In the
United States Court of Appeals
For the Seventh Circuit

No. 99-2022

Rita Moreno Gallegos,

Plaintiff-Appellant,

v.

Mt. Sinai Medical Center and UNUM
Life Insurance Company of America,

Defendants-Appellees.



Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 97 C 6207--Joan B. Gottschall, Judge.


Argued January 6, 2000--Decided April 27, 2000




       Before Coffey, Flaum and Kanne, Circuit Judges.

      Flaum, Circuit Judge. Rita Moreno Gallegos was
an employee of Mt. Sinai Medical Center ("Mt.
Sinai") who applied for employee welfare benefits
with Mt. Sinai’s insurance carrier UNUM Life
Insurance Company of America ("UNUM"). Her
request for benefits was denied, and Gallegos
filed suit, claiming that this denial violates
the Employee Retirement Insurance Security Act
("ERISA"), 29 U.S.C. sec. 1001, et seq. The
district court granted summary judgment to the
defendants. For the reasons stated below, we
affirm.

I.   BACKGROUND

      Gallegos was employed by Mt. Sinai as a
marketing director from 1990 until 1994. Her job
responsibilities included coordinating health
fairs and conducting other marketing activities
in the community. As part of her job she had to
travel frequently throughout the surrounding
area, carry and set-up display equipment, and
stand for significant periods of time.

      Gallegos was insured under Mt. Sinai’s Employee
Long Term Disability Plan (the "Plan").
Gallegos’s policy (the "Policy") was administered
by Mt. Sinai and underwritten by UNUM. The Policy
provides long-term disability benefits for
employees who meet the Plan’s requirements. The
Plan does not indicate that there are any time
limits for appealing denials of claims. However,
the summary plan description ("Summary Plan")
contains the following statements:

What are your rights under ERISA?

****

5. If your claim for a benefit is denied in whole
or in part you must receive a written explanation
of the reason for the denial. You have the right
to have the Plan review and reconsider your
claim.

6. . . . . If you have a claim for benefits which
is denied or ignored, in whole or in part, you
may file suit in a state or federal court. . . .
The court will decide who should pay court costs
and legal fees. If you are successful the court
may order the person you have sued to pay these
costs and fees. If you lose, the court may order
you to pay these costs and fees, for example, if
it finds your claim is frivolous./1

What if your claim is denied?

In the event that your claim is denied, either in
full or in part, the insurance company will
notify you in writing within 90 days after your
claim form was filed. . . . The insurance
company’s notice of denial shall include:

***

3. The steps to be taken if you or your
beneficiary wish to have the decision reviewed.

What do you do to appeal?

You, the claimant, or your authorized
representative may appeal a denied claim within
60 days after you receive the insurance company’s
notice of denial. . . .

      On December 16, 1994, Gallegos stopped working
because she suffered from multiple severe medical
conditions including congestive heart failure,
chronic obstructive pulmonary disease, chronic
active hepatitis C, and residual systemic
complications resulting from the chemotherapy
treatment she had received for breast cancer two
years earlier. On July 6, 1995, after it became
apparent that Gallegos would not be able to
return to work, Gallegos made a timely
application for disability benefits under the
Plan. This application was accompanied by a
statement from Gallegos’s physician Dr. Benson
stating that Gallegos’s illnesses prevented her
from performing any non-sedentary occupation. The
application also included a job description
provided by Mt. Sinai indicating that Gallegos’s
current position as director of marketing
frequently required her to travel, stand, walk
and lift or carry equipment weighing 25-50
pounds.

      UNUM initially approved Gallegos’s application
for disability benefits on August 15, 1995. UNUM
awarded Gallegos monthly benefits equivalent to
the amount specified in the Policy minus the
amount that Gallegos was receiving in Social
Security benefits. Gallegos’s Social Security
benefits were terminated in October 1995. On
November 7, 1995, Gallegos reapplied for Social
Security benefits. On November 8, 1995, Gallegos
informed UNUM that her Social Security benefits
had been terminated and requested that her UNUM
insurance disbursement be increased to the full
amount she was entitled to receive because the
amount she had previously received from Social
Security should no longer be deducted. On January
25, 1996, the Social Security Administration
("SSA") denied Gallegos’s reapplication for
benefits, and Gallegos appealed this decision. On
March 7, 1996, UNUM telephoned Gallegos to assess
the status of her Social Security appeal, and
Gallegos informed UNUM that there had been no
ruling as of that date.

      On March 14, 1996, UNUM requested an update
from Dr. Benson on Gallegos’s medical status. On
May 13, 1996, UNUM received a letter and medical
records from Dr. Benson that stated that in order
for Gallegos to return to work she would need
"[n]ew lungs, a new heart and a new liver." Dr.
Benson again stated that Gallegos was able to
perform only sedentary work. The medical records
that accompanied the letter indicated that
Gallegos’s condition had worsened since she had
stopped working in 1994.

      On June 11, 1996 UNUM wrote to Gallegos (the
"June 11 Letter"), informing her that it was
terminating her disability benefits because it
had determined that her occupation of "Marketing
Director" was a sedentary occupation to which she
was eligible to return according to the
information provided by Dr. Benson. The June 11
Letter included the following statements:

      If you have any new, additional information to
support your request for disability benefits,
please send it to [UNUM’s] attention at the above
address.

      If you do not agree with our decision, you may
have it reviewed. Should you desire a review, you
must send a written request, within 60 days of
your receipt of this notice. . . .

      If UNUM does not receive the written request
within 60 days of your receipt of this notice,
our claims decision will be final.

      On April 10, 1997, an SSA administrative law
judge ("ALJ") issued a decision determining that
Gallegos was disabled as of December 16, 1994,
and reinstating her Social Security benefits. On
April 18, 1997, Gallegos’s attorney wrote to UNUM
providing notice of the ALJ’s decision
reinstating Gallegos’s Social Security benefits.
In this April 18 letter, her attorney noted that
the 60-day review period had passed but indicated
that the additional information was only recently
available and could not have been provided to
UNUM before the expiration of the deadline.

      On July 9, 1997, Gallegos’s attorney again
wrote to UNUM requesting that UNUM reopen
Gallegos’s claim based on the ALJ’s determination
that Gallegos was disabled and the attorney’s
contention that Gallegos’s occupation was more
appropriately categorized as "public health
educator," a non-sedentary position, rather than
"marketing director," a sedentary one. On July
31, 1997, UNUM responded in writing that it would
not reopen Gallegos’s claim because she had made
her request for review more than 60 days after
the denial of benefits.

      Gallegos filed suit in federal district court
alleging that UNUM wrongfully denied her benefits
in violation of 29 U.S.C. sec. 1132(a)(1)(B). The
district court entered summary judgment in favor
of UNUM, finding that Gallegos had failed to
exhaust her administrative remedies by not filing
for a review of her claim within the 60-day
deadline outlined in the Summary Plan. Gallegos
now appeals.

II.   DISCUSSION

      The text of 29 U.S.C. sec. 1132, providing for
civil actions to redress violations of ERISA,
does not address whether a claimant must exhaust
her administrative remedies before filing suit in
federal court. See Powell v. AT&T Comm., Inc.,
938 F.2d 823, 825 (7th Cir. 1991); Kross v.
Western Elec. Co., Inc., 701 F.2d 1238, 1244 (7th
Cir. 1983). However, it has long been recognized
in this Circuit that the intent of Congress is
best effectuated by granting district courts
discretion to require administrative exhaustion.
See Powell, 938 F.2d at 825; Kross, 701 F.2d at
1244. This policy of judicial administration
furthers the goals of minimizing the number of
frivolous lawsuits, promoting non-adversarial
dispute resolution, and decreasing the cost and
time necessary for claim settlement. See
Lindemann v. Mobil Oil Corp., 79 F.3d 647, 649
(7th Cir. 1996). Furthermore, requiring
administrative exhaustion enables the compilation
of a complete record in preparation for judicial
review. See id.; Powell, 938 F.2d at 826.
Therefore, the district court in this case had
the discretion to require that Gallegos exhaust
the administrative remedies available to her
before being permitted to bring suit in federal
court under 29 U.S.C. sec. 1132. We will overturn
the district court’s decision in this matter only
for a clear abuse of discretion. See Ames v.
American Nat’l Can Co., 170 F.3d 751, 756 (7th
Cir. 1999); Powell, 938 F.2d at 825; Kross, 701
F.2d at 1244. An abuse of discretion is "a
serious error of judgment, such as reliance on a
forbidden factor or failure to consider an
essential factor." Powell, 938 F.2d at 825.

A.   Excuse of Failure to Exhaust

      We have held that a plaintiff is excused from
failing to pursue administrative remedies where
1) administrative remedies are not available or
2) pursuing those remedies would be futile. See
Robyns v. Reliance Standard Life Ins. Co., 130
F.3d 1231, 1236 (7th Cir. 1997); Wilczynski v.
Lumbermens Mutual Casualty Co., 93 F.3d 397, 402
(7th Cir. 1996); Smith v. Blue Cross & Blue
Shield United of Wisc., 959 F.2d 655, 658-59 (7th
Cir. 1992)./2 Gallegos does not assert that
attempts to pursue administrative review would
have been futile. However, Gallegos claims that
administrative review procedures were not
adequately provided to her. Gallegos argues that
the denial of her application as time barred is
a denial of access to review that should excuse
her from having to exhaust her administrative
remedies.

      ERISA regulations permit time limitations on
applications for review that are no less than 60
days. 29 C.F.R. sec. 2560.503-1(g)(3). Failure to
file a request for review within this limitations
period is one means by which a claimant may fail
to exhaust her administrative remedies. See
Smith, 959 F.2d at 658. UNUM provided a clear
statement of the limitations period in both the
Summary Plan and in the June 11 Letter. This
statement is sufficient to satisfy ERISA’s notice
requirement for review procedures. See Ames, 170
F.3d at 756. Thus, UNUM’s denial of Gallegos’s
request for review that was filed beyond the 60-
day time limit does not constitute a denial of
access to administrative review. See id.

B.   Estoppel
      Gallegos next argues that UNUM should be
estopped from asserting her failure to exhaust
administrative remedies as a defense to her suit
in federal court. Gallegos argues that statements
in the Summary Plan and June 11 Letter are
misleading in that a plain reading conveys to the
average participant that UNUM’s administrative
review procedure is wholly voluntary and does not
affect the ability of a participant to pursue
relief through the federal court system. Gallegos
contends that the two options for review of her
denied claim were presented as co-equal, not
interdependent. She argues that because UNUM
provided misleading information in the Summary
Plan and the June 11 Letter concerning the
effects of failing to file an administrative
appeal, UNUM should now be estopped from
asserting failure to exhaust administrative
remedies as a defense to her suit under ERISA.

      This Court has repeatedly held that estoppel
may be applied in certain ERISA actions. See
Coker v. Trans World Airlines, Inc., 165 F.3d
579, 585 (7th Cir. 1999) ("This court . . . has
recognized a form of estoppel as a matter of
federal common law in at least some ERISA
cases."); Thomason v. Aetna Life Ins. Co., 9 F.3d
645, 649-50 (7th Cir. 1993); Russo v. Health,
Welfare & Pension Fund, 984 F.2d 762, 767 (7th
Cir. 1993); Vershaw v. Northwestern Nat’l Life
Ins. Co., 979 F.2d 557, 559 (7th Cir. 1992);
Black v. TIC Investment Corp., 900 F.2d 112, 112
(7th Cir. 1990). When determining whether to
apply estoppel, we have considered ERISA’s
prohibition against oral modifications of written
plans and have determined that estoppel in the
ERISA context only applies to written, and not to
oral, misrepresentations. See Thomason, 9 F.3d at
649-50; Decatur Mem’l Hosp. v. Connecticut Gen.
Life Ins. Co., 990 F.2d 925, 927 (7th Cir. 1993);
Russo, 984 F.2d at 767. In addition, while we
have determined that estoppel may be applied to
single-employer unfunded plans, we have expressed
reservations about employing estoppel in other
contexts. See Black, 900 F.2d at 115 (stating
that concerns for the actuarial soundness of
multi-employer funded plans may militate against
applying estoppel in that context).

      The determination of when to apply estoppel "is
not so much a question of statutory
interpretation as a question of public policy."
Black, 900 F.2d at 114. The basic policy
consideration arguing in favor of applying
estoppel is the principle of contract law that "a
party who prevents the occurrence of a condition
precedent may not stand on that condition’s non-
occurrence to refuse to perform his part of the
contract." Swaback v. American Info. Techs.
Corp., 103 F.3d 535, 542 (7th Cir. 1996). We have
applied estoppel principles to ERISA claims where
the claimant was misled by written
representations of the insurer or plan
administrator into failing to take an action that
would have enabled the claimant to receive
benefits under the Plan. See id. at 542-43
(holding that a claimant could proceed with an
ERISA suit in federal court in spite of his
failure to timely elect a lump-sum pension
payment because his failure to elect was a result
of the insurer’s erroneous written statements
that the claimant was ineligible to receive this
type of payment); Meredith v. Allsteel, Inc., 11
F.3d 1354, 1358 (7th Cir. 1993) (finding that
employees who failed to timely elect early
retirement benefits were not barred from suit in
federal court where their failure to elect was
caused by the employer’s misrepresentation that
they were ineligible to receive those benefits),
overruled on other grounds by Ahng v. Allsteel,
Inc., 96 F.3d 1033 (7th Cir. 1996). We have also
applied estoppel in an ERISA suit where the
defendant insurer misrepresented the contractual
limitations period in the plan summary because we
determined that "a defendant whose own activities
made the plaintiff miss the deadline should [not]
be allowed to litigate over whether the plaintiff
could have sued earlier." Doe v. Blue Cross &
Blue Shield United of Wisc., 112 F.3d 869, 876
(7th Cir. 1997).

      The administrative exhaustion requirement is not
intended to place a meaningless procedural hurdle
in front of plaintiffs who desire to bring claims
for violations of their rights under ERISA in
federal court. Such a purpose would contravene
the express intent of the ERISA statute to
"protect . . . the interests of participants in
employee benefits plans . . . by . . . providing
. . . ready access to the Federal courts." 29
U.S.C. sec. 1001(b). Rather, the requirement is
aimed at encouraging claimants to pursue private
remedies and develop a proper administrative
record before entering federal court. Allowing an
insurance company to mislead a claimant into
procedurally defaulting her opportunity for
administrative review would contravene the
purpose behind requiring administrative
exhaustion. Furthermore, where a limitations
period is imposed by a contract rather than by
statute, the public policy considerations that
typically weigh in favor of strict enforcement of
the limitations period do not apply. See Doe, 112
F.3d at 877. This is especially true where one of
the parties to the agreement "does something that
makes it inequitable to hold the other party to
the shortened period" because then "there is no
social interest in preventing the period from
being enlarged." Id. Therefore, we hold that
estoppel may be applied to preclude the assertion
of failure to exhaust administrative remedies as
a defense where that failure results from the
claimant’s reliance on written misrepresentations
by the insurer or plan administrator./3

      In this case, Gallegos alleges that UNUM made
misleading representations in the Summary Plan
and June 11 Letter concerning the consequences of
her failure to pursue an administrative appeal.
We interpret an ERISA plan summary with its plain
meaning as understood by an average person. See
29 U.S.C. sec. 1022(a) ("The summary plan
description . . . shall be written in a manner
calculated to be understood by the average plan
participant."); Swaback, 103 F.3d at 540-41.
ERISA summary plan descriptions are required to
be "sufficiently accurate and comprehensive to
reasonably apprise such participants and
beneficiaries of their rights and obligations
under the plan." 29 U.S.C. sec. 1022(a). This
description must include "the remedies available
under the plan for the redress of claims which
are denied in whole or in part (including
procedures [for administrative review])." 29
U.S.C. sec. 1022(b); see 29 U.S.C. sec. 1021(a).

      In this case, UNUM attempted to comply with the
requirements of ERISA by informing Gallegos of
her options to pursue relief of the denial of her
claim through UNUM’s administrative review
procedure as well as through the federal court
system. Gallegos asserts, however, that what UNUM
did not tell her was that if she elected not to
pursue an administrative review of her claim,
UNUM would use this choice as a defense against
her in any subsequent federal suit. We agree with
Gallegos that the use of phrases such as "you may
have [your claim] reviewed," "should you desire
a review," "if you . . . wish to have the
decision reviewed," and "you . . . may appeal,"
given their plain meaning, indicate that a plan
participant has the opportunity to participate in
a voluntary, rather than mandatory, review
procedure. The only penalty mentioned for failure
to submit to administrative review is that the
claims decision will become "final." There is no
indication that this "finality" may have
consequences for the bringing of a suit in
federal court, an option which the claimant is
also informed she "may" pursue. A natural reading
of the plain language of the Summary Plan and
June 11 Letter is that both a court suit and an
administrative appeal are voluntary options for
review of a denial of a claim. The administrative
appeal has a limitations period of 60 days from
the denial of the claim, and the limitations
period for a court suit, while not defined in the
Summary Plan, is stated in the Plan as three
years from the time when proof of a claim is
required.
      In Black v. TIC Investment Corp., we held that
a plan administrator’s written representation to
the claimant that his benefits would be
forthcoming upon completion of bankruptcy
proceedings estopped the administrator from
contesting the claim because "[n]o fair reading
of the language would give a casual reader notice
that [the defendant] intended to contest any
claim." 900 F.2d at 116. We concluded that if the
claimant could demonstrate that he relied to his
detriment on the defendant’s implied
representation that it would not contest his
claim to benefits, the defendant was estopped
from contesting the claim. Id. Similarly, in this
case, a casual reader of the Summary Plan would
not be put on notice that an insured’s election
not to pursue administrative remedies would be
used by UNUM as a defense to a suit brought in
federal court.

      However, "[a]n estoppel arises when one party
has made a misleading representation to another
party and the other has reasonably relied to his
detriment on that representation." Black, 900
F.2d at 115; see Russo, 984 F.2d at 768;
Thomason, 9 F.3d at 648. Thus, Gallegos must also
demonstrate that she relied to her detriment on
UNUM’s representations. See Swaback, 103 F.3d at
543 (finding that a claimant must show that "but
for" the misrepresentations of the insurer he
would have met the deadline imposed by the
insurance contract). Gallegos must show that,
based upon the representations made by UNUM, she
thought that the two options for reviewing the
denial of her claim--a federal court suit or an
administrative appeal--were equally available to
her, and she must also show that she chose to
pursue the route of a court suit rather than
administrative review, unaware that this choice
was potentially fatal to her ability to receive
any review of the denial of her claim.

      We conclude that Gallegos has not demonstrated
that she relied on UNUM’s representations to her
detriment because she has not shown that but for
UNUM’s representations she would have filed an
administrative appeal within the 60-day
limitations period. Gallegos asserts that she was
unrepresented by counsel at the time her claim
was denied, and, therefore, that she was unable
to know that one of the potential consequences of
failing to pursue an administrative appeal was
that she may also be barred from bringing suit to
assert her rights under ERISA. However, she does
not allege that she allowed the time for her
appeal to lapse because she had chosen to pursue
relief from the denial of her claim through a
federal court suit rather than administrative
review. If anything, Gallegos’s contentions
support the conclusion that during the 60-day
limitations period she elected not to appeal her
claim at all, not that she elected to pursue an
avenue of relief with a longer statute of
limitations.

       We find that while the presentation of the
options for review of denied claims in UNUM’s
Summary Plan and June 11 Letter was misleading,
Gallegos did not rely on any of UNUM’s misleading
statements in deciding not to pursue an
administrative appeal within the 60-day deadline.
Therefore, UNUM is not estopped from asserting
failure to exhaust administrative remedies as a
defense to Gallegos’s suit in federal court, and
the district court did not abuse its discretion
by granting summary judgment to UNUM on this
basis.

III.   CONCLUSION

      For the reasons stated herein, we Affirm the
district court’s grant of summary judgment in
favor of the defendant.

/1 The Plan provides the following information:
Can legal proceedings be started at any time?
No, you or your authorized representative cannot
start any legal action:

1. until 60 days after proof of claim has been
given; nor

2. more than 3 years after the time proof of claim
is required.

/2 Gallegos raised before the district court several
other reasons why administrative exhaustion
should not be applied in her case. Gallegos does
not argue those additional contentions on appeal,
and we consider them waived.

/3 For purposes of this opinion, we assume that this
case involves a single-employer unfunded plan,
and we again decline to reach the question of
whether estoppel may be applied outside of this
context.
