Futility Is Not in the Eye of the Beholder, But Depends on the Facts
I have written and spoken on a number of occasions about the extent to which courts will enforce the exhaustion doctrine with regard to benefit claims, and about the exceptions that exist to exhaustion; I have litigated those disputes as well, in a number of contexts running from top-hat plans involving substantial deferred compensation to old fashioned LTD benefit denials.
Many lawyers and courts start out from the premise that the exhaustion requirement should be strictly applied, and that exceptions should be granted infrequently. This is all true, but the reality is that the dividing line between when to require exhaustion and when to allow an exception should be fact based: when a claimant simply alleges the elements needed to establish an exception, exhaustion should be strictly enforced, but an exception should be allowed where the plaintiff can demonstrate that the factual elements of a particular exception exist.
The United States District Court for the District of Puerto Rico just captured this distinction nicely, in an opinion addressing whether the futility exception to exhaustion could be invoked, when the Court explained that:
a plaintiff's belief that bringing administrative remedies would be futile is insufficient to call the futility exception into play. If, however, the plaintiff's belief is accurate—as demonstrated by factual evidence—and exhausting the administrative remedies would, in fact, be futile, then the futility exception is called into play.