos. 07-3102, 07-3211 regulation as doing away with the reasonably ascertainable claims procedure requirement. This interpretation is consistent with the regulation as a whole since 29 C.F.R. § 2560.503-1 explains in detail the claims procedures employers are required to put in place to comply with ERISA. See e.g. 29 C.F.R. § 2560.503-1(b)(3) (prohibiting employers for charging a fee for claims procedures and noting that such a procedure would not be deemed reasonable). Viewed in this light, 29 C.F.R. § 2560.503-1(l) would free claimants from having to comply with unduly onerous, but still reasonably ascertainable claim procedures. Thus, the lack of a reasonably ascertainable claims procedure is fatal to Hughes’ ERISA claims.