UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


WHITE, JUANITA

v.

AETNA LIFE INSURANCE


99-7169a

D.C. Cir. 2000


*	*	*


Tatel, Circuit Judge: Suffering from severe arthritis and  unable to
perform her job as a nurse, appellant applied for  long-term
disability benefits pursuant to a plan funded and  administered by
appellee Aetna Life Insurance Company.  Through a computer-generated
form letter, Aetna informed  appellant that it had denied her claim
because of a "lack of  sufficient clinical information." The denial
notice also in- formed appellant that she had to submit any appeal to
Aetna  within sixty days, but appellant's attorney filed her appeal 
three months late. Citing this untimeliness, Aetna refused to 
consider the appeal and reaffirmed its denial of long-term  disability
benefits. Because we find that Aetna violated the  Employee Retirement
Income Security Act and its imple- menting regulations by failing to
inform appellant of an  important reason for denying her claim, its
denial notice did  not trigger the sixty-day appeal deadline. We
therefore  reverse the district court's grant of summary judgment for 
Aetna and remand with instructions to direct Aetna to consid- er the


I


The Employee Retirement Income Security Act of 1974, 29  U.S.C. ss
1001-1461, prescribes requirements for the notice  that insurers must
give claimants when denying their claims:


[E]very employee benefit plan shall--


(1) provide adequate notice in writing to any participant  or
beneficiary whose claims for benefits under the plan  has been denied,
setting forth the specific reasons for  such denial, written in a
manner calculated to be under- stood by the participant, and


(2) afford a reasonable opportunity to any participant  whose claim for
benefits has been denied for a full and  fair review by the
appropriate named fiduciary of the  decision denying the claim.


Id. s 1133. Department of Labor regulations elaborate on  the
information that insurance companies must provide:


[The insurance company] shall provide to every claimant  who is denied
a claim for benefits written notice setting  forth in a manner
calculated to be understood by the  claimant:


(1) The specific reason or reasons for the denial;


(2) Specific reference to pertinent plan provisions on  which the
denial is based;


(3) A description of any additional material or informa- tion necessary
for the claimant to perfect the claim and  an explanation of why such
material or information is  necessary; and


(4) Appropriate information as to the steps to be taken if  the
participant or beneficiary wishes to submit his or her  claim for


29 C.F.R. s 2560.503-1(f).


Along with our sister circuits, we have adopted the "sub- stantial
compliance" test to determine whether denial notices  comply with
section 1133 and the regulation. See Heller v.  Fortis Benefits Ins.
Co., 142 F.3d 487, 493 (D.C. Cir. 1998).  Technical noncompliance will
be excused as long as the notice  substantially complies with the
statute and regulation. See  id. In assessing whether a notice
substantially complies, we  consider not just the notice itself, but
all communications  between the insurance company and the claimant.
See id.  Courts make the substantial compliance determination on a 
case by case basis, assessing the information provided by the  insurer
in the context of the beneficiary's claim. See, e.g.,  Kinkead v.
Southwestern Bell Corp., 111 F.3d 67, 69 (8th Cir.  1997); Donato v.
Metropolitan Life Ins. Co., 19 F.3d 375, 382  (7th Cir. 1992). Heller


[A]lthough the initial letter from [the insurer] informing  [the
claimant] of the denial of her disability benefits did  not conform to
the requirements of the regulations, "the  procedures, when viewed in
light of the myriad communi-


cations between claimant, her counsel and the insurer,  [appear]
sufficient to meet the purposes of Section 1133  in insuring that the
claimant understood the reasons for  the denial of [her benefits] as
well as her right to review  of the decision."


142 F.3d at 493 (quoting Kent v. United Omaha Life Ins. Co.,  96 F.3d
803, 807 (6th Cir. 1996)).


With this background in mind, we turn to the facts of this  case. A
registered nurse, appellant Juanita White worked for  the Washington
Hospital Center for twenty-two years. Se- vere pain in the right hip
and knees caused by worsening  arthritis forced her to stop working in
June 1996.


White applied for short-term disability benefits under  Washington
Hospital Center's Group Benefits Plan. Funded  by the hospital center,
the short-term disability plan was  administered by appellee Aetna
Life Insurance Company.  Aetna certified White as disabled, and White
received short- term disability benefits through December 1996.


Aetna based its short-term disability certification on a  report by a
physician in the office of Dr. C. Anderson Engh,  an orthopedic
surgeon. According to that report, a physical  examination of White
conducted in August 1996 indicated  end-stage degenerative
osteoarthritis of the right hip and  knees. The examining physician
concluded that White was  "unable to do a job that required standing
at this time" and  recommended hip replacement surgery.


Informed in December 1996 that her short-term disability  benefits
would run out at the end of the month, White applied  for long-term
benefits under a Washington Hospital Center  plan both administered
and funded by Aetna. White submit- ted a leave of absence certificate
from Dr. Engh in support of  her application. In a section of the form
titled "Serious  Health Condition," Dr. Engh checked "chronic
condition re- quiring treatments." In a handwritten comment, he de-
scribed his diagnosis as "osteoarthritis," adding that White  would
require hip replacement surgery. In a section titled  "Work Schedule,"
Dr. Engh checked "Intermittent/Reduced  Schedule."


On January 8, 1997, Aetna claims representative Donna  Hucks informed
White that her claim had been denied. Ac- cording to White, Hucks gave
three reasons for the denial:  Hucks "had not been able to contact
White's orthopedic  surgeon over a three day period, [ ] White's
internist had  refused to confirm that White was disabled to work, and
[ ]  White should have already undergone hip replacement sur- gery."
White asked Hucks for written confirmation of the  denial, but


By letter dated February 26, 1997, White's attorney ad- vised Aetna
that the hip replacement surgery was scheduled  for April 1 and asked
that her claim be reconsidered. The  attorney attached two documents:
a copy of Dr. Engh's  certificate and the more detailed report that
Dr. Engh's office  had prepared in August.


Aetna sent White a written denial dated March 13, 1997. A 
computer-generated form, the denial stated: "Your request  for an
extension of your period of disability has been re- viewed by an Aetna
medical director. Due to the lack of  sufficient clinical information
to support your request, your  period of disability could not be
recertified." The back of the  form described the procedure for


You are entitled to a review of this Certification Decision  if you do
not agree. To obtain a review, you or your  representative should
submit a written request. Your  written request should include the
Sponsor (e.g., Em- ployer), your name, Social Security Number and
other  identifying information shown on the front of this notice,  and
the issue, comments or additional medical informa- tion you would like
to have considered. You may also  ask for copies of documents
pertinent to your request.


The written request must contain the information de- scribed above and
must be mailed for delivery within 60  days following receipt of this
notice.


At about the same time Aetna sent the notice, Hucks called  White's
attorney to advise him of the written denial. She  explained that one
of the reasons for the denial was the lapse 


in time between the August physical examination and the  April surgery.
The attorney asked her to send him a copy of  the notice, but she
refused. White recalls receiving the  notice and forwarding a copy to
the attorney before her April  1 surgery. The attorney recalls
receiving the notice in early  May, attributing the delay to the fact
that he had moved his  office.


Almost three months after the sixty-day appeal deadline,  White's
attorney formally appealed the denial of benefits in a  letter
addressed to Hucks dated August 12, 1997. The letter  stated: "I
apologize for my delay in providing this material,  but Aetna's
failure to send a copy of its last determination to  me caused a
significant delay to my handling of this matter."  As to the merits of
White's claim, the letter explained: "You  had advised me in a
telephone conversation that you were  concerned about the lapse of
time between Dr. Engh's August  28, 1996 exam leading to his
recommendation for hip surgery  and the actual surgery on April 1,
1997. I asked Dr. Costecu  [White's internist] to address the medical
reasons for the  timing of the operation." Attached was a letter from
Dr.  Costecu explaining that White's "blood pressure was not 
sufficiently under control to clear her for surgery" before  April.
Dr. Costecu added that in her opinion, White was  disabled. Also
attached was an updated medical report from  Dr. Engh: "The severity
of her arthritis is such that she is  completely disabled and unable
to perform her normal work.  I do not feel that she will be at any
point in the future ever  able to perform her work as an RN on a
Geriatric Inpatient  Ward of an acute care hospital." Aetna denied
White's  request for review, explaining that "the request is well be-


White filed suit in the United States District Court for the  District
of Columbia, challenging Aetna's refusal to consider  her appeal and
claiming that Aetna's initial denial notice  failed to comply
substantially with ERISA and its regulations.  Granting summary
judgment for Aetna, the district court  found that Aetna's March 13
denial notice, together with  Hucks' oral communications with White
and her attorney,  substantially complied with ERISA and its


White v. Aetna Life Ins. Co., No. 97-2676, Mem. Op. (D.D.C.  Aug. 10,
1999). The district court thus found no basis for  excusing White's
late appeal. We review the district court's  order de novo. See, e.g.,
Cones v. Shalala, 199 F.3d 512, 516  (D.C. Cir. 2000).


II


If this case turned on whether White's lawyer had a  legitimate reason
for failing to file the appeal on time, Aetna  would win easily. The
lawyer blames the delay on Hucks for  failing to send him a copy of
the March 13 denial notice (the  regulations do not require her to
have done so), on Aetna for  sending the notice to White just before
she went into the  hospital, and on the post office for forwarding the
notice too  slowly. Yet notwithstanding these problems, the record 
shows that Hucks told the lawyer that she was sending the  notice to
White and that White forwarded it to him before her  surgery. The
lawyer, moreover, never claims that he did not  receive the notice
until after the appeal deadline. Instead, he  tells us that he would
have filed earlier than August 12 if only  Aetna had given more
specific reasons for denying the claim.  Perhaps. But nothing
prevented the lawyer from either  filing a cautionary notice of appeal
or seeking an extension of  time from Aetna.


From these facts, we can draw but one conclusion: the  attorney failed
to perform a primary obligation to his client-- filing a timely notice
of appeal. Fortunately for White, this  case is not so simple. If
Aetna's March 13 denial notice,  supplemented by Hucks' conversations
with White and the  lawyer, failed to comply substantially with
section 1133 and  its implementing regulations, then the sixty-day
appeal period  would not have begun to run, and the lawyer's failure
to file a  timely appeal could not have served as a legitimate basis
for  Aetna's refusal to consider the claim. See Counts v. Ameri- can
General Life and Accident Ins. Co., 111 F.3d 105, 108  (11th Cir.
1997) ("The consequence of an inadequate benefits  termination letter
is that the normal time limits for adminis- trative appeal may not be
enforced against the claimant."). 


We therefore turn to the question of Aetna's substantial  compliance.


The March 13 notice and Hucks' various conversations with  White and
the attorney identified three reasons for denying  White's claim:
Hucks could not reach Dr. Engh (January 8  phone call with White);
White failed to provide "sufficient  clinical information" (March 13
denial notice); and White had  offered no reason for the lapse in time
between the August  1996 examination and the April 1997 surgery
(January 8  phone call with White and March phone call with White's 
attorney). White's complaint alleges that Hucks gave a  fourth reason:
that Dr. Costecu, White's internist, declined to  certify her as
disabled. But because Aetna's answer denies  that particular
allegation and because neither party presses it  here, we need not


Aetna claims that the three reasons given in the March 13  notice and
in Hucks' various conversations satisfied its obli- gation to provide
"[t]he specific reason or reasons for the  denial." 29 C.F.R. s
2560.503-1(f)(1). White argues that we  can only consider the
particular reason that Aetna communi- cated in writing--that she
failed to provide "sufficient clinical  information"--but Heller holds
that oral communications  must also be considered in determining
substantial compli- ance. Heller, 142 F.3d at 493.


Had the three reasons been the only basis for denying  White's claim,
we think Aetna probably would have substan- tially complied with both
ERISA and the underlying regula- tion. Even if, as White argues, "lack
of sufficient clinical  information" is too general to be considered
"specific" within  the meaning of the statute, the third reason--the
lapse of  time between diagnosis and surgery--is not only specific,
but  according to Aetna's brief, the primary reason for having  denied
the claim. To be sure, Aetna failed to provide a  "[s]pecific
reference to pertinent plan provisions on which the  denial is based,"
as required by subparagraph two of the  regulation, and "[a]
description of any additional material or  information necessary for
the claimant to perfect the claim 


and an explanation of why such material or information is  necessary,"
as required by subparagraph three 29 C.F.R.  s 2560.503-1(f)(2), (3).
But where, as here, the reason for  denial has no connection to any
particular plan provision,  failure to reference a specific provision
seems just the type of  technical noncompliance that the substantial
compliance test  excuses. While failure to describe additional
material needed  to perfect the claim might otherwise have represented
a  significant omission, in this case Aetna's stated reason for 
denial made clear precisely the information White needed to  provide:
an explanation of the delay between the August  examination and the
April surgery. We thus think that were  this the entire story, Aetna's
communications would have  substantially complied with ERISA and the
regulation. The  communications were " 'sufficient to meet the
purposes of  Section 1133 in insuring that the claimant understood the
 reasons for the denial of [her benefits].' " Heller, 142 F.3d at  493
(quoting Kent, 96 F.3d at 807).


There is more to this case, however. In addition to the  three reasons
mentioned in the March 13 denial notice and  Hucks' phone calls, the
record reveals that Aetna's denial  rested on a fourth reason. Aetna's
statement of material  facts as to which there is no genuine issue
says this: "Aetna's  concern was compounded by the fact ... that Dr.
Engh had  refused to certify White as disabled...." Scouring the rec-
ord, we can find no evidence that Aetna ever communicated  this reason
to either White or her lawyer. At oral argument,  Aetna's counsel
conceded that he too knew of no such evi- dence.


Aetna argues that, even given its failure to communicate its  fourth
reason, its notice and Hucks' communications with  White and her
lawyer substantially complied with the regula- tions. We disagree. Not
telling White that her claim had  been denied in part because Dr. Engh
had failed to certify  her as disabled amounts to a major omission.
Based on the  information Aetna conveyed through the March 13 notice
and  Hucks' phone calls, neither White nor her attorney had any  way
of knowing that to perfect the claim, White needed to get  Dr. Engh to
certify her as disabled. Indeed, Aetna's counsel  conceded at oral
argument that even if White had submitted 


documentation responding to Aetna's stated reasons for deny- ing her
claim, Aetna likely would not have approved the claim  absent a
disability certification by Dr. Engh. Put simply,  Aetna failed to
give White a "specific reason" for denying her  claim and failed to
tell her the "additional material or infor- mation necessary ... to
perfect the claim," hardly substantial  compliance with the statute
and regulation. 29 U.S.C.  s 1133(1); 29 C.F.R. s 2560.503-1(f)(1),


Urging yet another justification for its refusal to consider  White's
claim, Aetna argues that White failed to show that  she was prejudiced
by the notice's deficiencies, i.e., that the  deficiencies caused her
to file an untimely appeal. Aetna  wants not just one, but two escape
hatches from ERISA's  requirements: one for insubstantial omissions
and another for  omissions that are not prejudicial. We think one is
enough.


To begin with, we are not at all sure how Aetna's prejudice  defense
can be reconciled with Heller. Indeed, under Aetna's  theory, we would
have no need at all for a substantial  compliance test because no
deficiency--substantial or other- wise--would relieve a claimant of
the obligation to appeal  within sixty days unless the deficiency
actually caused the  claimant to miss the deadline. The following
notice would  probably be acceptable: "Please be advised that your
claim  for disability benefits is denied. You have sixty days to 
appeal." Insurers would not have to include any specific  reason for
the rejection (subparagraph one of the regulation),  nor give
citations to relevant plan provisions (subparagraph  two), nor
describe additional information needed to perfect  the claim
(subparagraph three). As we understand Aetna's  argument, as long as
the notice describes how and when to  appeal (subparagraph four), the
absence of other information  required by the regulation likely would
not prejudice a claim- ant's ability to file a timely appeal. No doubt
this would have  been one way to run a claims procedure. But Congress
and  the Labor Department chose a different procedure, one that 
requires insurance companies to give claimants specific rea- sons for
denying benefits, to cite relevant plan provisions, to  specify


appeal. Heller, moreover, requires substantial compliance  with these
obligations.


The cases Aetna relies on to support its prejudice test, see,  e.g.,
Ellis v. Metropolitan Life Ins. Co., 126 F.3d 228, 238 (4th  Cir.
1997); Recupero v. New England Tel. and Tel. Co., 118  F.3d 820, 840
(1st Cir. 1997), differ from this case in a critical  respect. All
involved challenges to initial denial notices  where insurers
thereafter had evaluated claimants' appeals on  the merits; here Aetna
failed even to consider the merits of  White's appeal. Where claimants
receive "a full and fair  review ... of the decision denying the
claim," 29 U.S.C.  s 1133(2), perhaps it does make sense to require
them to  show that they were in fact prejudiced by deficiencies in the
 initial denial notice before restarting the review process. 
Otherwise, as the Sixth Circuit pointed out, "remand ...  would
represent a useless formality." Kent, 96 F.3d at 807.  Not so here.
White's claim may well have merit: both Dr.  Engh and White's
internist found her to be totally disabled.  Under these
circumstances, remand would hardly be a use- less formality.


Aetna's remaining arguments require little discussion. Cit- ing Kinkead
v. Southwestern Bell Corp., 111 F.3d 67 (8th Cir.  1997), Aetna claims
that an initial denial notice "need only  state a general reason for
the claim denial and explain the  procedure for appeal to trigger the
requirements of proper  exhaustion of the appeals process"; only final
denial notices,  Aetna argues, need be specific. Aetna's reliance on
Kinkead  is misplaced. Kinkead considered whether a notice informing 
the claimant that "medical evidence does not substantiate you  were
disabled" satisfied the insurance company's obligation  under the
regulation to provide the "specific reason." Id. at  69. In this case,
Aetna failed entirely to communicate to  White an important reason for
denying her claim. So even if  correct, Kinkead has nothing at all to
do with this case.


Aetna argues that failure to communicate an important  reason for
denying a claim has no consequence beyond estop- ping the insurer from
relying on that reason in considering a  claimant's appeal. Because
Aetna did not raise this claim 


until oral argument, however, we need not address it. See,  e.g.,
Galvan v. Federal Prison Industries, Inc., 199 F.3d 461,  468 (D.C.
Cir. 1999).


We conclude with a final observation. As this case well  demonstrates,
although insurance companies are protected by  Heller's substantial
compliance test, they could avoid expen- sive litigation for
themselves and claimants and conserve  judicial resources by strictly
complying with the Labor De- partment's regulations. In view of Heller
and the decision we  reach today, it would be in the best interest of
all concerned  for insurers to disclose in writing all information
required by  the regulations.


III


For all of these reasons, Aetna's March 13 notice, together  with
Hucks' conversations with both White and her attorney,  did not
substantially comply with ERISA and its regulations.  Because the
sixty-day appeal deadline thus never began to  run, we reverse the
district court's grant of summary judg- ment and remand with
instructions to direct Aetna to consid- er the merits of White's


So ordered.