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Fessenden v. Reliance Std. Life Ins. Co.

United States Court of Appeals for the Seventh Circuit

October 30, 2018, Argued; June 25, 2019, Decided

No. 18-1346


 [*999]  Barrett, Circuit Judge. Donald Fessenden applied for long-term disability benefits through his former employer's benefits plan. After the plan administrator, Reliance Standard Life Insurance Company, denied the claim, Fessenden submitted a request for review with additional evidence supporting it. When Reliance failed to issue a decision within the timeline mandated by the regulations governing the Employee Retirement Income Security Act of 1974 (ERISA), he sought review of Reliance's decision in federal court. Eight days later, after Fessenden had already filed suit, Reliance finally issued a decision, again denying Fessenden's claim.

We must decide whether Reliance's [**2]  tardiness affects the standard of review in the district court. If the decision had been timely, the court would have applied an arbitrary and capricious standard because the plan gave Reliance the discretion to administer it. When a plan administrator commits a procedural violation, however, it  [*1000]  loses the benefit of deference and a de novo standard applies. We have recognized an exception, though, and Reliance seeks to take advantage of it: if the administrator "substantially complies" with the prescribed procedures—in other words, if the violation is relatively minor—then the court will still defer to the administrator's decision. Reliance argues that it "substantially complied" with the deadline because it was only a little bit late.

We reject Reliance's argument because we hold that ] the "substantial compliance" exception does not apply to blown deadlines. An administrator may be able to "substantially comply" with other procedural requirements, but a deadline is a bright line. Because Reliance violated a hard-and-fast obligation, its late decision to deny Fessenden benefits is not entitled to deference.

Fessenden worked as a Software Engineer Manager for Oracle USA until January [**3]  2008, when he stopped working due to fatigue and severe, chronic migraine headaches. He applied for short-term disability benefits through Oracle's employee welfare benefits plan, a fully funded group insurance policy issued by Reliance. The request was approved, and Fessenden received benefits through May 11, 2008. Oracle terminated Fessenden shortly thereafter.

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927 F.3d 998 *; 2019 U.S. App. LEXIS 18885 **


Prior History:  [**1] Appeal from the United States District Court for the Northern District of Indiana, South Bend Division. No. 3:15-cv-00370 — Philip P. Simon, Judge.

Fessenden v. Reliance Std. Life Ins. Co., 2018 U.S. Dist. LEXIS 7754 (N.D. Ind., Jan. 17, 2018)


regulations, claimant, deadline, substantial compliance, deference, doctrine of substantial compliance, plan administrator, final decision, exhausted, novo, district court, benefits, disability benefits, standard of review, arbitrary and capricious, denial of benefits, deferential, effective

Pensions & Benefits Law, ERISA, Claim Procedures, Administration & Enforcement, Handling of Claims, Handling of Claims, Judicial Review, Judicial Review, Standards of Review, Arbitrary & Capricious Review, De Novo Standard of Review, Standards of Review, Civil Litigation, Federal Common Law, Statute of Limitations