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Plaintiff “Blew the Deadlines” – S.D. Tex

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  • Plaintiff “Blew the Deadlines” – S.D. Tex

    Here’s a new case out of the Southern District of Texas, Redoak Hospital, LLC v. GAP Inc. and GAP Inc Health and Life Insurance Plan. The court summarizes the dispute before it as follows.

    RedOak filed a first-level appeal on July 14, 2014.1 United notified SK on August 21, 2014 that the original claim decision had been upheld. (Docket Entry No. 11-8 at 18–20). The letter showed a “cc” to RedOak, but RedOak claims that it never received a copy of this notice from United. (Docket Entry No. 55-5 at 2–4). The parties agree that RedOak’s next communication with United was a letter sent on October 23, 2015. This letter stated that RedOak was starting another appeal. But the letter continued: “We have officially exhausted any and all administrative remedies . . . .” (Docket Entry No. 55-2 at 4; see also Docket Entry No. 29 at 9). RedOak sent another letter repeating this statement verbatim on April 25, 2016. (Id.). RedOak filed this lawsuit on May 10, 2016. (Docket Entry No. 1). RedOak’s unilateral attempt to add years to the appeal process and circumvent the Plan’s limitations provisions is the basis of the summary judgment motion.
    The court finds that the plaintiff failed to exhaust remedies and failed to file a lawsuit within the deadline.

    GAP argues that RedOak’s § 502(a)(1) claim is barred for two reasons: the failure to exhaust internal administrative remedies and the failure to file this lawsuit within 90 days after a final claim determination. The Plan requires both. RedOak argues that it should be excused from its failure to exhaust administrative remedies because United made the appeals process futile. RedOak’s argument is based on the claim that it never received United’s response to the first appeal letter. Even assuming that RedOak did not receive the letter and that it is excused from completing the administrative appeals process in a timely manner, RedOak is not excused from the Plan requirement that any lawsuit challenging a claim denial must be filed within 90 days of the final decision denying the claim. See Lacy v. Fulbright & Jaworski, 405 F.3d 254, 256–57 (5th Cir. 2005).

    RedOak offers affidavit evidence that it did not receive the August 21, 2014 letter denying its first-level appeal. Even so, RedOak waited until October 23, 2015 to file a second appeal letter. In that letter, RedOak confirmed that it had already completed all the appellate process the Plan provided and allowed, stating that “[w]e have officially exhausted any and all administrative remedies . . . .” (Docket Entry No. 55-2 at 4). At the latest, RedOak understood that it had exhausted the Plan’s administrative process—futile or not—by October 23, 2015. The 90-day deadline expired on January 21, 2016. RedOak did not file this lawsuit until May 10, 2016, more than four months late.

    RedOak argues that a 90-day period for a plaintiff to file suit is unreasonably short. The Fifth Circuit has indicated that a 90-day limit is reasonable. See Dye v. Associates First Capital Corp. Long-Term Disability Plan 504, 243 F. App’x 808, 809 (5th Cir. 2007) (upholding a 120-day limit, citing Northlake Regional Med. Ctr. v. Waffle House, 160 F.3d 1301, 1303 (11th Cir. 1998) (upholding a 90-day limit)). And RedOak took over 180 days, more than twice as long as the Plan allowed. Even if the Plan allowed 120 or 150 days, RedOak’s suit would be more than three months late. RedOak blew the deadlines and cannot proceed.
    The opinion is attached below.
    Attached Files