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February 27, 2004.


The opinion of the court was delivered by: VICTOR MARRERO, District Judge


Plaintiff Cecilia Nichols ("Nichols") brings this action for wrongful termination of long-term disability benefits against the Prudential Insurance Company of America ("Prudential"), the administrator of her former employer's long term disability employee benefits plan, pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. Nichols has moved for judgment on the administrative record, and Prudential has moved for dismissal without prejudice and, in the alternative, summary judgment on Nichols' claims. Before reaching the merits of the dispute, the Court must determine whether, at the time she filed this litigation, Nichols had exhausted her administrative remedies. At issue is 29 C.F.R. § 2560.503-1(h)(1999), which sets forth deadlines by which a benefits plan administrator must decide a claimant's appeal of a denial of benefits. The Court has determined that while Prudential technically did not comply with the letter of the regulation, Nichols ignored its spirit, Page 2 and therefore the Court dismisses Nichols's complaint without prejudice to allow Prudential to complete its review of her claim.


  Nichols worked as an internal auditor for Sumitomo Trust and Banking Company ("Sumitomo") from June 1997 to November 1999. Through her employment with Sumitomo, Nichols participated in the company's Long Term Disability Plan (the "LTD Plan"), an employee benefit plan that provides disability benefits to an employee who becomes totally disabled for more than 180 days. Prudential serves as the administrator of the LTD Plan.

  In April 2000 Nichols submitted a claim for long term disability benefits. Nichols identified six medical conditions that had been diagnosed by her treating physician as causing or contributing to her inability to work: chronic fatigue syndrome, fibromyalgia, dermatomyositis, Epstein-Barr virus infection, degenerative disc disease with radiculopathy, and lumbar disc herniation. Prudential approved Nichols's claim and began paying her long-term disability benefits in Page 3 April 2000.

  In December 2001, Prudential reviewed Nichols's claim, determined that she was no longer totally disabled, and informed Nichols that it would stop paying her disability benefits in April 2002. Prudential apparently reached this decision by asking a consulting physician to review Nichols's medical records from her five treating physicians. Prudential's consulting physician did not examine Nichols.

  On April 11, 2002, Nichols appealed the decision terminating her benefits to Prudential's Appeals Review Unit. On June 17, 2002, Prudential sent a letter to Nichols stating that it was reviewing her appeal and would contact her within 30 days to update her of the status of her appeal if a decision had not yet been reached. By a letter dated July 25, 2002 Prudential informed Nichols's counsel, Patrick Foley ("Foley"), that it was delaying making a decision on Nichols's appeal until it received additional medical records from Nichols's treating physicians, which it had requested. On November 4, 2002, Prudential informed Foley that it was still reviewing Nichols's claim and was awaiting the results of Nichols's independent medical examination ("IME"), which was scheduled for November 15, 2002. Foley replied by a letter dated November 7, 2002 that because Prudential had failed to resolve Nichols's appeal within the time allotted by the Code Page 4 of Federal Regulations, Nichols had filed this lawsuit on October 25, 2002 and therefore Nichols was canceling her IME and all other claims proceedings. Prudential now moves for a dismissal of Nichols's claims without prejudice for failure to exhaust her administrative remedies.


  It is well settled that an ERISA plaintiff must pursue all administrative avenues available under her plan before commencing litigation. See Chapman v. ChoiceCare Long Island Term Disability Plan, 288 F.3d 506, 511 (2dCir. 2002). Among other purposes, the exhaustion requirement serves to:
(1) uphold Congress' desire that ERISA trustees be responsible for their actions, not the federal courts; (2) provide a sufficiently clear record of administrative action if litigation should ensue; and (3) assure that any judicial review of fiduciary action (or inaction) is made under the arbitrary and capricious standard, not de novo.
Kennedy v. Empire Blue Cross and Blue Shield, 989 F.2d 588, 594 (2d Cir. 1993) (quoting Denton v. First Nat'l Bank of Waco, Texas, 765 F.2d 1295, 1300 (5th Cir. 1985)).

  ERISA requires all employee benefits plans to "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. When Prudential terminated Page 5 Nichols's benefits, it informed her of her right to appeal the decision. Nichols was thus obligated to pursue her appeal through Prudential before bringing this litigation. But, as this case demonstrates, even a seemingly straightforward requirement can have nuances and shades of meaning.

  The Secretary of Labor has established time limits by which an appeal of a denial of benefits must be decided. Those regulations provide:
(1) A decision by an appropriate named fiduciary shall be made promptly, and shall not ordinarily be made later than 60 days after the plan's receipt of a request for review, unless special circumstances (such as the need to hold a hearing, if the plan procedure provides for a hearing) require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of a request for review.
(2) If such an extension of time of review 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)(1999)(emphasis added).*fn2

  Nichols filed her appeal with Prudential's Appeals Review Page 6 Unit on April 11, 2002. For 67 days, Prudential, true to its logo, remained rock-silent. Seven days after the expiration of the 60-day deadline, Prudential first contacted Nichols to state that it had received her appeal and was "currently performing a thorough evaluation of the information currently within [Nichols's] file." (Letter dated June 17, 2002 from Appeals Review Unit to Nichols, attached as Ex. 7 to Affidavit of Julie M. Vales in Support of Defendant's Motion for Summary Judgment dated November 21, 2003 (Vales Aff.).) Prudential did not expressly request additional time to review Nichols's appeal, but stated that it would "contact [Nichols] within 30 days with the status of our evaluation if a decision has not yet been rendered." (Id.) Prudential wrote to Foley on July 25, 2002 that it "cannot complete our evaluation of Ms. Nichols's appeal at this time" but would "continue our evaluation upon receipt" of additional medical records that it had requested from some of Nichols's physicians. (Letter dated July 25, 2002 from Christopher Cawley to Foley, attached as Ex. 8 to Vales Aff.)

  On October 25, 2002, having received no decision from Prudential 197 days after she filed appeal, Nichols filed this lawsuit. The Appeals Review Unit was apparently unaware that Nichols had initiated litigation, because on November 4, 2002 it sent Foley a letter confirming Nichols's appointment for an Page 7 IME. Foley replied that he had instructed Nichols to cancel her appointment in light of the pending litigation.

  Prudential argues that Nichols failed to exhaust her administrative remedies because she prematurely terminated Prudential's review of her appeal. Prudential asserts that it substantially complied with the time limits set forth in the regulations and was reviewing Nichols's appeal in good faith when Nichols abruptly ended its efforts and brought litigation against it. Nichols responds that the language of 29 C.F.R. § 2560.503-1 (h) is clear. Nichols argues that Prudential neither rendered a decision nor requested ...

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