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July 2011

David Barboza v. California Association of Professional Firefighters, et al. ? Claimant's Failure to Exhaust his Administrative Remedies is Excused

The Extension of Time Provided Under 29 C.F.R. § 2560.503-1(i) to Multiemployer Plans to Render a Benefit Determination is Not Extended to Disability Claims

No. 09-16818, _______F.3d ____________ (9th Cir. 2011)

On June 30, 2011, Judge Wallace of United States Court of Appeals for the Ninth Circuit delivered the opinion of the Court holding that where a claimant seeks review of his or her disability claim, the quarterly meeting rule extending time for making benefit claim decisions is restricted to multiemployer plans.  

Appellant David Barboza sued the California Association of Professional Firefighters, its Long-Term Disability Plan, and the California Administration of Insurance Services, Inc. (collectively the "Plan") requesting the Plan pay long term disability benefits.  The parties ultimately agreed Barboza was entitled to benefits, but continued to disagree over whether the Plan was permitted to offset the award based on other payments Barboza received or may receive.  Without reaching this issue, the district court granted the Plan's motion for summary judgment in part because Barboza admitted he failed to exhaust his administrative remedies under the Plan. 

The Ninth Circuit reviewed the appeal de novo holding that for all practical purposes, the district court had terminated Barboza's action.  The termination constituted a final appealable judgment.

In determining whether Barboza should be excused from exhausting his administrative remedies, the Ninth Circuit examined regulations promulgated under ERISA, specifically, 29 C.F.R. § 2560.503-1(i)(1)-(3), which requires a plan administrator resolve a claimant's request for benefits within certain time limits.  The length of time is determined by the type of claim (whether or not a disability claim) and the type of plan involved (whether or not it is a multiemployer plan).  Disability claims have special timing rules.  Multiemployer plans, those requiring contributions from multiple employers, shall make a benefit determination no later than the date of the quarterly board or committee meeting that immediately follows the plan's receipt of a request for review, unless the request for review is filed within 30 days preceding the date of such a meeting. 

The parties' interpretations of the timing rules under 29 C.F.R. § 2560.503-1(i) differed.  In examining the arguments set forth by the parties, the Ninth Circuit reached the conclusion that the regulation is circular because each timing rule subparagraph refers to another of the timing subparagraphs, intertwining the timing rules of general claims, disability claims and claims under multiemployer plans.  The Ninth Circuit found 29 C.F.R. § 2560.503-1(i) is subject to conflicting interpretations.  

The Department of Labor filed an amicus brief on Barboza's behalf explaining that when the DOL revised section 29 C.F.R. § 2560.503-1(i) in November 2000, the purpose was to shorten the time periods for rendering benefit decisions.  The DOL further explained the extension of time for plans administered by boards of trustees or committees that meet quarterly is available only for multiemployer plans

The Ninth Circuit adopted the view held by the DOL, that 29 C.F.R. § 2560.503-1(i) timing rules preclude non-multiemployer plans from using the quarterly meeting rule to decide disability claims.  The Ninth Circuit held that because the Plan failed to timely render a decision within the disability claim time frame for Barboza's administrative appeal, Barboza's administrative remedies were exhausted. 

The Ninth Circuit Court of Appeals reversed the district court's summary judgment order and remanded the matter back to the district court for further proceedings. 

Click here for opinion.

This opinion is not final.  It may be withdrawn from publication, modified on rehearing, or review may be granted by the U.S. Supreme Court.  These events would render the opinion unavailable for use as legal authority.

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