## Facts

- Four plaintiffs, on behalf of themselves and a proposed class of similarly situated insureds, were enrolled in health coverage issued and administered by Oxford Health Plans, Inc. and related Oxford entities under ERISA-governed plans.
- Viagra was approved by the FDA on March 27, 1998 as a treatment for erectile dysfunction.
- Plaintiffs alleged that after Viagra’s approval, Oxford instituted plan-wide limits on Viagra coverage, including a 45-day “freeze” on paying for prescribed Viagra and, later, a limitation of payment to six pills per month.
- Plaintiffs characterized Oxford’s actions as a wrongful denial or restriction of benefits owed under the terms of their coverage.
- Plaintiffs sought declaratory and injunctive relief and damages, asserting ERISA claims for benefits (29 U.S.C. § 1132(a)(1)(B)) and alleging breach of fiduciary duties (29 U.S.C. § 1104).
- Oxford moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing the complaint should be dismissed because plaintiffs did not exhaust the plans’ internal administrative claims and review procedures.
- Oxford also requested attorneys’ fees under 29 U.S.C. § 1132(g)(1).
- Plaintiffs responded that exhaustion should be excused because pursuing internal review would be futile given Oxford’s alleged uniform coverage policy regarding Viagra.

## Issues

1. Whether ERISA participants challenging Oxford’s 45-day Viagra coverage freeze and six-pill-per-month payment limit were required to exhaust internal plan remedies before filing suit.
2. Whether plaintiffs plausibly alleged futility—sufficient to excuse exhaustion at the pleading stage—by claiming the denial flowed from a fixed, uniform coverage policy applicable to all insureds.
3. Whether Oxford was entitled to attorneys’ fees under 29 U.S.C. § 1132(g)(1) based on its motion to dismiss.

## Decision

- The court denied Oxford’s Rule 12(b)(6) motion to dismiss.
- The court held that, taking the allegations as true, plaintiffs sufficiently pleaded futility to excuse exhaustion of administrative remedies at this stage because the complaint challenged an across-the-board Viagra coverage limitation rather than an individualized claim error.
- The court denied Oxford’s request for attorneys’ fees under 29 U.S.C. § 1132(g)(1).

## Legal Principles

- ERISA claimants generally must pursue a plan’s internal claims and review procedures before bringing suit for benefits.
- Exhaustion may be excused when the claimant makes a clear and positive showing that using plan procedures would be futile.
- Futility can be adequately alleged where the complaint attributes the denial to a uniform coverage policy that would control the result of any internal appeal.
- On a Rule 12(b)(6) motion, the court accepts well-pleaded factual allegations as true and draws reasonable inferences in favor of the nonmoving party.
- Attorneys’ fees under ERISA § 502(g)(1) are discretionary and are not awarded as a matter of course, particularly where the requesting party has not prevailed.

## Conclusion

In Sibley-Schreiber v. Oxford Health Plans, Inc., the court allowed a putative ERISA class action to proceed challenging Oxford’s Viagra coverage freeze and six-pill payment cap, concluding that the complaint adequately alleged futility of internal review and therefore could not be dismissed for non-exhaustion at the pleading stage; the court also denied Oxford’s request for attorneys’ fees.


Sibley-Schreiber v. Oxford Health Plans, Inc., 62 F.Supp.2d 979 (1999)