The Eleventh Circuit Court of Appeals has adopted a unique position concerning the exhaustion of administrative remedies in Employee Retirement Income Security Act (ERISA) litigation. While the Eleventh Circuit Court of Appeals has conventionally held that plaintiffs in ERISA actions must exhaust their administrative remedies before suing in federal court, it has extended this same holding to all types of ERISA claims, both for benefits denials and statutory violations. Its position has not only placed it in the minority among federal appellate courts but has also drawn criticism from former U.S. Department of Labor (DOL) officials.
According to the Eleventh Circuit, various policy considerations support its extension of the exhaustion requirements. They cite the requirement as reducing the number of frivolous ERISA lawsuits, decreasing alternative dispute resolution (ADR) expenses, and allowing trustee decisions to guide courts if litigation occurs. The Court also pointed to the requirement increasing the ability of plan trustees to carry out their fiduciary duties expertly and efficiently by preventing premature judicial intervention in the dispute.
Most federal appellate courts have adopted an opposing approach, recognizing an exception to the administrative exhaustion requirement in cases in which plaintiffs seek to enforce statutory rights, not to claim benefits. The Third, Fourth, Fifth, Sixth, Ninth, Tenth, and D.C. Circuits have all found that exhaustion is not required for ERISA claims outside of benefits claims under ERISA § 502(a)(1)(B).
In contrast, the Seventh and Eleventh Circuits have adopted a minority rule requiring administrative exhaustion for all ERISA claims. Even more than the Seventh Circuit, the Eleventh Circuit has strictly enforced the exhaustion requirement, save in the most exceptional of circumstances, which singles it out for its mandatory application of the rule. For example, the Eleventh Circuit has held that exhaustion is not required when administrative remedies are available but would be futile, result in an inadequate remedy, or consist of an administrative review scheme that would deny a claimant meaningful access.
The Eleventh Circuit considers the exhaustion requirement a pleading requirement. As a result, if a plaintiff fails to allege either exhaustion of administrative remedies or futility in attempting to do so, the court may dismiss the ERISA claim. Upon appellate review, the Eleventh Circuit reviews the district court’s decision only for a clear abuse of discretion.
The position of the Eleventh Circuit on this issue has led to growing opposition. For instance, former DOL officials have bluntly criticized the Court’s expansion of the exhaustion requirement to have no basis in law, purpose, or policy, particularly in light of seven other circuits that have adopted a contradictory position.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
