By: Derek Hawkins//August 5, 2019//
7th Circuit Court of Appeals
Case Name: Donald Fessenden v. Reliance Standard Life Ins. Co., et al.
Case No.: 18-1346
Officials: WOOD, Chief Judge, and SYKES and BARRETT, Circuit Judges.
Focus: ERISA – Administrator Deadline
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 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 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.
Vacated and remanded