6.28.2007

S.D.N.Y. Notes Split Re Application of Administrative Exaustion Requirement to Statutory ERISA Claims

Per American Medical Ass'n v. United HealthCare Corp., Slip Copy, 2007 WL 1771498 (S.D.N.Y. June 18, 2007):

Decisions from six other circuits have held that the administrative exhaustion requirement applies to plan-based ERISA claims-that is, claims relating to violations of the terms or provisions of the plan at issue-but not to statutory ERISA claims-that is, claims that arise from a violation of the statute itself rather than of a plan. See Smith v. Snydor, 184 F.3d 356, 364-65 (4th Cir.1999); Chailland v. Brown & Root, Inc., 45 F.3d 947 (5th Cir.1995); Richards v. General Motors Corp., 991 F.2d 1227 (6th Cir.1993); Held v. Manufacturers Hanover Leasing Corp., 912 F.2d 1197 (10th Cir.1990); Zipf v. American Telephone & Telegraph Co., 799 F.2d 889, 891-92 (3d Cir.1986); Amaro v. Continental Can Co., 724 F.2d 747, 749-50 (9th Cir.1984). See also De Pace v. Matsushita Elec. Corp. of Am., 257 F .Supp.2d 543, 557 (E.D.N.Y.2003) (collecting cases). The Seventh and Eleventh Circuits, however, have declined to distinguish between statutory and plan-based ERISA claims, and instead require exhaustion regardless of the nature of the claim. See Mason v. Continental Group, Inc., 763 F.2d 1219, 1227 (11th Cir.1985); Kross v. Western Electric Co., 701 F.2d 1238 (7th Cir.1983).

Despite its earlier reference in Leonelli to administrative exhaustion in connection with fiduciary duty claims, the Second Circuit has explicitly recognized that the question of whether exhaustion is required for statutory as well as plan based claims remains open in this circuit. See Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 102 (2d Cir.2005) (recognizing the existence of a split among the circuits on this question and declining to “here decide whether administrative exhaustion is a prerequisite to a statutory ERISA claim.”).FN15 As the Nechis Court recognized, “[d]istrict courts in the Second Circuit have routinely dispensed with the exhaustion prerequisite where plaintiffs allege a statutory ERISA violation.” Id. (quoting De Pace, 257 F.Supp.2d at 558). District courts have continued to do so subsequent to the Nechis decision. See, e.g., Richards v. FleetBoston Financial Corp., 427 F.Supp.2d 150, 180 (D.Conn.2006) (declining to require exhaustion of administrative remedies where the plaintiff sought “relief for statutory violations, rather than violations of the terms of the Amended Plan.”) This Court agrees with the reasoning of De Pace and Richards, as well as with that of the Third, Fourth, Fifth, Sixth, Ninth, and Tenth Circuits, and notes that the Second Circuit has hinted that it also may do so, observing that it was “dubious that Nechis's claims may be dismissed for failure to exhaust administrative remedies[.]” Nechis, 421 F.3d at 100. The Court declines, therefore, to require administrative exhaustion of statutory-as opposed to plan-based-ERISA claims.

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