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RITZER v. NATIONAL ORG. OF INDUS. TRADE UNIONS INS

November 30, 1992

KARL RITZER, Plaintiff,
v.
NATIONAL ORGANIZATION OF INDUSTRIAL TRADE UNIONS INSURANCE TRUST FUND HOSPITAL, MEDICAL, SURGICAL HEALTH BENEFIT, Defendant.


Nickerson


The opinion of the court was delivered by: EUGENE H. NICKERSON

MEMORANDUM AND ORDER

NICKERSON, District Judge:

 Plaintiff Karl Ritzer brought this action in the Civil Court of the City of New York, County of Queens, against the National Organization of Industrial Trade Unions Insurance Trust Fund Hospital, Medical, Surgical Health Benefit (the "Fund") alleging a wrongful denial by the Fund of his medical benefit claim and seeking "damages" of $ 25,000.

 Defendant removed the action to this court on the ground that the Fund is an employee welfare benefits plan within the meaning of section 3(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1001 et seq., so that the Federal district courts had exclusive original jurisdiction over the dispute. 29 U.S.C. § 1132(e).

 This is one of many similar actions against the Fund filed in or transferred to the Eastern District of New York in the past two years. See, e.g., Brookdale Hospital v. Nat'l Org. of Indus. Trade Unions Fund, 91 CV 3737 (Korman, J.); Buckley v. Nat'l Org. of Indus. Trade Unions Fund, 91 CV 1412 (Weinstein, J.); Coviello v. Nat'l Org. of Indus. Trade Unions Fund, 92 CV 875 (Glasser, J.); D'Amico v. Nat'l Org. of Indus. Trade Unions Fund, 90 CV 3090 (Hurley, J.); East Rockaway Nursing Home v. Nat'l Org. of Indus. Trade Unions Fund, 92 CV 3072 (Nickerson, J.); Falco v. Nat'l Org. of Indus. Trade Unions Fund, 91 CV 2641 (Amon, J.); Labarsky v. Nat'l Org. of Indus. Trade Unions Fund, 90 CV 2753 and 90 CV 2754 (Dearie, J.); Lawrence v. Nat'l Org. of Indus. Trade Unions Fund, 91 CV 3011 (Dearie, J.); Maimonides Medical Center v. Nat'l Org. of Indus. Trade Unions Fund, 92 CV 4456 (Nickerson, J.); Nepomniashy v. Nat'l Org. of Indus. Trade Unions Fund, 90 CV 144 (Sifton, J.); Rollo v. Nat'l Org. of Indus. Trade Unions Fund, 91 CV 2912 (Weinstein, J.).

 No doubt numerous similar disputes have been brought in the Southern District of New York. See, e.g., DiRoma v. Nat'l Org. of Indus. Trade Unions Fund, No. 91-653, 1992 U.S. Dist. LEXIS 7698 (S.D.N.Y. May 27, 1992); Seff v. Nat'l Org. of Indus. Trade Unions Fund, 781 F. Supp. 1037 (S.D.N.Y. 1992).

 I

 The essential facts of this case may be quickly told. During 1990 and for at least a portion of 1991, Ritzer was an employee of the Superb Cutting Corporation ("Superb"). During this period the Fund was obligated to provide medical insurance to each of Superb's regular full-time employees who worked at least 21 hours a week. Both Superb and Ritzer maintained that, at all relevant times, Ritzer was eligible to participate in the plan.

 In February 1991 Ritzer's physician advised him to undergo total hip replacement surgery. After getting a second concurring medical opinion, Ritzer received an oral confirmation from the Fund that the expenses for this operation would be paid.

 In March 1991, in the course of pre-admittance registration, Ritzer reportedly informed a hospital employee that he was self-employed at a Hagen Dazs store and was insured by the Fund. The hospital called the Fund, which discovered that Ritzer's insurance was based on his employment by Superb. To investigate this purported discrepancy, the Fund asked Superb to send a copy of its quarterly state payroll tax report so that the Fund could verify Ritzer's eligibility.

 Meanwhile Ritzer was hospitalized for eight days, underwent surgery, and incurred expenses totalling $ 21,031.50. The Fund denied the claim on May 23, 1991.

 II

 The court may dispose of this case at the threshold if, as defendant contends, Ritzer failed to exhaust his administrative remedies.

 Section 503(2) of ERISA provides that every employee benefit plan must "afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim." 29 U.S.C. § 1133. The Second Circuit has construed this section as depriving federal courts of jurisdiction over benefit disputes until the decision of the fiduciary is final. Haeberle v. Bd. of Trustees of Buffalo Carpenters Healthcare, Dental, Pension and Suppmental Funds, 624 F.2d 1132, 1135 (2d Cir. 1980).

 This requirement prevents ERISA disputes from over-taxing the federal courts, promotes a non-adversarial dispute resolution process, decreases the costs and time of claims settlement, and establishes a complete record for use by the reviewing court. Accordingly ERISA plans are granted broad discretion in establishing and implementing benefit dispute review procedures.

 But broad discretion is not complete discretion. Regulations promulgated by the Department of Labor require the trustees of an ERISA plan expeditiously to review its administrator's denial of a benefit claim if a claimant timely requests such review. The regulations provide that:

 (h) Decision on review. (1)(i) A decision by an appropriate named fiduciary shall be made promptly, and shall not be made later than 60 days after the plan's receipt of a request for a review, unless special circumstances . . . require an extension of time. . . .

 (2) If such an extension of time is required because of special circumstances, written notice of the extension shall be furnished to the claimant prior to the commencement of the extension. . . .

 (4) The decision on review shall be furnished to the claimant within the appropriate time described in paragraph (h)(1) of this section. If the decision on review is not furnished within such time, the claim shall be deemed denied on review.

 29 C.F.R. § 2560.503-1(h) (1990).

 The record shows that Ritzer exhausted his administrative appeal. By a letter dated June 6, 1991, Ritzer's attorney asked the Fund to review its denial of Ritzer's claim. Some eight weeks later, by a letter dated July 31, 1991, the Fund asked the attorney to submit a release signed by Ritzer so that it could provide information concerning Ritzer's participation in the Fund. Presumably because the attorney had requested a review and not information, he ignored this request. After waiting more than 60 days, Ritzer brought this action in Queens County Civil Court on August 15, 1991. By that time the Fund's trustees had neither reviewed the decision of its administrator nor provided Ritzer with a written notice of an extension due to special circumstances.

 The court deems, pursuant to 29 C.F.R. § 2560.503-1(h)(4), that Ritzer's claim was denied on review. Since Ritzer pressed his appeal to a final resolution, this court has jurisdiction. See McRae v. Seafarers' Welfare Plan, 726 F. Supp. 817, 820 (S.D. Ala. 1989), rev'd in part on other grounds, 920 F.2d 819 (11th Cir.), reh'g denied, 931 F.2d 901 (11th Cir. 1991) (finding that plaintiff had ...


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