Conley v. Pitney Bowes
| Decision Date | 13 September 1994 |
| Docket Number | No. 93-3957,93-3957 |
| Citation | 34 F.3d 714 |
| Parties | 18 Employee Benefits Cas. 2137 Donald E. CONLEY, Appellant, v. PITNEY BOWES, A Corporation; Pitney Bowes Long Term Disability Plan; George B. Harvey, as Trustee of Pitney Bowes Long Term Disability Plan; Carmine F. Adimando, as Trustee of Pitney Bowes Long Term Disability Plan; Pitney Bowes Group Life Insurance Plan; Pitney Bowes Retirement Plan; Pitney Bowes Major Medical Expense Plan; Pitney Bowes Dental Expense Plan; Michael Critelli, Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Sheldon Weinhaus, St. Louis, MO, argued, for appellant.
Keith Rabenberg, St. Louis, MO, argued. (Clark Cole, on the brief), for appellees.
Before MORRIS SHEPPARD ARNOLD, Circuit Judge, JOHN R. GIBSON, Senior Judge, and MELLOY, * District Judge.
Donald E. Conley initiated this action in the Circuit Court of Butler County, Missouri, against his employer Pitney Bowes after he had been denied continued disability benefits for a claim arising from injuries suffered in an automobile accident. The company removed the case to the United States District Court for the Eastern District of Missouri because the suit related to benefits under the Employee Retirement Income Security Act, 29 U.S.C. Sec. 1001 et seq. (ERISA). The district court granted the defendants's motion for summary judgment, 839 F.Supp. 1364, and this appeal followed. At issue is whether a claimant must exhaust administrative procedures when, contrary to the requirements of his plan, the letter denying his benefits does not inform him of appeal procedures.
ERISA does not explicitly require exhaustion of administrative or plan remedies. The doctrine is, in this context, a creature either of contract or judicial invention. We have required exhaustion in ERISA cases only when it was required by the particular plan involved. See Anderson v. Alpha Portland Industries, Inc., 727 F.2d 177, 180 (8th Cir.1984), aff'd, 752 F.2d 1293 (8th Cir. en banc 1985); cf. Kennedy v. Empire Blue Cross and Blue Shield, 989 F.2d 588, 594 (2nd Cir.1993) (). We have declined to apply a broader, judicially-crafted exhaustion requirement in ERISA actions. See Anderson v. Alpha Portland Industries, Inc., 752 F.2d 1293 (8th Cir. en banc 1985) (exhaustion not required for retirees absent explicit plan language extending plan requirements to them). The appellant concedes that the plan which is the subject of the suit before us does contain, in fact, such a requirement.
The language of the plan requiring exhaustion is complimented, in this case, by language that requires that any notice of denial of benefits be accompanied by explicit instructions informing the plan participant of the procedures for appeal. Section 7.8(a) of the plan document requires that the plan administrator provide to This plan language comports with the requirements of 29 C.F.R. Sec. 2560.503-1(f)(4), which dictates that the "[c]ontent of notice ... to every claimant who is denied a claim for benefits ... set[ ] forth ... [a]ppropriate information as to the steps to be taken if the participant or beneficiary wishes to submit his or her claim for review."
The present case, therefore, may be distilled to one of contract. Two terms of an ERISA plan are the focus of this dispute, namely, an exhaustion clause and a clause requiring notice of appeal procedures. In deciding whether Mr. Conley's action can survive a motion for summary judgment, Jacobs v. Pickands Mather & Co., 933 F.2d 652, 657 (8th Cir.1991).
The terms that are at the center of this dispute are promises that were exchanged as part of a complex agreement. While pension and benefit plans are typically characterized as being unilateral contracts (agreements where an offer is accepted by a performance), the promises in the plan before us are more properly characterized as a bilateral contract (an agreement where promises of future performance are exchanged). See Arthur Linton Corbin, Corbin On Contracts Sec. 21 (one vol. ed. 1952). Accordingly, the part of the plan under consideration is subject to the federal common law of contracts. See Pilot Life Insurance Company v. Dedeaux, 481 U.S. 41, 56, 107 S.Ct. 1549, 1557, 95 L.Ed.2d 39 (1987).
One well-established rule of contract construction is that "[i]n bilateral contracts for an agreed exchange of performances, ... where one party's performance is to be rendered prior in time to that of the other, it is a constructive condition precedent to the latter's duty." Lawrence P. Simpson, Handbook of the Law of Contracts Sec. 152 (1965). See also Restatement (Second) of Contracts Sec. 237 (1981) (); E. Allan Farnsworth, Contracts Sec. 8.2(B) (2d ed. 1990); John D. Calamari and Joseph M. Perillo, The Law of Contracts Sec. 11-8 (1987); Corbin On Contracts Sec. 657. Such a "performance is as much a condition precedent to the other's duty as though expressly made so." Simpson, Sec. 152; See also, Loud v. Pomona Land & Water Co., 153 U.S. 564, 577, 14 S.Ct. 928, 932, 38 L.Ed. 822 (1894) . Furthermore, "[w]here the consideration given by each party to a contract consists in whole or in part of promises, all the performances to be rendered by each party taken collectively are treated as performances to be exchanged under an exchange of promises, unless a contrary intention is clearly manifested." Restatement (Second) of Contracts Sec. 232.
Application of these principles to the case at hand is straightforward. Because appellees were obligated to inform appellant of the appeal procedure at the time they denied him benefits, appellees performance had necessarily to precede exhaustion by the plaintiff. A defense under the exhaustion clause, therefore, may not be asserted absent performance of the notice clause, since they are presumed to be the subject of promises made in exchange for each other.
The defendants-appellants maintain that failure to impose the exhaustion requirement would be contrary to the public policy behind such a requirement. We disagree. Exhaustion is a very important concept in our jurisprudence, with deep roots in the principles of federalism and comity. See, e.g., Rose v. Lundy, 455 U.S. 509, 518, 102 S.Ct. 1198, 1203, 71 L.Ed.2d 379 (1982). Among its several purposes in ERISA plans are:
(1) To reduce the number of frivolous law suits;
(2) To promote the consistent treatment of claimants;
(3) To provide a non-adversarial method of claims settlement;
(4) To minimize the cost of claims settlement for all concerned;
(5) To enhance the ability of trustees of benefit plans to expertly and efficiently manage their funds by preventing premature judicial intervention in their decision-making processes;
(6) To enhance the ability of trustees of benefit plans to correct their errors, [or convince a disappointed claimant that he is incorrect];
(7) To enhance the ability of trustees to interpret plan provisions; and
(8) To help assemble a factual record which will assist a court in reviewing the fiduciaries actions.
Costantino v. TRW, Inc., 13 F.3d 969, 975 (6th Cir.1994). We recognize that judicially-created exhaustion requirements also may further these goals. We believe, however, that the freedom of contract between autonomous parties is a more important principle than even the very important judicially-created doctrine of exhaustion. Furthermore, where exhaustion is a bargained-for term of a contract, freedom of contract is not necessarily inconsistent with the principles underlying exhaustion requirements.
Requiring plan administrators to provide notice...
To continue reading
Request your trial
-
Fallick v. Nationwide Mut. Ins. Co.
...Welfare Benefit Plan, 50 F.3d 1478 (9th Cir.1995); Communications Workers of Am. v. AT & T, 40 F.3d 426 (D.C.Cir.1994); Conley v. Pitney Bowes, 34 F.3d 714 (8th Cir.1994); Costantino v. TRW Inc., 13 F.3d 969 (6th Cir.1994); Miller v. Metropolitan Life Ins. Co., 925 F.2d 979 (6th Cir.1991); ......
-
Holmes v. Colo. Coal. for the Homeless Long Term Disability Plan
...terms not to require exhaustion and do not exhaust their administrative remedies as a result.” (emphasis added)); Conley v. Pitney Bowes, 34 F.3d 714, 718–19 (8th Cir.1994) (holding that exhaustion was not required when a claim denial notice did not advise the claimant of the appeal procedu......
-
Van Natta v. Sara Lee Corp.
...an explicit requirement that employees exhaust the administrative, contractual remedies prior to filing a complaint. Conley v. Pitney Bowes, 34 F.3d 714, 716 (8th Cir.1994). However, the Eighth Circuit has recognized a judicially created exhaustion requirement under ERISA. Kinkead v. Southw......
-
Yates v. Symetra Life Ins. Co.
...ERISA itself does not require a claimant to exhaust administrative remedies before suing to obtain benefits. Conley v. Pitney Bowes, 34 F.3d 714, 716 (8th Cir. 1994). Because ERISA provides for the administrative review of benefits, however, the Eighth Circuit requires a claimant to "exhaus......