In Schorsch v. Reliance Standard Life Insurance Co., No. 10-3524 (7th Cir. 2012), the district court granted summary judgment against the plaintiff, on the grounds that the plaintiff failed to exhaust her administrative remedies under ERISA. In this case, plaintiff Deborah Schorsch (“Schorsch”), was covered under an employer-provided long-term group disability insurance plan (the “Plan”). The Plan was insured and administered by Reliance Standard Life Insurance Company (“Reliance”). In 1992, Schorsch suffered a contusion and spinal cord damage in a car accident, which caused her to become disabled. Schorsch began receiving long-term disability benefits under the Plan on January 29, 1993. Under the Plan, after 60 months, to continue to receive the disability benefits, Schorsch could not be able to perform the material duties of any occupation as reasonably allowed by her education, training, or experience.
On May 19, 2006, at Reliance’s request, Schorsch underwent an independent medical exam to determine if she continued to meet the unable to perform any occupation standard of the Plan. The report of the examiner concluded that she did not meet this standard. Reliance notified Schorsch, by letter dated June 13, 2006, that it would terminate her disability benefits on June 29, 2006, based on this report. The letter stated that Schorsch could request a review of this termination by writing to Reliance within 60 days after the receipt of the letter. Schorsch did not request the review within that 60- day period. Schorsch subsequently brought this suit under ERISA to reinstate her disability benefits. The question for the Seventh Circuit Court of Appeals (the “Court”): did Schorsch’s failure to request the review of Reliance’s decision to terminate her disability benefits constitute a failure to exhaust her administrative remedies under ERISA, so that she is barred from filing suit for her benefits in court?
In analyzing the case, the Court noted that courts have interpreted ERISA as requiring exhaustion of administrative remedies as a prerequisite to bringing suit under the statute. Courts may excuse a failure to exhaust administrative remedies where there is a lack of meaningful access to review procedures, or where pursuing internal plan remedies would be futile. However, the Court found no such lack of access or futility here. It said that Schorsch did not show: (1) reasonable reliance on any alleged failure of Reliance when she failed to request a review of its decision to terminate her disability benefits, or (2) that any of Reliance’s alleged missteps denied her meaningful access to a review. The Court ruled that Schorsch failed to exhaust her administrative remedies by failing to request a review of Reliance’s decision to terminate her benefits, with no excuse for such failure, and therefore she cannot bring suit under ERISA. Accordingly, the Court affirmed the district court’s summary judgment against Schorsch.