This month's Friday Five covers cases relating to the standard for triggering an administrative appeal, exemptions to the exhaustion of administrative remedies requirement of ERISA, artful pleading in an attempt to avoid ERISA preemption, the scope of a crime exclusion to life insurance policies, and judicial clarification on the ERISA duty to monitor service providers.

1. Claimants Must Communicate Their Intention to Appeal Adverse Determinations in "Clear" or "Explicit" Terms. Following the denial of her LTD benefits claim, the plaintiff sent a letter to the insurer’s appeals department submitting additional medical records and asking for an update on her claim. The district court found that because there was no “clear statement” challenging the denial or otherwise an “explicit request for an appeal,” the plaintiff failed to trigger the administrative appeals process. As such, absent an appropriate administrative appeal, the court determined that the plaintiff failed to exhaust her administrative remedies under ERISA. The court granted a summary judgment in favor of the insurer. Meyer v. Hartford Life & Accid. Ins. Co., No. 16-1282, 2019 WL 5068650 (C.D. Ill. Oct. 9, 2019).
2. Insurer's Failure to Follow Claims Procedures Triggers Exception to ERISA Exhaustion Requirement. Following the initial denial of a life insurance claim under her deceased husband’s term life insurance policy, and without pursuing any administrative appeals, the plaintiff sued in federal court. The plaintiff argued that the insurer’s letter denying waiver of premium benefits, the denial of which caused the life insurance policy to lapse, was issued well outside the 90-day ERISA window for adverse benefit determinations. The court agreed, and further concluded that because the insurer failed to follow the express claims procedures and deadlines under ERISA, the plaintiff’s administrative remedies were deemed constructively exhausted when the 90-day adverse determination period ran without response from the insurer. Rizzo v. First Reliance Standard Life Ins. Co., No. 17-745, 2019 WL 5420548 (D.N.J. Oct. 23, 2019).
3. Alternative Pleading Cannot Escape Preemption Under ERISA. In a case filed in federal court, the plaintiff pled state law insurance claims and an ERISA claim in the alternative which related to the denial of benefits under the spousal supplement to a life insurance policy. The federal magistrate judge determined that the plaintiff’s attempts to plead an ERISA claim in the alternative only "if the policy is deemed to be controlled by ERISA" could not save the state law claims from preemption. The judge determined as a matter of law on a motion to dismiss/strike that ERISA controlled based upon the language of the plan documents. Shears v. Symetra Life Ins. Co., No. 19-161, 2019 WL 5089195 (S.D. Ala. Sept. 13, 2019).
4. Tenth Circuit Warns – Don’t Speed and Make a Claim. In a recent ERISA AD&D case from the U.S. Court of Appeals for the Tenth Circuit, the appellate court determined that speeding at 74 miles per hour on an unpaved road triggered the crime exclusion under the life insurance policy. The Tenth Circuit further rejected the appellant’s argument that the insurer’s claims manual, which suggested that mere traffic violations were not intended to be included in the crime exclusion, was not part of the policy. The court explained that “judicial reliance on a claims manual in this context is problematic when there is no evidence that the manual was offered to, or even available to, an insured or otherwise used in advertising or closing a sale.” The Tenth Circuit ultimately affirmed summary judgment in favor of the insurer. Caldwell v. UNUM Life Ins. Co. of Am., No. 17-8078, 2019 WL 4463495 (10th Cir. Sept. 18, 2019).
5. District Court Sheds Light on Duty to Monitor Service Providers. In a long-running case involving the duty of an ERISA fiduciary to monitor service providers, such as investment managers, a federal district court provided helpful insight into a largely unexplored area of law. The court determined that a retirement committee appropriately monitored its investment manager through periodic reports from a top-end investment consultant, appropriate documentation underlying its relationship with the investment manager, consistent oversight by ERISA counsel, and immediate action upon learning of the manager’s misadventures. The court ultimately found that the investment manager was solely liable for the over $7 million in losses to the retirement plans, and provided helpful tips to permit other ERISA fiduciaries to craft best practices for oversight of service providers in an area of ERISA law lacking robust decisional or administrative guidance. The court granted summary judgment in favor of the retirement committee and its members. U.S. Dept. of Labor v. WPN Corp., et al., No. 14-1494, 2019 WL 4748052 (W.D. Pa. Sept. 30, 2019).