In bilateral contracts for an agreed exchange of performances, where one party's performance is to be rendered prior in time to that of the other, it is a constructive condition precedent to the latter's duty.
Plaintiff employee initiated this action in the Circuit Court of Butler County, Missouri, against his employer Pitney Bowes after he had been denied continued disability benefits for a claim arising from injuries suffered in an automobile accident. The company removed the case to the United States District Court for the Eastern District of Missouri because the suit related to benefits under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (ERISA). Plaintiff sought review of the decision of the District Court, which granted defendant employer's motion for summary judgment based on the employee's failure to exhaust his administrative remedies, on the ground that the employer failed to inform him of appeal procedures in the letter denying benefits under the ERISA. The court reversed the district court's judgment and remanded for further proceedings.
Must a claimant exhaust administrative procedures when, contrary to the requirements of his plan, the letter denying his benefits does not inform him of appeal procedures?
Defendant employer was obligated under the ERISA plan to inform Plaintiff employee of the appeal procedure at the time they denied him benefits. The court found that the plan was a bilateral contract for an agreed exchange of performances. The employer's performance of the notice clause was to be rendered prior in time to exhaustion by the employee, and the court determined that notice was a condition precedent to the exhaustion requirement. The court held that a defense under the exhaustion clause could not be asserted absent performance of the notice clause. Application of a legal rule that the summary plan description gave the employee constructive knowledge of the appeals procedures was not appropriate on summary judgment. The employee also could not be expected to deny actual notice when the employer's motion did not raise the issue. Therefore, the district court erred in dismissing the employee's other ERISA claims for wrongful discharge and for breach of fiduciary duty. The motion for summary judgment did not refer to those claims or place the employee on notice that he needed to argue that the exhaustion requirement did not apply to those claims.