Dennis Dozier v. Sun Life Assurance Company of Canada

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 06a0398p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
DENNIS DOZIER ,
Plaintiff-Appellant,
v.
SUN LIFE ASSURANCE COMPANY OF CANADA ,
Defendant-Appellee.
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No. 05-6598
Appeal from the United States District Court
for the Eastern District of Kentucky at London.
No. 04-00291—Danny C. Reeves, District Judge.
Argued: September 21, 2006
Decided and Filed: October 27, 2006
Before: MERRITT, SUTTON, and GRIFFIN, Circuit Judges.
_________________
COUNSEL
ARGUED: E. Douglas Richards, E. DOUGLAS RICHARDS, PSC, Lexington, Kentucky, for
Appellant. Jeffrey C. Mando, ADAMS, STEPNER, WOLTERMANN & DUSING, PLLC,
Covington, Kentucky, for Appellee. ON BRIEF: E. Douglas Richards, E. DOUGLAS RICHARDS,
PSC, Lexington, Kentucky, for Appellant. Jeffrey C. Mando, ADAMS, STEPNER,
WOLTERMANN & DUSING, PLLC, Covington, Kentucky, for Appellee.
_________________
OPINION
_________________
SUTTON, Circuit Judge. Dennis Dozier challenges the district court’s dismissal of his
employee-benefits suit for failure to exhaust administrative remedies, claiming that pursuing the
administrative review process for one benefit after the insurance company had already rejected his
application for a similar (though easier to obtain) benefit would have been futile. Because it indeed
would have been futile for Dozier to ask the insurance company to find that he could not perform
“any occupation” for which he was qualified (the eligibility requirement for obtaining a waiver of
life insurance premiums) after the company had already concluded that he could perform his “own
occupation” (making him ineligible for long-term-disability benefits), we reverse.
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I.
In March 2001, Dennis Dozier injured his lower back and managed to work only
intermittently after the injury. A year later, on March 19, 2002, his doctor recommended that he
retire because he was “permanently incapacitated” and could not work. JA 153.
Through his employer, Dozier participated in long-term-disability and life insurance policies
underwritten by Sun Life Assurance Company of Canada. The long-term-disability benefit applied
to anyone “unable to perform the Material and Substantial Duties of his Own Occupation.” JA 102
(emphasis added). The life insurance policy provided a waiver-of-premium benefit for disabled
employees, which the policy defined as those “unable to perform the material and substantial duties
of any occupation for which he is or becomes reasonably qualified for by education, training or
experience.” JA 81 (emphasis added).
Dozier applied for benefits under each policy through a single application form provided by
Sun Life. On May 15, 2002, Sun Life issued a letter to Dozier denying his claim for long-term-
disability benefits. The letter, signed by Beth Bixler from the LTD Claims group, identified his
occupation as involving “sedentary” work and concluded that “you are not precluded from
performing that type of work.” JA 44. One week later, Sun Life issued a letter denying Dozier’s
claim for waiver-of-premium benefits. Signed by Kathy Barrick of the Life Claims group, the letter
stated that “[t]he long term disability claim file indicated . . . that the findings in your medical
records did not preclude you from performing sedentary work” and thus “[s]ince you are not Totally
Disabled . . . we must deny this request for benefits.” JA 41. The letter also noted that “this
decision is solely related to your Waiver of Premium claim and does not directly [a]ffect your long
term disability claim.” Id. Each letter explained the process for filing an appeal from the insurance
company’s decision.
On July 2, 2002, Dozier sought administrative review of Sun Life’s long-term-disability
decision. According to the terms of the policy, Dozier had 180 days to decide whether to appeal
either the long-term-disability or the waiver-of-premium decisions, and Sun Life had 90 days to
issue a decision with respect to each potential appeal. On October 17, 2002, Sun Life notified
Dozier that it would adhere to its initial decision in denying his long-term-disability claim and that
“[a]ll administrative remedies ha[d] been exhausted and no additional information [would] be
reviewed.” JA 147. When Sun Life issued this letter, Dozier still had 32 days to seek administrative
review of the harder-to-obtain benefit—the waiver of premiums.
Dozier filed a lawsuit in state court against Sun Life seeking long-term-disability and waiver-
of-premium benefits. After Sun Life removed the case to federal court on diversity grounds, the
district court ruled that Sun Life had mistakenly denied Dozier long-term-disability benefits and
dismissed without prejudice his waiver-of-premium claim for failure to exhaust administrative
remedies.
In response, Dozier asked Sun Life to review the denial of his waiver-of-premium claim.
Sun Life declined, noting that Dozier was outside the 180-day window for appealing the decision.
Dozier filed a second action in state court regarding his waiver-of-premium claim, and Sun
Life again removed the action to federal court. The district court dismissed Dozier’s claim with
prejudice because he had failed to exhaust his administrative remedies and because the time for
seeking administrative review had expired.
II.
Acknowledging that he did not exhaust the administrative remedies available on his waiver-
of-premium claim, Dozier argues that any administrative appeal would have been futile given the

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reality that Sun Life had denied his long-term-disability appeal and indeed had done so before the
time for appealing the other claim had expired. While “application of the administrative exhaustion
requirement in an ERISA case is committed to the sound discretion of the district court,” Fallick
v. Nationwide Mut. Ins. Co., 162 F.3d 410, 418 (6th Cir. 1998), that discretion must be exercised “to
excuse nonexhaustion where resorting to the plan’s administrative procedure would simply be
futile,” id. at 419; see id. at 420 (“[W]hen resort to the administrative review process would be an
exercise in futility, the exhaustion of remedies doctrine shall not apply.”).
Generally speaking, we have applied the administrative-futility doctrine in two scenarios:
(1) when the “Plaintiffs’ suit [is] directed to the legality of [the plan], not to a mere interpretation
of it,” Costantino v. TRW, Inc., 13 F.3d 969, 975 (6th Cir. 1994) (emphases omitted); see also
Fallick, 162 F.3d at 420, and (2) when the defendant “lacks the authority to institute the [decision]
sought by Plaintiffs,” Hill v. Blue Cross & Blue Shield of Mich., 409 F.3d 710, 719 (6th Cir. 2005).
To meet the “quite restricted” standard for establishing administrative futility, we have required a
litigant to “make a clear and positive indication” that further administrative review would have come
to naught. Fallick, 162 F.3d at 419.
The “clear and positive indication” that Dozier had no reason to seek administrative review
of his waiver-of-premium claim, it seems to us, came when Sun Life denied his long-term-disability
claim on October 17, 2002. At that point, Dozier still had 32 days to seek administrative review of
the waiver-of-premium claim but no rational reason for doing so. In denying the long-term-
disability claim, Sun Life had made a final determination that Dozier was able to perform “the
Material and Substantial Duties of his Own Occupation.” JA 145 (emphasis added). That
determination necessarily precluded him from arguing with a straight face to the same insurance
company that he was “unable to perform the material and substantial duties of any occupation,” JA
41 (emphasis added), the eligibility standard for obtaining the waiver-of-premium benefit. The
denial of the easier-to-obtain claim precluded eligibility for the more-difficult-to-prove claim.
Under these circumstances, Dozier had every reason to believe that administrative review
of the waiver-of-premium claim would have been pointless. Dozier could fairly assume that the
same company would apply these two tests consistently, meaning that the denial of the one claim
would foreclose eligibility for relief on the other. See Paese v. Hartford Life & Accident Ins. Co.,
449 F.3d 435, 449 (2d Cir. 2006) (noting that “Hartford’s decision that Paese was not totally
disabled from his ‘own occupation’ necessarily implies a decision that he was not totally disabled
from ‘any occupation’”); Cilano v. Alstom Transp., Inc., No. 04-CV-6322 CJS, 2005 WL 139172,
at *2–3 (W.D.N.Y. Jan. 18, 2005) (“Where as here a plaintiff has exhausted one claim but not
another, he may demonstrate futility by showing that the two claims are so identical that the denial
of one demonstrates with certainty that the other will also be denied.”) (internal quotation marks
omitted); cf. Lindemann v. Mobil Oil Corp., 79 F.3d 647, 650 (7th Cir. 1996) (holding exhaustion
required despite futility argument because “[t]he two claims are not so identical that Mobil’s denial
of the claim for separation benefits demonstrates with certainty that it would deny the ERISA claim
as well”).
Sun Life’s handling of the two claims buttresses this conclusion. Dozier initially filed only
an application for long-term-disability benefits. But because he also was potentially eligible for the
waiver-of-premium benefit, Sun Life treated Dozier’s single application as an application for both
benefits, as required by the insurance company’s policy. See JA 199 (“[I]f someone had LTD they
don’t need to file for Waiver and LTD, they only file for LTD.”). Then, when Sun Life denied
Dozier the waiver-of-premium benefit, it explained that Dozier was able to perform “any
occupation” for which he was qualified—the test for eligibility—because “[t]he long-term-disability
claim file indicated . . . that the findings in your medical records did not preclude you from
performing” your “own occupation.” JA 41. Quite understandably, in other words, the company

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explained to Dozier that his ability to perform his “own occupation” showed that he could perform
“any occupation.”
Further supporting Dozier’s decision to consider the company’s action on the former
application before appealing the latter one, Sun Life gave Dozier 180 days to seek administrative
review of the decisions. Given the interconnectedness of the two applications and the policy’s
requirement that appeals must be decided within 90 days, Dozier was fully entitled to seek review
of the easier-to-obtain benefit and wait to decide whether to seek review of the harder-to-obtain
benefit until after a response from the company. And when Sun Life denied the long-term-disability
benefit, the eligibility criteria for the two benefits made the appeal of the waiver-of-premium
decision look utterly pointless to anyone save a litigation-hungry employee. “The law does not
require parties to engage in meaningless acts or to needlessly squander resources as a prerequisite
to commencing litigation.” Fallick, 162 F.3d at 420 (internal quotation marks omitted).
Nor would an appeal of the waiver-of-premium claim have advanced any of the purposes of
the judicially-created ERISA exhaustion requirement, namely:
(1) To help reduce the number of frivolous law-suits under ERISA.
(2) To promote the consistent treatment of claims for benefits.
(3) To provide a nonadversarial method of claims settlement.
(4) To minimize the costs of claims settlement for all concerned.
(5) To enhance the ability of trustees of benefit plans to expertly and efficiently
manage their funds by preventing premature judicial intervention in their decision-
making processes.
(6) To enhance the ability of trustees of benefit plans to correct their errors.
(7) To enhance the ability of trustees of benefit plans to interpret plan provisions.
(8) To help assemble a factual record which will assist a court in reviewing
fiduciaries’ actions.
Constantino, 13 F.3d at 975.
Sun Life has not explained how an administrative appeal of the waiver-of-premium benefit
would advance any of these purposes. Nor can we think of any reason why it would do so. By not
requiring exhaustion, in marked contrast, we would advance several of these goals: cost savings for
the company and applicant; elimination of frivolous claims; timeliness in bringing the dispute to a
close; and of course “the consistent treatment of claims for benefits.” Id. The last point may be the
most important: Courts and applicants may fairly assume that a company will treat benefits claims
consistently and coherently; they should not be required to insist on exhaustion on the assumption
that the company may have a bad day. Otherwise, the futility exception would never apply—as the
specter of a mistake or inconsistent application of the plan’s terms would always hold out the
possibility of relief.
Sun Life persists that Dozier should have exhausted both claims because the company had
independent units reviewing each claim, making it possible for the company to grant the harder-to-
prove claim after denying the easier-to-prove claim. In support of this argument, Sun Life points
to the testimony of Lesley Hanslope, the life insurance group manager, who said that even though
her group considered the decision of the other group, the life insurance group theoretically could

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No. 05-6598 Dozier v. Sun Life Assurance Co. of Canada Page 5
have granted the waiver-of-premium claim even after the LTD group had denied the long-term-
disability claim. She acknowledged, however, that such a decision would be “very rare,” and neither
she nor any other company employee could point to a single instance where that inconsistency had
occurred. JA 198–99. The context of her testimony, moreover, shows that she was speaking of the
two groups’ initial decisions, not their authority to issue inconsistent decisions in the context of an
administrative appeal. As to that, the record is silent. No authority to our knowledge exists for the
proposition that the futility exception does not apply whenever it can be said—indeed it always can
be said—that the company might make a mistake or exercise its discretion inconsistently in
addressing two related applications.
In the end, we are left with two policies whose consistent interpretation would have required
Sun Life to deny Dozier’s application for the waiver-of-premium benefit, two policies that so far as
the record shows have never been construed inconsistently and an individual applicant whose only
sin was in assuming that the company would treat his administrative appeals in a consistent and
coherent manner. The futility rule permitted him to act on that assumption, and accordingly the
district court must process his claim.
III.
For these reasons, we reverse and remand the case for further proceedings consistent with
this opinion.

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