The Tenth Circuit Court of Appeals issued its opinion in Holmes v. Colorado Coalition for the Homeless Long Term Disability Plan on Tuesday, August 12, 2014.
Lucrecia Carpio Holmes was employed by Colorado Coalition for the Homeless and suffered from a number of debilitating medical conditions. She applied for disability benefits through the Coalition’s employee benefit plan disability policy through Union Security Insurance Company. Union Security denied her claim, and Holmes appealed the denial on November 21, 2005. Union Security had 45 days within which to either overturn or uphold the denial, excluding certain tolling periods. Union Security issued its denial on April 7, 2006, 137 days after Holmes appealed. Included in each of Union Security’s denials was a document detailing the appeal procedure, which consisted of two levels of administrative appeal with Union Security prior to filing a civil action in district court.
Instead of filing a second appeal with Union Security, Holmes filed a civil action against the Coalition’s Long Term Disability Plan in the district court on April 28, 2008. The defendant was not aware of the appeal, and default judgment entered against it. Upon learning of the suit, Defendant removed the action to federal court and moved to have the default judgment set aside. The district court granted Defendant’s motion, ruling it had not been properly noticed in the lower court proceeding. Both parties filed cross-motions for summary judgment. While those motions were pending, Holmes filed a motion to stay decision, reopen discovery, and proceed to trial if necessary. The district court denied her motion and granted summary judgment to Defendant, holding that Holmes’s claim was barred because she failed to exhaust her administrative remedies. It found that although Union Security issued its second denial after 137 days, 67 of those days were attributable to Holmes, and Holmes had forfeited her right to enforce ERISA deadlines. The district court also held Union Security had complied with applicable ERISA notice and disclosure requirements. Holmes appealed.
The Tenth Circuit first evaluated Holmes’s argument that the district court erred by ruling she failed to exhaust her administrative remedies. Holmes argued that her Summary Plan Description failed to define the two-level review process, and alternatively she should be deemed to have exhausted her administrative remedies because Union Security failed to comply with ERISA’s timing and notice requirements. The Tenth Circuit addressed the language regarding administrative remedies contained in the plan and the Summary Plan Description, and determined that the administrative appeal process was contained in the plan by reference. Because Holmes failed to complete the administrative appeal process, district court review was barred.
The Tenth Circuit agreed with Holmes that Union Security failed to comply with ERISA’s timing and notice requirements; however, it found Holmes was not prejudiced by that failure. Although the Summary Plan Description failed to inform claimants of the review process, it incorporated by reference the letter detailing the review process that Union Security included with each denial.
The Tenth Circuit affirmed the district court’s dismissal.