Claims Defense, DOL Investigations, and Litigation Process

A1.Exhaustion

Part 23, ch. 3, § A1

Benefit claimants must generally exhaust the plan's administrative remedies before suing under (a)(1)(B) — a judge-made doctrine, near-universal across circuits — subject to futility and inadequate-remedy exceptions (both narrowly applied) and to deemed exhaustion: when the plan fails to establish or follow claims procedures consistent with the §503 claims-procedure regulation, the claimant is deemed to have exhausted and proceeds to court (§2560.503-1(l)(1)) — with de novo review the usual consequence. For disability claims the standard is strict adherence, subject to a narrow de minimis exception (no likely prejudice or harm, good cause or matters beyond the plan's control, an ongoing good-faith exchange, and no pattern or practice) (§2560.503-1(l)(2)); for other benefits, circuits differ on whether minor or harmless lapses are excused. Final reg: 29 C.F.R. §2560.503-1(l); Case law: circuit consensus doctrine. In the Eleventh Circuit, ERISA itself no longer requires exhaustion of statutory claims (fiduciary breach, §510, and other claims to enforce ERISA's own terms): the en banc court overruled its forty-year mandatory-exhaustion rule as unsupported by the text (the §503 claims-procedure provision addresses only claims for benefits) and applied the change retroactively. Case law: Circuit — Bolton v. Inland Fresh Seafood Corp. of Am., No. 24-10084 (11th Cir. Oct. 13, 2026) (en banc) (overruling Mason v. Continental Grp., Inc., 763 F.2d 1219 (11th Cir. 1985); vacating the panel decision, 155 F.4th 1272 (11th Cir. 2025)). Outside the Eleventh Circuit the rule is circuit law, not a national one: the Third Circuit does not require exhaustion of statutory claims, and the Seventh Circuit, which Bolton described as the only circuit that had aligned with Mason, leaves exhaustion to the district court's discretion. Case law: Circuit — Zipf v. AT&T, 799 F.2d 889 (3d Cir. 1986); Lindemann v. Mobil Oil Corp., 79 F.3d 647 (7th Cir. 1996); Salus v. GTE Directories Serv. Corp., 104 F.3d 131 (7th Cir. 1997). Plans may still make exhaustion an express term for benefit claims. Whether a plan term can require exhaustion of statutory claims is open: Bolton reserved that question because it read the plan before it as permissive (a participant "need not" file a claim), and DOL told the court it would urge close judicial scrutiny of such terms. Case law: Circuit — Bolton (reserving). A sponsor that wants a plan-imposed exhaustion step for statutory claims may, after assessing the governing circuit's law, draft it in clearly mandatory terms that the plan and SPD state consistently, but should treat it as untested and not count on it as a defense. Practitioner consensus.