                  United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT

                                 ___________

                                 No. 96-2282
                                 ___________

Sharon Kinkead,                      *
                                     *
     Plaintiff - Appellant,          *
                                     *
     v.                              *
                                     *   Appeal from the United States
Southwestern Bell Corporation        *   District Court for the
Sickness & Accident Disability       *   Eastern District of Missouri.
Benefit Plan; Southwestern           *
Bell Corp. Long Term Disability *
Plan for Salaried Employees;          *
Southwestern Bell Corporation,        *
                                      *
     Defendants - Appellees.          *
                                 ___________

                   Submitted:    December 9, 1996

                        Filed:   April 9, 1997
                                 ___________

Before FAGG and LOKEN, Circuit Judges, and KYLE,* District Judge.
                               ___________

LOKEN, Circuit Judge.


     Sharon Kinkead appeals the district court's1 dismissal of her ERISA
benefit claims against Southwestern Bell Corporation (Bell) and two of its
employee benefits plans.    Agreeing that Kinkead's suit is barred by her
failure to exhaust the plans' contractual appeal procedures, we affirm.




     *The HONORABLE RICHARD H. KYLE, United States District Judge
     for the District of Minnesota, sitting by designation.
     1
      The HONORABLE CAROL E. JACKSON, United States District Judge
for the Eastern District of Missouri.
     Following      a    traffic   accident,    Kinkead    applied   for   short-term
disability benefits from the Bell plans in September 1989.            On October 12,
Bell terminated her employment.            On December 18, the plans' Benefit
Committee notified Kinkead of its decision that she was not entitled to
further benefits.       Kinkead did not ask the Committee for further review of
this denial, as permitted by the plans and invited by the claim denial
notice.    Instead, she sued Bell for retaliatory discharge in violation of
§ 510 of ERISA, 29 U.S.C. § 1140.           After this claim was dismissed, see
Kinkead v. Southwestern Bell Tel. Co., 49 F.3d 454 (8th Cir. 1995), she
commenced this action to recover disability benefits allegedly due her
under the plans.        See 29 U.S.C. § 1132(a)(1)(B).


     The district court granted defendants' motion to dismiss on the
ground that Kinkead failed to exhaust her contractual plan remedies.
Kinkead    appeals,     arguing    that   defendants'     claim   denial   notice   was
inadequate and, in any event, the plans do not require exhaustion of the
plan review procedures.        Exhaustion is a threshold legal issue we review
de novo.    See, e.g., Conley v. Pitney Bowes Corp., 34 F.3d 714 (8th Cir.
1994).


     ERISA expressly provides that every employee benefit plan must
"provide adequate notice in writing" of each claim denial, and "afford a
reasonable opportunity . . . for a full and fair review" of each denial.
29 U.S.C. § 1133.         The Department of Labor's implementing regulations
contain similar requirements.        See 29 C.F.R. § 2560.503-1(f) and (g).         Not
surprisingly, therefore, the Bell plans at issue contain provisions
requiring that participants be notified of claim denials and establishing
an internal procedure for further review.




                                          -2-
                                           2
      Federal courts applying ERISA have uniformly concluded that benefit
claimants    must     exhaust   the    review    procedures    mandated       by    29   U.S.C.
§ 1133(2) before bringing claims for wrongful denial to court.                      See, e.g.,
Diaz v. United Agric. Employee Welfare Benefit Plan & Trust, 50 F.3d 1478
(9th Cir. 1995); Communications Workers of America v. American Tel. & Tel.
Co., 40 F.3d 426 (D.C. Cir. 1994).            Such exhaustion serves many important
ERISA purposes.       It "minimize[s] the number of frivolous ERISA lawsuits;
promote[s] the consistent treatment of benefit claims; provide[s] a
nonadversarial dispute resolution process; and decrease[s] the cost and
time of claims settlement."             Makar v. Health Care Corp. of the Mid-
Atlantic, 872 F.2d 80, 83 (4th Cir. 1989).              Moreover, when a benefit plan
gives the decision-maker discretionary authority to determine claims, claim
denials are reviewed for abuse of discretion on the record considered by
the plan decision-maker.        See Ravenscraft v. Hy-Vee Employee Benefit Plan
&   Trust, 85 F.3d 398, 402 (8th Cir. 1996).2                    In these situations,
exhaustion "enhance[s] the ability of trustees to interpret plan provisions
[and] help[s] assemble a factual record which will assist a court in
reviewing" claim denials.           Conley, 34 F.3d at 718.


      With    these    basic    principles      established,    we     turn    to    Kinkead's
specific contentions on appeal.


      1.    The   denial    notice.      Kinkead    first    argues     that    the      Benefit
Committee's       claim    denial    letter    failed   to    comply    with       the   notice
requirements set forth in the plans, 29 U.S.C. § 1133(1), and 29 C.F.R.
§ 2560.503-1(f).          Therefore, defendants may not enforce the contractual
exhaustion requirement.             See Conley, 34 F.3d at 718 (exhaustion not
required when claim denial notice did not advise of




      2
      The Bell plans grant such discretionary authority to the
Benefit Committee.

                                              -3-
                                               3
appeal procedure and claimant had no actual knowledge of that procedure).



     The Committee's letter notified Kinkead that it had examined her
file, "including a medical report from your doctor and the opinion of our
Medical Advisor," and was denying her claim "because medical evidence does
not substantiate you were disabled."   The letter advised that the Committee
"relied upon the provisions of Article 4, Paragraph 4.1 of the Plan" and
went on to quote that provision.    Regarding review procedures, the letter
stated:


     You have the right to request that your claim denial be
     reviewed and to review pertinent documents relating to the
     denial. If you wish your denial of claim for benefits to be
     reviewed, you or your authorized agent may submit a written
     request for review to [the Benefit Committee's Secretary]. A
     request for review must be submitted within sixty (60) days of
     your receipt of this letter.       It is important that any
     additional information you would like to be considered at the
     time of review accompany your written request.


     The Committee's letter adequately described the claim review process.
It advised Kinkead she had a right to further review and to examine the
Committee's file.   It told her where and when to submit a request for
review and whether she could submit additional information.      Thus, this
case is distinguishable from Conley, where the claim denial notice made no
mention of an appeal process.     Kinkead argues that she was entitled to a
clear statement that she must exhaust this review procedure.    But neither
the statute, the Department's regulations, nor any prior case imposes such
a notice requirement.   Given the practical reasons favoring exhaustion,
claimants with notice of an available review procedure should know that
they must take advantage of that procedure if they wish to bring wrongful
benefit denial claims to court.




                                     -4-
                                      4
      Kinkead further argues that the Committee's denial letter failed to
provide a sufficiently detailed analysis of the reasons for denying her
claim, as we required in Brumm v. Bert Bell NFL Retirement Plan, 995 F.2d
1433, 1436-37 (8th Cir. 1993); Cox v. Mid-America Dairymen, Inc., 965 F.2d
569, 573-74 (8th Cir. 1992); and Richardson v. Central States, S.E. & S.W.
Areas Pension Fund, 645 F.2d 660, 665 (8th Cir. 1981).   But in these cases,
we were reviewing, on the merits, final claim denial letters that did not
provide an adequate explanation of the plan administrator's discretionary
decision.    See Collins v. Central States, S.E. & S.W. Areas Health &
Welfare Fund, 18 F.3d 556, 561 (8th Cir. 1994) (final denial notice
adequate if it "permit[s claimant] to challenge the denial in federal court
and for us to review it").     Here, on the other hand, we deal with an
initial claim denial notice.   At this early stage of the claim process,
administrative efficiency is a virtue, so long as disappointed claimants
are   advised of their right to pursue the plan's review procedures.
Therefore, the initial claim denial need not be extensive, provided that
it explains the basis for the adverse initial decision sufficiently to
permit the claimant to prepare an informed request for further review.


      In this case, the Committee's letter notified Kinkead that her claim
was denied "because medical evidence does not substantiate you were
disabled."   The letter told her what medical reports the Committee had
considered and advised her that she could review these documents and submit
additional information with her request for further review.   The letter was
sufficient to trigger an appeal process that Kinkead was required to
exhaust.


      2. The Plans' Exhaustion Requirement.   Kinkead next argues that the
Bell plans create an optional review procedure, not a




                                   -5-
                                    5
procedure that claimants must exhaust.             The district court's opinion
expressly states that Kinkead did not raise this issue in opposing
defendants' motion to dismiss.      In her reply brief to this court, Kinkead
asserts that the district court overlooked her "response to defendants'
reply in support of motion to dismiss," a pleading she did not include in
the record on appeal.        We conclude that this issue is not properly
preserved.


     In addition, while we agree that the need to exhaust is a question
of contract interpretation, see Schneider Moving & Storage Co. v. Robbins,
466 U.S. 364 (1984), benefit plans are required by law to include a claim
review   procedure,   and   the   duty   to    exhaust   furthers    important   ERISA
purposes.    In these circumstances, any plan claim review procedure that
meets the requirements of 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1(f)
and (g) will trigger the judicially imposed duty to exhaust that remedy.3


     The judgment of the district court is affirmed.                Appellees' motion
for costs and attorney's fees is denied.


KYLE, District Judge, dissenting.


     I respectfully dissent from the majority’s conclusion that the plans
were not required to advise Kinkead that, after being notified that her
application for benefits had been denied, she




     3
      Kinkead relies on Conley for the proposition that benefit
plans must explicitly require exhaustion. But the contractual duty
to exhaust was conceded in Conley; we considered only whether that
duty should be imposed on a claimant who had no notice or knowledge
of the plan's claim review procedure.

                                         -6-
                                          6
must exhaust their appeal procedures before filing suit in federal court.4



       The   Court   writes   that   “neither       the    statute,   the   Department’s
regulations, nor any prior case imposes such a notice requirement.”                 ERISA
itself, however, does not contain any exhaustion requirement.                The statute
is silent on this issue; exhaustion is a judicially created requirement.
See Conley v. Pitney Bowes, 34 F.3d 714, 716 (8th Cir. 1994).


       The opinion states that: “[G]iven the practical reasons favoring
exhaustion, claimants with notice of an available review procedure should
know that they must take advantage of that procedure if they wish to bring
wrongful benefit denial claims to court.”            (Emphasis added).       While there
are practical reasons favoring exhaustion, it does not, in my view, follow
that    claimants    should   know   that    they   must    take   advantage   of   those
procedures if they wish to file a lawsuit to enforce their benefits.                   We
are    not necessarily dealing with sophisticated employees or lawyers
specializing in ERISA claims.          Requiring the plan to clearly advise a
claimant of the consequences of not exhausting the administrative review
process would not place a substantial burden on the plan administrators,
but it would explain the adverse consequences to an uninformed claimant.


       In summary, I believe that a plan should be required to clearly
inform a claimant that its internal review procedures must be exhausted
before, and as a condition of, seeking judicial relief.                The plans under
review here failed to so inform Kinkead.




       4
      I concur with the majority’s conclusions that the Committee’s
claim denial letter adequately described the claim review process
and provided a sufficiently detailed analysis of the reasons for
denying Kinkead’s claim.

                                            -7-
                                             7
Accordingly, I would reverse the Order of the District Court and allow
Kinkead to proceed with her ERISA benefit claims against Bell and its two
plans.


     A true copy.


           Attest:


                CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                  -8-
                                   8
