Bilyeu v. Morgan Stanley Long Term Disability Plan

I. BACKGROUND

Bilyeu was employed by Discover Financial Services from 1987 through April 2004. Compl. ¶ 8. Morgan Stanley Long- Term Disability Plan (the Plan) provides benefits for long- term disabilities to Discover employees. Id. ¶¶ 4-5. Unum is the Plan’s claim administrator, and also the insurer and payor of Plan benefits. Id. ¶¶ 6-7.

Alleging she suffered from several medical conditions that prevented her from materially performing the duties of any occupation, Bilyeu filed a long-term disability (LTD) claim with Unum in April 2004. Id. ¶¶ 9-10. These conditions included Behçet’s disease, fatigue and anxiety. Id. ¶¶ 12-18; Clerk’s Record 13-2 at 3. Unum approved the claim in Octo- ber 2004. Compl. ¶ 11. Under the Plan, benefits for disabili- ties arising from mental illness are limited to 24 months. Id. ¶ 19. Unum concluded that Bilyeu’s disability was subject to the mental illness limitation. Id. Bilyeu disputed that conclu- sion. Id. ¶¶ 12-20.

Nearing the 24-month deadline, Dr. Sharon Hogan, a medi- cal consultant for Unum, called Bilyeu’s treating physician, Dr. Kenneth Proefrock, to discuss her medical condition. Clerk’s Record 15.1 at 5-7. On December 6, 2006, Dr.…

Opinion by Judge FISHER; Partial Concurrence and Partial Dissent by Judge RAWLINSON.

*1086 OPINION

Leah A. Bilyeu appeals the district court’s dismissal of her claim challenging the termination of her long-term disability benefits under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132 . Bilyeu also challenges the district court’s grant of summary judgment in favor of First Unum Life Insurance Company (Unum) on Unum’s counterclaim for restitution of overpaid benefits. We have jurisdiction under 28 U.S.C. § 1291 , and we vacate and remand.

We vacate the judgment in favor of Unum on Bilyeu’s claim for denial of benefits. We hold that the district court abused its discretion by dismissing this claim for failure to exhaust administrative remedies. The exhaustion requirement should have been excused because Bilyeu acted reasonably in light of Unum’s ambiguous communications and failure to engage in a meaningful dialogue.

We also vacate the judgment in favor of Unum on Unum’s counterclaim for reimbursement of overpaid long-term disability benefits. Unum has not shown that it is seeking equitable relief because it has not satisfied the elements for an…

concurring in part and dissenting in part:

I agree with the majority that Plaintiff Leah Bilyeu (Bilyeu) waived her argument that Unum Life Insurance Company (Unum) lacks statutory standing. I respectfully disagree on ah other issues.

Bilyeu argues on appeal, as she did before the district court, that a fax sent by her physician Dr. Proefrock to Dr. Hogan, the physician for Unum, satisfied the exhaustion requirement under the Employee Retirement Income Security Act of 1974 (ERISA). However, the letter denying Bilyeu’s claim explicitly directed her that if she disagreed with the determination denying disability benefits, she was required to submit an appeal in writing to: First Unum Life Insurance Company at PO Box 100158, Columbia, SC 29202-3158, Fax: 1-800-447-2498 www.unumprovident.com.

Rather than submitting an appeal as directed, Bilyeu elected to provide additional information pursuant to a different paragraph of the denial letter. This information was sent to Unum’s physician ad-visor rather than to the benefits center as directed in the denial letter from Unum.

The district court found that because the letter from Bilyeu’s physician to Unum’s physician did not comply…