In a long-term disability (LTD) case—particularly one governed by the Employee Retirement Income Security Act (ERISA), which covers most employer-sponsored plans—an administrative remedy refers to the internal claims and appeals process required by the plan and federal regulations before a claimant can file a lawsuit in court.
Yes, unless doing so would be futile.
A recent court decision held that although ERISA does not require administrative exhaustion as a prerequisite to suit, “[the Seventh Circuit has] interpreted ERISA as requiring exhaustion of administrative remedies as a prerequisite to bringing suit under the statute.” , Hegemann v. Blue Cross Blue Shield of Ill., No. 24-cv-286-wmc, 2026 BL 78572, at *5 (W.D. Wis. Mar. 9, 2026), citing Schorsch v. Reliance Standard Life Ins. Co., 693 F.3d 734, 739 (7th Cir. 2012) (quotation omitted). However, courts may excuse failure to exhaust administrative remedies where there is a lack of meaningful access to review procedures, or where pursuing internal plan remedies would be futile. Id. (quotation omitted).
In the Hegemann case, the plaintiff acknowledged his failure to appeal the denial of the Aspirus Hospital Claim. However, he argued this failure should be excused because appealing the Aspirus Hospital Claim would have been futile, especially after the Aspirus Cardiology Claim appeal had already been denied.
For a plaintiff to come within the futility exception he “must show that it is certain that [his] claim will be denied on appeal, not merely that he doubts that an appeal will result in a different decision.” Lindemann v. Mobil Oil Corp., 79 F.3d 647, 650 (7th Cir. 1996) Because his two claims involved the same procedure, were denied for identical reasons, and his appeal of the first denial had already been rejected, Hegemann argued that the LTD carrier was certain to deny any appeal of the second benefit denial. Id. at *5.
The Hegemann court found the carrier has “somewhat disingenuously” disagreed, arguing that plaintiff did not fit into this exception because his argument “is based on doubt, not certainty.” However, the cases cited by the LTD carrier were readily distinguishable, involving plaintiffs who, for various reasons, either did not seek any appeal after an initial claim denial or had advanced a second claim based on different facts. See Robyns v. Reliance Standard Life Ins. Co., 130 F.3d 1231, 1238 (7th Cir. 1997) (“The fact that [defendant] administers both claim denials and administrative appeals is not enough to constitute futility.”); Univ. of Wisconsin Hosps. & Clinics Auth. v. Aetna Health & Life Ins., No. 15-CV-283-BBC, [2015 BL 283009], 2015 U.S. Dist. LEXIS 116014, [2015 BL 283009], 2015 WL 5123734 (W.D. Wis. Sept. 1, 2015) (“If it is not enough to show that the same individual or entity is making the initial decision and deciding the appeal, then a conclusory decision is not enough either.”); Lindemann v. Mobil Oil Corp., 79 F.3d 647 (7th Cir. 1996) (“[Plaintiff] herself argued that her wrongful termination claim was so different from [her] benefits claim.”). In contrast, plaintiff’s hospital and cardiology claims in this case arose from the same facts, were denied for identical reasons, and already had one appeal denied.
The LTD carrier also argued in Hegemann that futility is inapplicable in this case because plaintiff relied on echocardiogram results that could have been included in an appeal. However, because Hegemann followed up with Aspirus regarding the denial, prompting them to provide further documentation to the LTD carrier ahead of his first appeal, Hegemann reasonably believed that the LTD carrier had full access to his records and that a second appeal stemming from the same procedure, which had already been denied, would certainly be denied. Accordingly, the court examined whether Hegemann was entitled to LTD benefits on both claims.
This case distinguishes the administrative exhaustion requirement when the claimant’s administrative appeal would have been futile because it was certain that his claim would be denied on appeal.
