When a Plan seeks reimbursement from a beneficiary under ERISA Section 503(a)(3) (“appropriate equitable relief”) for medical expenses the Plan paid, can the beneficiary assert equitable defenses?

The Circuits are split on this.  A new case, applying recent United States Supreme Court precedent, concludes the beneficiary can assert equitable defenses.

This new case highlights the issue.  US Airways, Inc. Plan v. McCutchen [PDF], __F.3d__ (3rd Cir. 11/16/2011)(beneficiary may assert equitable defenses to reduce reimbursement amount sought by ERISA Plan).

FACTS: McCutchen was injured in an auto accident. The US Airways ERISA Plan paid $66,866 in medical expenses.  McCutchen then obtained a personal injury settlement for $110,000.  After paying his attorneys, McCutchen netted $66,000. The Plan sought reimbursement, asserting a claim under ERISA Section 502(a)(3), seeking “appropriate equitable relief” in the form of a constructive trust. The Plan terms also required reimbursement from “any monies recovered” from a third party.

TRIAL COURT: Summary Judgment GRANTED for PLAN, requiring McCutchen to reimburse Plan $66,866.

APPEAL ISSUE: Whether Section 503(a)(3)’s requirement that equitable relief be “appropriate” limits the Plan’s recovery from a beneficiary by equitable defenses “typically available in equity.”

THIRD CIRCUIT:  REVERSES— EQUITABLE DEFENSES MAY REDUCE PLAN RECOVERY.

RATIONALE:

  1. “Appropriate equitable relief” under ERISA 502(a)(3) means “something less than all equitable relief.”  Congress intended to limit equitable relief available under this section through the application of equitable defenses.  Op. at 11. (Emph. in original).
  2. Equitable liens by agreement are not subject to the asset tracing requirements imposed on liens sought as a matter of equitable restitution.  Op. at 9.
  3. Equitable relief must mean “something less that all relief.”  Op. at 10.
  4. “Unjust enrichment” is applicable to claims for equitable relief.  Op. at 12.  The Court rejects the Plan’s argument that equitable doctrines limiting reimbursement recovery are inapplicable.  Op. at 14-15.
  5. The Court rejects decisions from other circuits (8th and 11th Circuits) that have held “that it would be pioneering federal common law to apply equitable limitations on an equitable claim.”  Op. at 15.
  6. Applying the doctrine of unjust enrichment, McCutchen prevails because the net amount of his recovery from the third party is less than full payment of his medical bills, “thereby undermining the purpose of the Plan.”  Op. at 17.

“No one loves the messenger who brings bad news.” Antigone (lines 276-77).

What happens when an ERISA claimant brings state law claims against independent medical consultants retained by the Plan to provide medical reviews eventually relied upon in claim denials?

Are these claims preempted by ERISA?

Good news: Sometimes yes.

Here’s the case of Cacoperdo v Hartford Life Ins. Co., 2011 WL 4632881 (S.D.N.Y October 5, 2011) [PDF] (state law claims against plan’s independent medical consultants preempted by ERISA; Court also denies Plaintiff discovery propounded to independent physicians as a “fishing expedition”).

FACTS: Cacoperdo sought ERISA disability benefits from his employer’s plan. He received benefits for a while but eventually Hartford retained two different companies to prepare independent medical review reports. Hartford relied on these reports to deny the disability claim.

Plaintiff then sued, asserting ERISA claims against Hartford and state law tortious interference claims against the physicians providing independent reviews.

Plaintiff’s theory: The independent medical consultants are not ERISA entities. “[The independent medical consultants] knew or should have known of a valid contract between Hartford and the Plaintiff, and that they induced Hartford to breach the contract by creating medical findings that would lead Hartford to fail to discharge its duties and obligations under the contract.”

ISSUE: Whether claims against medical consultants are preempted by ERISA?

TRIAL COURT HELD: The claims against the physicians are preempted. The Court also denies discovery from the physicians.

RATIONALE:

  1. Unlike other court decisions which allowed state law invasion of privacy claims (Dishman v. UNUM, 269 F.3d 974 (9th Cir. 2001)) or outrage claims (Barker v. Hartford, 2007 U.S. Dist Lexis 55532 (N.D. Tex. July 31, 2007)), Plaintiff’s claim here specifically “derive[s] from his benefits claim….[T]he state law claim here stems from the Plan that is breached—not an independent duty of care owed to the Plaintiff [by the independent medical reviewers].” Op. at 5.
  2. “There was no direct evidence that [the physicians] breached an independent duty of care owed to Cacoperdo.” Op. at 5.
  3. The Court denied discovery from the physicians. The Court said: “[N]o factual allegations have been pled with any amount of specificity against [the reviewing physicians] that would support an independent state law tort cause of action against them. The Court will not allow Cacoperdo to engage in a fishing expedition against non-fiduciary third party vendors in order to determine whether any factual allegations can be made.” Op. at 6 (Emph. added).

You already know that ERISA disability payments can often be reduced or offset by disability payments the beneficiary receives from the Social Security Administration.

 But…. 

 Can the ERISA Plan offset Veterans Administration (VA) disability benefits as “other income?”  

 It depends on what the “other income” ERISA plan language says.

 AND, courts may conclude the issue involves construing “existing law” and will endeavor to apply de novo review.

 Here’s the case of  Riley v. Sun Life and Health Insurance Co., __F.3d __ (8th Cir. October 7, 2011) (PDF)  (VA benefits cannot be offset because they are not “similar to” ERISA long term disability benefits.)  This case also gives a good road map how ERISA Plans should construct offset provisions.

 FACTS:  Riley had multiple sclerosis symptoms and sought ERISA disability benefits under his Employer’s ERISA qualified long term disability plan with Sun Life. He also received VA disability benefits from the Department of Veterans Affairs. The plan stated that  offsets would apply to benefits received from Social Security Administration or the Railroad Retirement Act or “any other similar act or law provided in any jurisdiction.” Sun Life offset from the disability benefits amounts received for his VA disability benefits. 

 Riley sued contending Sun Life should not offset his VA disability benefits.

 TRIAL COURT: Granted Defendant Sun Life summary judgment, concluding the offset of VA disability benefits was appropriate.

EIGHTH CIRCUIT COURT OF APPEALS:  REVERSES and finds VA Disability benefits should not be offset.

 RATIONALE:

             1. The Court reviewed the decision de novo because the plan’s decision involved construction of existing law.

             2. Some cases have allowed for an offset of VA disability benefits;  some cases have not—depending on plan language. 

–High v. E-Systems, Inc., 459 F.3d 573 (5th Cir. 2006) (broad plan language allowed VA disability benefits offset).

–Jones v. ReliaStar Life Insurance Co.,  615 F.3d 941 (8th Cir. 2010) (upheld Plan’s decision to offset VA benefits because the plan language defined “other income” as income based on “the same or related disability for which [the plan participant is] eligible to receive benefits under the Group Policy.”)

 –But see, Williams v. Group Long Term Disability Ins., 2008 WL 2788615 (N.D. Ill. July 17, 2008)(VA benefits cannot be offset because VA benefits are “different” and the language was not “clear [to the employer] at the outset” that VA benefits would be offset.)

            3.  KEY QUOTE: “We disagree with the Plan administrator’s decision to offset Riley’s VA benefits. Those benefits for a war-time service disability, as a matter of statutory construction, do not derive from an act that it “similar to ” [the Social Security Act  (SSA) or the Railroad Retirement Act (RRA)].”  The Court explains how SSA and RRA are not “similar” to long term disability benefits.

            4. GOOD DISSENT:

-Discretionary review should have been applied: the issue does not involve construing an “existing law.” It deals  with the meaning of plan terms.

-ERISA disability benefits are substantially similar to SSA and RRA disability benefits and should be offset.

“Murder is always a mistake.  One should never do anything that one cannot talk about after dinner.” —Oscar Wilde
 
We’ll end the week on the uplifting note that “murder does not pay.”
 
What happens when the sole beneficiary of an ERISA plan life benefit kills the plan participant (insured)? 
 
Are state slayer statutes (which prohibit murder for profit) preempted by ERISA?  No. 
 
Here’s the case of Union Security Life Insurance Co. v. JJG-1994; JJG-2002, [PDF], a minor, __F.Supp.2d__, 2011 WL3737277 (N.D.NY August 24, 2011)(attached)(State slayer rules NOT preempted by ERISA).
 
FACTS:  An employee was covered under the employer’s group life insurance benefits.  He was murdered by the sole beneficiary of the employee’s group life benefits. No contingent beneficiary was identified in plan documents.
 
ISSUE: Whether one who kills the ERISA plan participant may continue as the sole beneficiary of the life insurance benefits?
 
HELD:  No. State law prohibiting a killer from profiting from his crime is NOT preempted by ERISA.
 
RATIONALE: Some state laws of “general application” may have only an incidental effect on ERISA and are therefore not preempted.
Where do you litigate an ERISA disability claim?  What venue is the most convenient?
 
Under ERISA, venue is proper in “the district where the plan is administered, where the breach took place, or where defendant resides or may be found.” 29 U.S.C. 1132(e)(2).
 
But how do you decide which is the more “convenient” venue?  Here are two cases (attached) that highlight the point.
 
Key point: If the only connection to the venue is Plaintiff’s counsel, Defendant’s Motion to Transfer Venue has a good shot at winning.
 
Girgis v. The Hartford Life and Accident Insur. Co. [PDF], 2011 WL 2115814 (D.N.J. May 25, 2011).
 
    FACTS: Plaintiff worked in Texas, and in 2003 asserted a disability claim under the ERISA plan, claiming total disability due to Fibromyalgia. Hartford paid on the disability claim until September 2009, when it concluded Girgis was no longer disabled under the terms of the plan. Girgis appealed, which was denied, and he commenced suit in … New Jersey.
 
    ISSUE:  Is Texas or New Jersey the most convenient venue?
 
    HELD:  Defendant’s Motion to Transfer Venue was GRANTED.
 
    RATIONALE:
 
            1. The Court applies a multi-factor test.  Plaintiff’s choice of forum is important, but is not dispositive.  Op. at 2-3.
 
            2. The defendant’s choice of forum counterbalances Plaintiff’s choice of forum. Op. at 3.  Strong factors for Defendant include the fact that both the administrator of the plan and the alleged breach of the contract occurred in Texas.  Plaintiff lives in Texas.  The only person involved in this litigation with an interest in litigating in New Jersey is the Plaintiff’s attorney.
    
            3.  Plaintiff lived and was employed in Texas, by a Texas corporation, with a plan administered in Texas. Op. at 3
 
            4.  Plaintiff alleges that he ceased work due to disability.  “[W]hile the Court hesitates to conclude travel would be difficult, both physically and financially, … logic dictates that the fourth factor favors Defendant.”
 
            5.  The “convenience of the witnesses” factor does not pertain to ERISA cases and thus does not help Plaintiff’s argument. Op. at 3
 
            6.  The “location of books and records” factor is insignificant because they “may be easily reproduced and transmitted to any district….” 
 
Smith v. Aetna Life Insurance [PDF], __ F. Supp. 2d __ (N.D. Cal.September 6, 2011)
 
    FACTS:  Smith was a Bank of America employee, working in North Carolina. She sued in California alleging Aetna wrongfully denied disability benefits.
 
    ISSUE:  Is North Carolina or California the most convenient venue?
 
    HELD:  Defendant’s Motion to Transfer Venue to North Carolina GRANTED.
 
    RATIONALE:
 
            1. Where Plaintiff does not reside in the forum, the Court may afford Plaintiff’s choice considerably less weight.  Op. at 3.
 
            2. The Court found unpersuasive Plaintiff’s argument that there are a “limited number of attorneys in the country who handle ERISA disability” cases.  Op. at 3
 
            3.  The only link to the venue was the Plaintiff’s attorney.  The convenience of counsel is not considered for purposes of deciding whether venue is convenient.  Op. at 3
 
DISCUSSION.  These cases highlight that connection to the forum is important.  Give serious consideration whether you bring a motion to transfer under 29 USC 502(e)(2) or under 28 USC 1404(a).  The outcomes may be different.  See, e.g.,  Smith v. Aetna, supra at 4. 
When is an ERISA claim timely? 
 
You need to look at: the state statute of limitations, the limitations provisions in the plan, and… when the claim “accrues.”
 
BUT… Is there a difference when the claim involves just the calculation of the benefit, rather than whether the claimant is entitled to a benefit at all? Yes.
 
A new case worth reading is Withrow v. Bache Halsey Stuart Shield (PDF),  __ F.3d __ (9th Cir. August 23, 2011). 
 
FACTS:  Withrow had ERISA long term disability coverage, insured by Reliance Standard.  Withrow became totally disabled in 1986, and applied for benefits in January 1987. 
 
    1987 and 1990:  Withrow tells Reliance that she should receive $5000 per month, rather than $3950. Reliance disagrees and explains how the benefit was calculated.
 
    2002: Twelve (12) years later Withrow raises the benefit calculation issue again. Reliance explains its decision and denies the claim. 
 
    July 21, 2003: Withrow appeals the denial.  
 
    January 14, 2004. Reliance upholds the claim determination. 
 
    February 16, 2006. Withrow (finally) files suit.
 
 
ISSUE: Whether this ERISA claim was timely?
 
DISTRICT COURT:  GRANTS Defendant’s Motion to Dismiss the Claim, as Untimely.
 
NINTH CIRCUIT COURT OF APPEALS:  REVERSES–Claim Timely, with the Following Rationale:
 
        1. There are two parts to the determination of a timely ERISA claim:
 
                    (a) whether the action is barred by the statute of limitations, and
 
                    (b) whether the action is contractually barred by the limitations provision. Op. at 4.
 
        2.  Statute of Limitations Analysis: Reliance did not clearly communicate repudiate 1990 claim; claim does not “accrue” until 2004.
 
                    A. Under Ninth Circuit precedent,  the court must apply the state statute of limitations most analogous to the ERISA benefit recovery.
 
                B.  When the action “accrues” is governed by federal law. Op. at 4.  An ERISA cause of action “accrues ‘either at the time benefits are actually denied, or when the insured has reason to know that the claim has been denied.'”
 
                C. Reliance “actually denied” the appeal on January 14, 2004, and that’s when the claim accrued.
 
                D.  A claimant has “reason to know” of a claim denial “when the plan communicates a ‘clear and continuing repudiation’ of the claim ‘such that the claimant could not have reasonably believed but that his or her benefits had been finally denied.'”  Op. at 4.
 
                E.  The substance of Reliance’s response  to Withrow’s issues raised in the 1990s is unclear. The only evidence regarding the denial is a handwritten note in the file. This is insufficient to constitute “clear and continuing repudiation.”  Consequently, Withrow’s 1990 claim did not accrue with regard to the statute of limitations, until January 14, 2004.
 
    3. Limitations Provision Analysis–Does Not Apply to Calculation Issues. 
 
              A.  The plan provides that no legal action may be brought after “the expiration of three years…after the time written proof of loss is required….” Op. at 6
 
            B. “[C]ontract limitations provisions in benefit policies still have force independent of ERISA in long term disability benefit cases.”  Id.
 
            C.  Under California law, the limitations provisions are “meaningless as applied to disputes over the proper calculation of the amount of monthly disability benefits, as opposed to disputes over whether an applicant is entitled to benefits at all.” Op. at 7.
 
Have a great Labor Day.
Here is a case update on two important ERISA issues:
 
1. Does “conflict of interest” apply to third-party administrators of self-funded plans?  Claimants may argue that de novo review applies to third party claim administrators (TPA) of self-funded plans due to a conflict of interest. 
 
They will claim the TPA is in such a “competitive market” that it has an “incentive to keep claims down to be more attractive to potential plans.”  There is some Supreme Court dicta that supports this argument. 
 
How do you respond?  This new case gives you a response: argue there was no evidence of a “meaningful conflict.”
 
2. What happens when the beneficiary spends all of the Social Security reimbursement before you get reimbursed? 
 
Argue “equitable lien by agreement” and you can win.
 
 Here is the case of Funk v. CIGNA et al, __F.3d __ (pdf) (3rd Cir. August 4, 2011)(third party administrator, of a self-funded plan, does not lose discretionary review due to “conflict of interest” just because it operates in a “competitive market”  and has an “incentive to keep claims down to be more attractive to potential plans“).
 
FACTS: Funk was an “eligible employee” under a self-funded ERISA plan, administered by CIGNA.  CIGNA had full discretionary authority. Funk was in a funk: he was depressed and paranoid.  He sought long term disability benefits. To qualify for disability Funk had to establish he was incapable of performing any job for which he is qualified or may reasonably become qualified, other than a job that pays less than 60% of his pay before he claimed disability.
 
CIGNA’s independent record review found that Funk was not that depressed or paranoid, and that he could work his job.  A peer-to-peer review and neuropsych exam also found he could work. CIGNA denied his long term disability claim.
 
Funk also received a retroactive Social Security award and owed CIGNA $24,817 in reimbursement.  But apparently to get out of his funk, Funk spent funds and refused to pay.  He contended there could be no lien because he did not have possession of the funds.
 
Funk appealed his claim denial.  He contended CIGNA had failed to perform a vocational assessment to specifically assess whether he could earn 60% of his pre-disability income in some other job. CIGNA had another record review, which confirmed Funk’s records did not establish impairment severe enough to prohibit him from performing his own or any occupation. Funk appealed again, and CIGNA denied his second appeal. Funk sued.
 
TRIAL COURT RULES AGAINST CIGNA, with the following rationale:        
  1. CIGNA abused its discretion because CIGNA did not specifically evaluate whether alternative jobs could exceed 60% of his predisability income.
  2. CIGNA had a conflict of interest and de novo review applied because CIGNA was a claim administrator “in a competitive market” and has an “incentive to keep claims down to be more attractive to potential plans.”
  3. CIGNA was not entitled to the Social Security reimbursement because Funk no longer had possession of the Social Security funds. 
THIRD CIRCUIT REVERSES and HOLDS FOR CIGNA, with the following reasoning:
  1. Proper Denial. The Plan required that CIGNA determine whether Funk was capable of working in any job that would pay him 60% of his former pay.  CIGNA complied by determining Funk could do his prior job. Because CIGNA’s determination did not turn on the existence of an alternative 60% job, it was unnecessary to discuss alternative jobs.  Op. at 21-22.
  2. Discretionary Review Applies.  “While the Supreme Court in Glenn  did say that ‘for ERISA purposes a conflict exists’ when a third party administrator operates in a competitive market, … that Court also acknowledged that the conflict may be of little or no practical significance.”  Op. at 23, citing Glenn, 554 U.S. at 114-5.  Nothing showed hear that CIGNA was operating under a “meaningful conflict of interest.” Op. at 23.
  3. CIGNA Gets Reimbursement. Even though Funk no longer had the Social Security funds in his possession, there was an “equitable lien by agreement that attached to the Social Security award as soon as Funk received it.  Dissipation of the funds was immaterial. Op. at 26-7.  

So who is a proper defendant in an ERISA benefits case? BIG NEWS: The answer just changed in the Ninth Circuit.

The Ninth Circuit just overruled Everhart v. Allmerica Financial Life Insurance Co., 275 F.3d 751 (9th Cir. 2011) and other cases, which limited proper defendants to plans and plan administrators.

In the Ninth Circuit, federal law allows ERISA beneficiaries to sue third party insurers.

Here’s today’s case: Cyr v. Reliance Standard, __ F. 3d __ (9th Cir. June 22, 2011)(pdf)

FACTS:

Cyr was a beneficiary under her employer, CTI’s ERISA long term disability benefit, insured by Reliance Standard. Reliance controlled the decision on denial of benefits, but was not identified as the plan administrator. Cyr sued claiming she should receive higher disability benefit amounts. She sued: Reliance, the CTI Group plan and CTI as plan administrator.

Reliance moved for summary judgment contending only the plan or plan administrator were proper parties. It was denied. Reliance appealed.

ISSUE: Whether Reliance was a proper defendant in a suit for benefits “even though it isn’t a plan or a plan administrator?”

HELD: Reliance IS a proper defendant.

  1. “Potential defendants in actions under Section 1132(a)(1)(B) should NOT be limited to plans and plan administrators….”. Op. at 8503-4 (Emph. added).
  2. Reliance is a proper defendant in this lawsuit. Any suggestions to the contrary in our prior decisions, including…Everhart v. Allmerica Financial Life Insurance Co., 275 F.3d 751, 756 (9th Cir. 2001) [and other cases] are overruled.”

What Plan Language do You Need to Confer Discretionary Review?

Do you get discretionary standard of review if the plan states: “Written or authorized electronic proof of loss SATISFACTORY TO US must be given to Us at Our office, within 90 days of the loss for which claim is made.”

You would likely have discretionary review in the First, Eighth and Tenth Circuits…

BUT you would NOT have the benefit of discretionary review with this “satisfactory to us” language in the Second, Third, Seventh and Ninth Circuits.

Here’s the recent case of Viera v. LINA, __ F.3d __ (3rd. Cir. June 10, 2011)pdf (“[S]atisfactory to us” language does not confer discretion). This case also provides “safe harbor” language to use to make sure you get discretion in the Third Circuit next time.

FACTS:

Viera was covered by an accidental death and dismemberment (“AD&D”) policy issued by Life Insurance Company of America (LINA), which was subject to ERISA. Viera had a heart condition for which he took Coumadin to prevent blood clots. He died in a motorcycle accident. The Certificate of Death mentioned cardiovascular disease as one of multiple injuries contributing to the accident.

LINA denied the claim for benefits, relying on a medical review that concluded Viera’s Coumadin treatment complicated medical treatment and contributed to his death. LINA denied the appeal. Viera’s estate sued.

During litigation Plaintiff submitted an expert’s report which concluded that the Coumadin made “the bleeding worse” but it was “unreasonable to propose that, if not for the [Coumadin], the patient would have survived.” (This had not been a part of the record on appeal.)

THIRD CIRCUIT COURT OF APPEALS HELD … on the issue of De novo or Discretionary Review.

  1. “Proof of loss satisfactory to us” language does NOT confer discretion. Op. at 12-13, 19. (The Second, Seventh and Ninth Circuits follow this analysis.) This differs from the First, Eighth and Tenth Circuits which have held that “satisfactory to us” language DOES confer discretion.) Op. at 16-18.
  2. “Proof of loss satisfactory to us” language reserves only “the inevitable prerogative to determine what FORMS of proof must be submitted with a claim—something that an administrator in even the most tightly restricted plan would have to do.” (Quoting Diaz v. Prudential Insurance Co. of America, 424 F.3d 635, 639 (7th Cir. 2005)(Emph. in original). Op. at 19-20.
  3. Recommended Safe Harbor Discretionary Language: “If an administrator wishes to insulate its decision to deny benefits from de novo review, we suggest … the following “safe harbor” language: ‘Benefits under this plan will be paid only if the administrator decides in [its] discretion that the applicant is entitled to them.'” Op. at 21.

The case was remanded for further proceedings.

So you have an unwinnable lawsuit alleging wrongful denial of ERISA benefits. How do you stop the bleeding?

Paying the claim during the lawsuit may moot the claims and end it right there, even if plaintiff continues to seek attorney fees.

Here’s the decision of Templin v. Independence Blue Cross, (E. D. Pa. May 13, 2011) (no determination has been made as to publication). It shows what can happen when the ERISA plan decides to pay a claim during a pending lawsuit alleging wrongful denial of benefits.

Does payment of the claim render the lawsuit moot? Yes.

Does plaintiffs’ claim for attorney fees trump the mootness principle? Maybe not.

FACTS: Both plaintiffs were hemophiliacs covered under an ERISA health plan and they sought prescription benefits–payments for a blood medication. After defendants denied the benefit, plaintiffs sued and the Court ordered defendants to conduct an expedited administrative review. Following expedited review, defendants approved the claims. Defendants then moved to dismiss, contending the claims pending before the court were moot. Plaintiffs argued, however that mootness did not apply because plaintiffs’ attorney fees and costs had not been paid.

TRIAL COURT HELD: Defendants approved the claim during the pending lawsuit and therefore the claims are moot, even though plaintiffs’ continue to seek attorneys fees in the lawsuit.

RATIONALE:

  1. “Under traditional mootness principles, ‘[o]nce the defendant offers to satisfy the plaintiff’s entire demand, there is no dispute over which to litigate” and the payment ‘will generally moot the claim.” Op. at 10
  2. The case became moot once the disputed claims for benefits were paid. Id.
  3. “‘[A] request for [attorney] fees does not preserve a claim that otherwise has become moot.'” Op. at 11 (emph. added), citing Tannenbaum v. Unum Life Ins. Co, of Am., 2010 WL 2649875 at 6, n.14 (E.D. Pa, June 30, 2010) and Lewis v. Continental Bank Corp., 494 U.S. 472, 480 (1990)(a plaintiff’s “interest in attorney’s fees is …insufficient to create an Article III case or controversy where none exists on the merits of the underlying claim”). Op. at 11.
  4. Plaintiffs’ attorney fees incurred during the pre-litigation administrative process are not recoverable. “[T]his holding would apply to equal force to [attorney fees incurred during] administrative proceedings post-filing of the complaint in a case where plaintiff failed to exhaust administrative remedies before filing suit.” Op. at 11, n. 14.