Dougherty, Sylvia A. v. IN Bell Tele Co

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-2066
SYLVIA A. DOUGHERTY,
Plaintiff-Appellant,
v.
INDIANA BELL TELEPHONE COMPANY, AMERITECH
CORPORATION, a company of SBC, an Indiana
corporation for profit d/b/a SBC INDIANA,
SBC COMMUNICATIONS, INCORPORATED, an
Illinois corporation for profit, AMERITECH
PENSION PLAN, et al.,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 03 C 186—Sarah Evans Barker, Judge.
____________
ARGUED DECEMBER 2, 2005—DECIDED MARCH 16, 2006
____________
Before BAUER, POSNER, and MANION, Circuit Judges.
MANION, Circuit Judge. The Indiana Bell Telephone
Company employed Sylvia Dougherty as a telephone
operator. During her employment, she participated in an
employer-sponsored disability plan providing sickness
benefits and accident benefits. Under this plan, accident
benefits are generally more desirable than sickness benefits.
After a disabling neck strain in 1988, the plan awarded
2 No. 05-2066
Dougherty accident benefits. The benefits continued until
2000 when the plan determined that Dougherty was no
longer disabled. Dougherty returned to work but soon
experienced pain in her right shoulder and elsewhere. This
pain led her again to seek disability benefits. This time, the
plan granted her sickness benefits, not accident benefits.
Dougherty sued, challenging the plan’s termination of
accident benefits from her 1988 claim as well as the plan’s
classification of her subsequent benefits as sickness benefits.
The district court granted the plan summary judgment.
Dougherty appeals. We affirm.
I.
A.
Sylvia Dougherty began working at the Indiana Bell
Telephone Company as a telephone operator in 1979. At
times relevant to this action, Indiana Bell and its parents,
first Ameritech Corporation and later SBC Communications,
Inc., sponsored what is currently known as the Ameritech
Sickness and Accident Disability Benefits Plan (the “plan”).
Dougherty participated in the plan during her employment.
As is evident from its name, the plan administers two
types of disability benefits. See Sisto v. Ameritech Sickness &
Accident Disability Benefit Plan, 429 F.3d 698, 700-01 (7th Cir.
2005) (explaining the same plan). Sickness benefits cover
disabilities caused by illnesses or injuries suffered outside
the course of employment, and sickness benefits are capped
at fifty-two weeks. Accident benefits, by contrast, are for
disabling illnesses or injuries suffered during the course of
employment. Unlike sickness benefits, there is no automatic
time limitation. Accident benefits continue for the duration
of the disability.
No. 05-2066 3
B.
In September 1987, Indiana Bell increased Dougherty’s
work week from five to six days. Dougherty responded by
obtaining a doctor’s note recommending that “she work
only five days per week.” The doctor justified the recom-
mendation by stating that Dougherty had back and neck
pain “related to work stress” and that her “problem is
aggrevated [sic] by working more than five days in a row.”
To verify this medical complaint, Indiana Bell had
Dougherty undergo a functional capacity evaluation in
January 1988. The exam included lifting items weighing
more than ten pounds. During the testing, Dougherty
strained muscles in her neck. As a result, she then claimed
that she was unable to work at all.
Dougherty then applied for disability benefits under the
plan, and the plan agreed that she was disabled. Because the
strain occurred during the functional capacity evaluation
and because Indiana Bell directed Dougherty to participate
in that evaluation, the injury occurred in the course of
employment according to the terms of the plan. Conse-
quently, the plan awarded Dougherty accident benefits.
Separately, she received worker’s compensation as a result
of this neck strain.
Dougherty’s accident benefits continued largely uninter-
rupted for the next twelve years. Although accident benefits
only last as long as the disability lasts, the plan, for several
years, did not monitor the status of Dougherty’s disability.
That changed in September 1999, when a claims representa-
tive reviewed Dougherty’s file and discovered the absence
of a recent medical evaluation. To avoid any malingering,
the plan first checked Dougherty’s status by hiring a private
investigator. The investigator spoke with Dougherty’s
neighbors, who reported that Dougherty was very active
4 No. 05-2066
and exhibited no signs of obvious disability. While
surveilling Dougherty’s home, the investigator reported
seeing Dougherty running outside to close a convertible
roof due to a sudden rainstorm. Also, on a videotape, the
investigator indisputably recorded Dougherty operating her
vehicle and carrying several shopping bags out of a store to
her vehicle. The tape possibly caught her performing yard
work, but the identity of the woman on that portion of the
tape is disputed.
The plan then had Norman Moskowitz, M.D., conduct a
medical examination of Dougherty in January 2000. In
evaluating Dougherty’s cervical spine (neck), Dr.
Moskowitz found that she had lost some ability to bend and
extend her neck but noted no neurological deficits. He
further observed that, when he had tested her range of
motion, Dougherty “was not credible, cooperative or
compliant.” Besides his exam, Dr. Moskowitz reviewed her
medical file and the investigator’s surveillance report and
tape. Dr. Moskowitz concluded that Dougherty was “not
disabled from any type of employment.” The plan then
terminated her accident benefits as of January 30.
In response, Dougherty obtained a medical evaluation of
her own dated February 25, 2000, which was performed by
Roland Kaplan, D.O. Dr. Kaplan found that, among other
problems, Dougherty had inflamed nerves in her cervical
spine, and, although she had “good cervical motion,” he
found her cervical spine to be less than fully functional. Dr.
Kaplan concluded that, with respect to work, Dougherty
could not sit for more than ten minutes at a time and
recommended maintaining the “status quo,” i.e., not
working and staying on disability leave. In March,
Dougherty submitted Dr. Kaplan’s report to the plan and
appealed the termination of benefits. Thereafter, Dougherty
No. 05-2066 5
submitted additional reports from Dr. Kaplan, which
essentially confirmed his earlier conclusions.
The plan then had David Trotter, M.D., review
Dougherty’s updated medical file. Dr. Trotter acknowl-
edged that the file indicated some cervical spine trouble, but
he believed, based upon the file, that those troubles were
“associated with a significant amount of symptom magnifi-
cation.” He concluded that Dougherty was not disabled,
stating that there was “no medical justification for any
alteration” in the plan’s determination that she was no
longer disabled as of January 30. Dr. Trotter added that the
plan was “quite liberal” in using that date because, in his
opinion, it appeared that Dougherty could have returned to
work “at a much earlier point in time.” Dr. Trotter also
reviewed Dr. Kaplan’s supplemental reports, but Dr.
Trotter’s opinion did not change. The plan denied
Dougherty’s appeal on May 12 and informed her that its
decision was final. Dougherty took no further action on this
accident claim at that juncture.
C.
Dougherty returned to work on June 12, worked about
three weeks, and lodged a claim for disability benefits on
July 7. This claim followed a July 3 visit with one of
Dougherty’s numerous doctors in this case. Among other
findings, this doctor noted neck, wrist, and spinal problems
as well as weakness in Dougherty’s rotator cuff (shoulder).
As the 1988 claim was no longer active, the plan treated
this claim as a new claim. In addition, the plan classified the
claim as one for sickness benefits, not accident benefits. The
plan did so because there was no work-related injury
presented to the plan in conjunction with this claim. Fur-
6 No. 05-2066
ther, Dougherty did not submit the proper form for accident
benefits (an “AM974 form”) or some equivalent and did not
instruct the plan to treat this claim as being related to her
1988 accident claim. Moreover, the plan immediately
informed Dougherty that it was treating this claim as a
sickness claim, which it plainly defined as a claim based
upon an “off-the-job” injury. Dougherty took no action at
that time to dispute the classification. The importance of
these details will become apparent below. The plan
awarded Dougherty sickness benefits for the period of July
8 to July 17.
Dougherty returned to work on July 18 but stopped
working again on August 4 on account of continued pain.
She again sought disability benefits, but, as before, she did
not present an on-the-job injury as the basis for an accident
claim or otherwise instruct the plan to link this claim to her
1988 claim. The plan treated this August claim as a relapse
of the July sickness claim and so informed Dougherty. On
August 10, Dougherty called the plan and asked why the
claim was not being treated as an accident claim. A plan
representative responded to Dougherty’s inquiry by leaving
her a cryptic voicemail along the lines of accident benefits
being linked to worker’s compensation, and the representa-
tive invited Dougherty to call back if Dougherty had
additional questions. Dougherty did not pursue her inquiry
further nor did she appeal or otherwise dispute the sickness
versus accident classification at that time. In September,
Dougherty underwent shoulder surgery and was treated for
carpal tunnel syndrome. As to her August claim, Dougherty
received sickness benefits from August 11 to December 16.
The plan selected the end date after consulting with
Dougherty’s doctors. Dougherty did not appeal that
decision nor any other aspect of this claim. She returned to
work on December 18, 2000.
No. 05-2066 7
In March 2001, Dougherty ceased working, complaining
of neck and upper back pain, and made another disability
claim in a similar fashion as before. The plan again immedi-
ately informed her that the claim was being treated as a
sickness claim, and she did not challenge that classification
at the time. The plan denied the claim in April, citing a lack
of documentation. Dougherty appealed the denial but not
the sickness classification. After several rounds of medical
evaluations, document submissions, and general back and
forth between the parties, the plan reversed its denial and
awarded Dougherty sickness benefits from March 18, 2001
to March 2, 2002.
Nevertheless, because sickness benefits, as discussed
above, cannot exceed fifty-two weeks, the plan later deter-
mined that the March 2 date was erroneous; Dougherty
exhausted her fifty-two weeks well before that date. Be-
tween Dougherty’s July 2000 and August 2000 claims, she
received approximately twenty weeks of benefits. Thus, she
had roughly thirty-two weeks left for the March 2001 claim,
and those weeks ran out on October 29, 2001. The plan
reached this determination because the benefit periods
associated with the three 2000 and 2001 claims were
“successive periods of disability” under the terms of the
plan, meaning that they had to be grouped together as one
period for purposes of the fifty-two-week clock. Pursuant to
the plan’s text, a new clock starts to run only when the
employee has been back to work for more than thirteen
continuous weeks. Dougherty did not satisfy that require-
ment. The plan notified Dougherty of this correction in
March 2002.
D.
Dougherty took no further action until June 2002, when
she—now represented by counsel—sent a letter to the plan
8 No. 05-2066
seeking to appeal the plan’s denial of accident benefits, not
sickness benefits. In August 2002, the plan advised
Dougherty, through her counsel, that the plan terminated
her accident benefits from the 1988 claim in January 2000,
that she had already appealed that termination in March
2000, and that the plan had already issued its final decision
in May 2000. Viewing the 1988 claim as being closed for
more than two years, the plan rejected the June 2002 appeal,
standing on its final determination from May 2000.
In January 2003, Dougherty filed a state court lawsuit
challenging the plan’s actions under Employee Retirement
Income Security Act, specifically, 29 U.S.C. § 1132(a)(1)(B),
solely claiming wrongful denials of benefits. The case was
then removed based upon a federal question. Besides the
plan, other entities related to plan were named as defen-
dants in the action, but there is no need to detail them here.
The plan and the other defendants moved for summary
judgment. The central issues were the plan’s January 2000
termination of accident benefits from the 1988 claim and the
plan’s classification of the 2000 and 2001 claims as sickness
claims rather than accident claims. The district court
granted the summary judgment motion, and Dougherty
appeals.
II.
We review the district court’s grant of summary judgment
de novo. See Sisto, 429 F.3d at 700. Summary judgment is
appropriate when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law.” Fed. R. Civ. P. 56(c). On
appeal, Dougherty puts forth a morass of disjointed argu-
No. 05-2066 9
ments that can be distilled down to three issues: the stan-
dard by which to review the plan’s decisions, the plan’s
termination of accident benefits from the 1988 claim, and the
1
plan’s handling of the 2000 and 2001 claims.
A.
When the terms of an employee benefit plan afford the
plan administrator broad discretion to interpret the plan
and determine benefit eligibility, the administrator’s benefit
decisions are reviewed under the arbitrary-and-capricious
standard. See Sisto, 429 F.3d at 700. In granting summary
judgment, the district court applied this highly-deferential
standard. Dougherty argues for less deferential review, but
she does not dispute the plan’s language. Rather, she argues
that the plan was biased against her and, therefore, that the
plan should be afforded no deference or very little defer-
ence. See, e.g., Manny v. Cent. States, Se. & Sw. Areas Pension
& Health & Welfare Funds, 388 F.3d 241, 242-43 (7th Cir.
2004); Mers v. Marriott Int’l Group Accidental Death & Dis-
memberment Plan, 144 F.3d 1014, 1020 & n.1 (7th Cir. 1998).
This is an uphill battle for Dougherty because the existence
of potential bias, a potential conflict of interest, is not
enough to dislodge our ordinary and most-deferential level
of arbitrary-and-capricious review. See Ruiz v. Cont’l Cas.
Co., 400 F.3d 986, 991 n.1 (7th Cir. 2005); Mers, 144 F.3d
at 1020; see also Rud v. Liberty Life Assur. Co. of Boston, ___
1
Separately, the district court granted summary judgment on
two additional matters: the plan’s March 2002 termination of
sickness benefits as of October 2001 and Dougherty’s alleged loss
of future pension benefits caused by the plan’s adverse disability
determinations. Dougherty has not pursued these claims on
appeal.
10 No. 05-2066
F.3d ___, No. 04-3655, 2006 WL 399149, at *5-6 (7th Cir. Feb.
22, 2006) (claimant must “demonstrate the existence of a real
and not merely notional conflict of interest”). We presume
a plan is “acting neutrally unless a claimant shows by
providing specific evidence of actual bias that there is a
significant conflict.” Kobs v. United Wis. Ins. Co., 400 F.3d
1036, 1039 (7th Cir. 2005) (quoting Mers, 144 F.3d at 1020).
In an attempt to show actual bias, Dougherty relies on
three documents from the voluminous record. First, she
cites a 1993 internal memorandum reviewing her benefits
file. This memo, Dougherty contends, shows that the plan
was wrongfully trying to “get rid” of her, and she therefore
reasons that the plan was biased against her. The memo
raises the possibility of offering Dougherty a settlement to
amicably close out her accident claim, which, at that
juncture, had been running for five years. The memo
contains a sinister one-liner: “Our Company would gain
from her no longer being on the active payroll.” However,
in context, there is nothing sinister about this memo. The
memo recommended offering Dougherty a lump sum so as
to conserve assets over the long run for the benefit of all the
plan’s participants and beneficiaries. See Ameritech Benefit
Plan Comm. v. Commc’n Workers of Am., 220 F.3d 814, 825
(7th Cir. 2000); Fagan v. Nat’l Stabilization Agreement of the
Sheet Metal Indus. Trust Fund, 60 F.3d 175, 180 (4th Cir.
1995). Lump sum settlements are authorized under the
terms of the plan, and the recommendation was not an
attempt to shortchange Dougherty. The memo explicitly
expressed the belief that Dougherty would be receptive to
the offer—possibly preferring a sizeable amount of cash up
front rather than receiving small installments over many
years. The recommendation, moreover, was not a decree
forced upon Dougherty. Rather, the recommendation was
to make an offer to see if she found the idea desirable. She
No. 05-2066 11
had the option to reject the offer. (It is unclear if the plan
made this offer, but, if it did, it was unquestionably refused
as the plan continued paying Dougherty benefits until
2000.) Furthermore, this memo was not drafted in a context
of the plan having insufficient assets, which, if the case,
might alter the analysis. Cf. Hess v. Reg-Ellen Mach. Tool
Corp., 423 F.3d 653, 659-60 (7th Cir. 2005) (actions taken in
the face of insufficient assets gave “more teeth” to plaintiff’s
claim of bias). In sum, the plan’s conduct here constitutes
fair and responsible management of resources on behalf of
all participants and beneficiaries. The memo does not show
that the plan held some bias against Dougherty. This
conclusion holds especially true here when some seven or
more years lapsed between the time of this 1993 memo and
the 2000 to 2002 disability decisions at issue in this appeal.
Second, Dougherty complains about a 1997 internal email
concerning a mistaken stop in payments of her accident
benefits. One agent of the plan sent an email to another
agent to correct this erroneous stoppage and to pay her for
all missed payments. Siding with Dougherty, the email
referred to the stoppage as a “definite ‘no-no’ ” and cor-
rectly stated that benefits continue for as long as the em-
ployee remains disabled. The email then suggested putting
together a settlement offer. Dougherty takes issue with the
mere existence of settlement talk in this context, arguing
that any thought of settlement shows that the plan was
biased against her. However, we again see no evidence of
bias here. The email was intended for Dougherty’s benefit.
It promptly corrected a mistake in favor of Dougherty. As
for the settlement reference, it follows the discussion in the
preceding paragraph.
Third, Dougherty contends that internal staff notes
concerning the decision to initiate an investigation of her
disability status in 1999 exhibits bias. This is Dougherty’s
12 No. 05-2066
weakest point. Since eligibility for accident benefits lasts
only as long as the disability lasts, it was more than appro-
priate for the plan to contemplate checking up on a claim-
ant’s disability and then doing so. The plan had a duty to all
of its beneficiaries and participants to investigate ongoing
claims, such as Dougherty’s, making sure to avoid paying
benefits to claimants who were not entitled to receive them.
See Ameritech, 220 F.3d at 825; Barnhart v. UNUM Life Ins. Co.
of Am., 179 F.3d 583, 589 (8th Cir. 1999) (“A company failing
to conduct proper inquiries into claims for benefits breaches
its duty to all claimants as a fiduciary of the benefit funds
when it grants claims to unqualified claimants.”); cf. Gaither
v. Aetna Life Ins. Co., 394 F.3d 792, 807 (10th Cir. 2004)
(“fiduciary has a duty to protect the plan’s assets against
spurious claims”). Thus, contrary to Dougherty’s contention
in her brief, these notes do not evince some conspiracy to
“get her off the payroll at all costs by any way possible.”
They simply reveal an entirely permissible internal decision-
making process that led the plan to verify her continued
eligibility. See Robyns v. Reliance Standard Life Ins. Co., 130
F.3d 1231, 1237 (7th Cir. 1997). What is more, there is no
indication that the agents behind the eligibility investigation
had a personal stake in the outcome of Dougherty’s claim.
See Leipzig v. AIG Life Ins. Co., 362 F.3d 406, 409 (7th Cir.
2004). On the contrary, these notes demonstrate that the
agents were not looking out for themselves but prudently
attending to the best interests of all participants and benefi-
ciaries. See Ameritech, 220 F.3d at 825. At bottom, these notes
and the decision to investigate Dougherty’s disability status
do not establish actual bias. Accordingly, Dougherty has not
presented a sufficient reason to supplant the customary
arbitrary-and-capricious standard with a less deferential
level of review. See Kobs, 400 F.3d at 1039; Ruiz, 400 F.3d at991 n.1.
No. 05-2066 13
Under this standard then, we will uphold a benefit
decision so long as that decision has “rational support in the
record.” Leipzig, 362 F.3d at 409. “ ‘[Q]uestions of judgment
are left to the plan administrator,’ and ‘it is not our function
to decide whether we would reach the same conclusion’ as
the administrator.” Sisto, 429 F.3d at 701 (quoting Trombetta
v. Cragin Fed. Bank for Sav. Employee Stock Ownership Plan,
102 F.3d 1435, 1438 (7th Cir. 1996); Tegtmeier v. Midw.
Operating Eng’rs Pension Trust Fund, 390 F.3d 1040, 1045 (7th
Cir. 2004)). Put simply, a decision will not be overturned
unless it is “downright unreasonable.” Sisto, 429 F.3d at 700(quoting Tegtmeier, 390 F.3d at 1045).
B.
With that, we turn to the plan’s termination of accident
benefits on Dougherty’s 1988 claim. The plan’s January 2000
decision to terminate benefits is supported by at least three
items in the record. One, the reports from Dougherty’s
neighbors that she was very active and showed no signs of
obvious injury. Two, the undisputed portion of the investi-
gator’s videotape showing Dougherty engaging in normal,
everyday activities, i.e., driving her vehicle and hauling
shopping bags. Three, the opinion of Dr. Moskowitz, who,
beyond reviewing the file and the surveillance tape, exam-
ined Dougherty in person and concluded that she was “not
disabled from any type of employment.” Additionally, these
three items plus a fourth item, Dr. Trotter’s later opinion
that Dougherty was not disabled, support the plan’s May
2000 denial of her administrative appeal. The fact that Drs.
Moskowitz and Trotter’s views conflicted with those of
Dougherty’s doctor, Dr. Kaplan, does not change the result
under the arbitrary-and-capricious standard. See Black &
Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2003);
14 No. 05-2066
Leipzig, 362 F.3d at 409 (“Most of the time, physicians accept
at face value what patients tell them about their symptoms;
but [plan administrators] must consider the possibility that
applicants are exaggerating in an effort to win benefits (or
are sincere hypochondriacs not at serious medical risk).”).
Thus, there is more than sufficient rational support to
uphold the plan’s conclusion that Dougherty was no longer
disabled and its corresponding decision to terminate
benefits. See Kobs, 400 F.3d at 1040; Leipzig, 362 F.3d at 409.
In an attempt to show bad faith and bypass this rational
support, see Trombetta, 102 F.3d at 1438, Dougherty com-
plains of the plan’s failure to provide her with the investiga-
tor’s videotape during the administrative proceedings. The
problem here is that, while she was aware of the tape during
the administrative proceedings, she never submitted a
request to the plan for the tape. Rather, she asked her union
representative to retrieve the tape for her, and the union
representatives who requested the tape from the plan did so
without proper authorization. Putting aside the defective
request, Dougherty suggests that common sense dictates
that the plan should have simply released the tape to her
and/or her union representative. Not so. Common sense
counsels that a tape bearing information of a private and
confidential nature should not be released without proper
authorization. Had the plan simply released the tape under
these circumstances it would have run afoul of its duty to
“not to disclose private information without proper authori-
zation.” Anderson v. Flexel, Inc., 47 F.3d 243, 249 (7th Cir.
1995) (internal quotation omitted). There were proper
channels to obtain and then contest the tape, Dougherty did
not avail herself of those channels. Her argument here does
not merit reversal of the plan’s decision.
Dougherty also calls attention her worker’s compensation
claim, specifically whether that claim was settled in 1993.
No. 05-2066 15
The district court mentioned that it was. Dougherty and the
record indicate that it was not. (It was not closed until 2002.)
Dougherty contends that this error merits reversal. How-
ever, whether the worker’s compensation claim was settled
has no bearing on the outcome of the case. It is a back-
ground matter, not a material fact. See Fed. R. Civ. P. 56(c).
The material facts here concern whether the plan had
rational support in the record to terminate her accident
benefits. The pendency of the worker’s compensation claim
does not alter or impugn the evidence discussed two
paragraphs above justifying the termination of benefits.
Furthermore, even if, as Dougherty maintains, this misun-
derstanding somehow infected the district court’s summary
judgment decision, it is of no consequence. We review the
district court’s summary judgment decision de novo, and
we can affirm a district court’s judgment even if that correct
judgment was reached by an erroneous means. See Common-
wealth Ins. Co. v. Titan Tire Corp., 398 F.3d 879, 887 (7th Cir.
2004). Bottom line, reviewing this case de novo (i.e., without
the benefit of or in deference to the district court’s opinion),
we find rational support in the record for the plan’s decision
to terminate accident disability benefits. Therefore, under
the arbitrary-and-capricious standard, we uphold the plan’s
decision.
C.
Dougherty also challenges the plan’s decision to classify
the three claims initiated in 2000 and 2001 as sickness claims
rather than accident claims. On this front, the district court
concluded that Dougherty failed to exhaust her administra-
tive remedies and further found that the two exceptions to
the exhaustion requirement—lack of meaningful access to
review and futility—did not apply. See Stark v. PPM Am.,
Inc., 354 F.3d 666, 671 (7th Cir. 2004). We will not disturb a
16 No. 05-2066
district court’s exhaustion decision unless “there has been
a clear abuse of discretion.” Id. (internal quotation omitted).
“Exhaustion of plan remedies is favored because the plan’s
own review process may resolve a certain number of
disputes; the facts and the administrator’s interpretation of
the plan may be clarified for the purposes of subsequent
judicial review; and an exhaustion requirement encourages
private resolution of internal employment disputes.” Id.(internal quotation omitted). Failure to exhaust such
remedies precludes judicial consideration of the underlying
issue. See id. at 672.
As detailed in the background section above, during the
administrative process of the July 2000, August 2000, and
March 2001 disability claims, (1) Dougherty did not ex-
pressly present an on-the-job injury or link these claims to
her 1988 accident claim; (2) the plan immediately notified
her that each claim was being treated as a sickness claim;
and (3) Dougherty did not appeal, dispute, or otherwise
challenge the plan’s sickness classification. The only time
Dougherty even addressed the sickness versus accident
classification was when she placed a single phone call to a
claims representative asking why her claim had been
classified as a sickness claim. Given her call, Dougherty
clearly appreciated a difference between sickness and
accident benefits, yet she did not tell the plan that she
wanted her claim classified in a certain way or make a
discernable effort to show that she disagreed with the
classification. Further, when Dougherty’s counsel sent the
plan an appeal letter in June 2002, that letter solely referred
to accident benefits. As such, that letter could not even be
considered an appeal of the sickness classification in the
2000 and 2001 claims. The first articulated dispute to the
classification came with the filing of Dougherty’s lawsuit in
2003. Consequently, the plan did not have an opportunity
No. 05-2066 17
to review Dougherty’s present classification dispute at the
administrative level. Under these circumstances, we agree
with the district court’s exhaustion ruling.
Dougherty, nonetheless, does not attack this reasoning
directly. Instead, she contends that the plan should be
estopped from relying on the failure-to-exhaust defense. She
argues that the voicemail (which tied accident benefits to
worker’s compensation instead of the plan’s requirement of
a disabling injury in the course of employment) caused her
not to appeal the adverse classification. As the plan points
out, however, Dougherty failed to make this argument to
the district court. When confronted with the consequences
of this failure, Dougherty suggests in her appellate reply
brief that she did raise it and cites a single paragraph in an
affidavit filed with her summary judgment response.
Viewed generously, this affidavit hints at the foundation of
a possible estoppel argument. Burying a potential argument
in an affidavit supporting a response brief, and then only
hinting at it, is wholly inadequate. Cf. United States v.
Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) (waiver when
argument buried in a brief). To preserve this issue for
appeal, Dougherty should have argued it in her response
brief or otherwise explicitly called it to the district court’s
attention. Dougherty has therefore waived her estoppel
argument. See Trs. of the AFTRA Health Fund v. Biondi, 303
F.3d 765, 776 n.9 (7th Cir. 2002). We add, furthermore, that
such oral advice about a plan does not count for much
when, as here, see supra Part I.A, the written text of the plan
clearly sets out the difference between sickness and accident
benefits. See Librizzi v. Children’s Mem’l Med. Ctr., 134 F.3d
1302, 1305 (7th Cir. 1998) (“Revealing the truth in writing
usually precludes a claim based on a supposed oral error.”).
Estoppel, in circumstances such as these, “only applies to
written, and not to oral, misrepresentations.” Gallegos v. Mt.
18 No. 05-2066
Sinai Med. Ctr., 210 F.3d 803, 809-10 (7th Cir. 2000); see also
Kamler v. H/N Telcomm. Servs., Inc., 305 F.3d 672, 679-81 (7th
Cir. 2002). Accordingly, Dougherty’s estoppel argument
does not alter the exhaustion analysis.
Finally, Dougherty complains that she should not have
been required to exhaust administrative remedies because
the plan did not give her a written denial notice of accident
benefits for her 2000 and 2001 claims and further because
the plan did not make a reviewable factual determination to
support these denials. It is true that claimants are entitled to
adequate, written notice for denials of their claims. See
Urbania v. Cent. States, Se. & Sw. Areas Pension Fund, 421 F.3d
580, 586 (7th Cir. 2005). Here, however, Dougherty did not
expressly present an accident claim to the plan. Rather, the
plan confronted claims that were not linked to any injury
suffered during the course of employment. Not surprisingly
then, given the plan’s text, the plan classified the claims as
sickness claims. Further, the plan promptly notified
Dougherty of the classification and ultimately granted these
claims. Therefore, with respect to Dougherty’s now-desired,
but then-unarticulated accident claims, the plan’s denial-
notice obligations were not triggered. We accordingly find
no grounds to reverse the district court’s exhaustion
decision.
III.
Given the discretionary terms of the plan, the correct
standard to review the plan’s benefit decisions is the
arbitrary-and-capricious standard. There is, moreover, no
evidence of bias that would necessitate a less deferential
review. Furthermore, the plan’s termination of accident
benefits on Dougherty’s 1988 claim has rational support in
the record; thus, under the arbitrary-and-capricious stan-
dard, we will not disturb that decision. Finally, Dougherty’s
No. 05-2066 19
failure to exhaust administrative remedies bars consider-
ation of her contention that the plan misclassified her 2000
and 2001 claims as sickness claims. The judgment of the
district court is AFFIRMED.
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—3-16-06