Cathy Sayles made a claim for benefits under her employer's group long term disability insurance plan ("the LTD plan") administered by Continental Casualty Company. Sayles sued Continental in 2009 for past and future benefits sought in 2001. The United States District Court for the Western District of Missouri granted Continental's motion for summary judgment on the ground that Sayles failed to exhaust her administrative remedies. The court rejected Sayles' contention that Continental was estopped from asserting an exhaustion defense because it had not advised her of her rights to administrative and federal court review, finding Sayles had abandoned her claim.
Sayles made her claim for LTD benefits in early November 2001. One of Sayles' physicians completed a "Functional Assessment Tool" indicating that, as far as he knew, Sayles was able to perform certain job duties, but had reported frequent migraines. Continental contended it had also unsuccessfully requested a functional assessment and medical records from her attending physician on several occasions, but never received them. However, the record did not contain evidence of these requests. It did contain a letter to Sayles on January 11, 2002, advising that if Continental did not receive medical information within ten days it would assume Sayles no longer wished to make a claim and would close its file. Continental did not receive a response to this letter and closed its file.
Sayles asserted "on information and belief" that she never received the January 2002 letter. However, on September 13, 2002, Continental responded to a September 6, 2002, letter from Sayles' attorney who had requested a copy of the claim file. Continental's September 13, 2002 letter, which enclosed the claim file, referenced the January 11, 2002 letter and advised that Sayles' file was closed because Continental had never received the requested medical information. In February 2003, Sayles' attorney informed Continental he was gathering documents to be submitted as part of Sayles' claim, but Continental did not receive any further communication from Sayles, or her attorney, until October 1, 2009 when she filed suit.
Continental sought summary judgment asserting Sayles failed to exhaust her administrative remedies and that her lawsuit was untimely based on the LTD plan's three-year limitation for filing suit. The court granted the motion on the exhaustion issue but also commented on the possible merits of the limitations of action defense.
Sayles argued Continental was estopped from arguing failure to exhaust administrative remedies because it never advised her about any right or procedure for administrative or federal court review of her claim. The court characterized Sayles' position as seeking "judgment as sanctions for her theory of a procedural blunder." In the court's view, the procedural defaults reflected in the record were by Sayles, her attorney, and her doctors. The result of those defaults was "a file which does not permit a thorough or sensible evaluation of plaintiff's health." In fact, the court noted, Sayles did not contend that the record supported a ruling in her favor on the merits and held Sayles' failure to provide medical information constituted an abandonment of her claim.
The court did not fully address Continental's argument that the lawsuit was untimely on the theory that, under 29 C.F.R. section 2560.503-1(h), Sayles' claim was "deemed denied" after 120 days. The court noted that Sayles had presented no authority to support her assertion that a plan administrator must issue a formal denial of a claim that has apparently been abandoned or otherwise remains unexhausted and "assumed" that the limitations period commenced in March 2002. However, it concluded that "closer sua sponte examination of the enforceability of the plan's purported 3-year limitation for filing suit is not warranted under the circumstances." The court did not elaborate on why the limitations provision might not be enforceable.
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