Accrual of Statute of Limitations for ERISA Disability Claim to be heard by SCOTUS

by Hinshaw & Culbertson LLP
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On October 15, 2013, the United States Supreme Court will conduct oral argument in Heimeshoff v. Hartford Life & Accident Ins. Co., et al., addressing the accrual of the statute of limitations for judicial review of an adverse benefit determination under an employee benefit plan governed by the Employee Retirement Income Security Act (“ERISA”).

As discussed below, the District Court of Connecticut granted defendants’ motion to dismiss, holding that plaintiff’s lawsuit was time-barred given the plan’s contractual limitation requiring legal action to be commenced within three years “after the time written proof of loss is required to be furnished.” The Second Circuit Court of Appeals affirmed in an unpublished per curiam opinion. In granting the petition for review, the Supreme Court limited the scope of its inquiry to a single question, rejecting consideration of two others that had been posed.

This blog entry will therefore “tee up” Tuesday’s oral argument before the Supreme Court, summarizing the underlying District Court and Second Circuit decisions and clarifying what are – and what are not – the core issues to be resolved.

District Court proceedings

On November 18, 2010, Julie Heimeshoff filed her lawsuit against Hartford and Wal-Mart, claiming that defendants had violated ERISA by failing to provide long-term disability (“LTD”) benefits to which she was entitled under the employee benefit plan issued and offered, respectively, by defendants.

Heimeshoff claimed that she had to stop working as Senior Public Relations Manager for Wal-Mart on or about June 8, 2005 due to “significant pain, extreme fatigue, and cognitive impairment” based upon “likely Irritable Bowel Syndrome and possible Restless Leg Syndrome, Allergies, and strong past history of lupus.” On August 22, 2005, Heimeshoff submitted her claim for LTD benefits to Hartford, supported by an Attending Physician Statement from her rheumatologist, Dr. Michael Saitta, with a diagnosis of Systemic Lupus Erythematosis and Fibromyalgia.

On November 29, 2005, Hartford sent a letter to Heimeshoff notifying her that it had not yet received a response from Dr. Saitta regarding her functionality, stating that it therefore could not make a benefit determination. On December 8, 2005, Hartford sent another letter to Heimeshoff, denying her claim because of the failure to provide satisfactory proof of loss.

Heimeshoff subsequently underwent a two-day Physical Capacity Evaluation (“PCE”) on July 18 and 19, 2006 to provide Hartford with the requested functionality information. Heimeshoff’s counsel forwarded the resulting report to Hartford on October 2, 2006, also including a report from her primary treating physician confirming her disability.

Hartford retained a rheumatology consultant to review the PCE, to speak with Dr. Saitta and to issue a report. On November 29, 2006, Hartford denied Heimeshoff’s LTD benefit claim. Heimeshoff pursued an administrative appeal of Hartford’s denial determination, submitting further evaluations and medical reports. Hartford retained two additional consultants, and – as alleged by Heimeshoff – issued “its last and final denial letter” on November 26, 2007.

In the litigation, defendants moved to dismiss the complaint, arguing that it was time-barred under the terms of the plan.

The plan provided that “[l]egal action cannot be taken against The Hartford … after the shortest period allowed by the laws of the state where the policy is delivered. This is 3 years after the time written proof of loss is required to be furnished according to the terms of the policy.” As to proof of loss, the plan required that “[w]ritten proof of loss must be sent to The Hartford within 90 days after the start of the period for which The Hartford owes payment.”

In opposition to defendants’ motion, Heimeshoff argued that the plan was ambiguous as to when proof of loss was due and that Hartford had failed to advise her of the plan’s three-year limitation in its denial letter.

The District Court dismissed the case. It first discussed well-settled law that because ERISA does not specify a limitations period, courts are to borrow from the most nearly analogous state limitations statute. However, a plan may prescribe a shorter limitations period than that state statute of limitations, and a limitations period that begins to run before a claimant may file a lawsuit is enforceable.

Citing a letter from Hartford that gave Heimeshoff up to September 30, 2007 to submit her additional claim information, the District Court concluded that written proof of loss was due – at the latest – by that date. As such, she was required to take legal action no later than September 30, 2010, but she did not file her lawsuit until November 18, 2010.

The District Court also rejected Heimeshoff’s contention that Hartford’s denial letter had to include notice of the plan’s limitations period. Discussing ERISA’s regulations, the District Court concluded that Hartford was required to provide “a statement of the claimant’s right to bring a civil action,” but not the applicable time limits for that action.

Second Circuit decision

By way of a brief Summary Order, the Second Circuit affirmed the dismissal of Heimeshoff’s case. The three-judge panel rejected Heimeshoff’s argument that the contractual limitations period did not begin to run until Hartford’s final denial of benefits. It noted that Connecticut’s six-year statute of limitations otherwise applied, but the three-year limitation in Hartford’s plan shortened that time frame. “The policy language is unambiguous and it does not offend the statute to have the limitations period begin to run before the claim accrues.”

The Second Circuit also found it unnecessary to resolve Heimeshoff’s contention that Hartford was required to disclose, in its denial letters, the time limits for filing a civil action. Heimeshoff’s counsel had conceded both in the District Court and at oral argument before the Second Circuit that he had received a copy of the plan containing, as described by the Second Circuit, “the unambiguous limitations provision long before the three-year period for Appellant to bring the claim had expired.”

Scope of Supreme Court’s review

In granting Heimeshoff’s petition for writ of certiorari, the Supreme Court accepted only one question: “When should a statute of limitations accrue for judicial review of an ERISA disability adverse benefit determination?”

Two other questions were not accepted for review: “What notice regarding time limits for judicial review of an adverse benefit determination should an ERISA plan or its fiduciary give the claimant with a disability claim?” and “When an ERISA plan or its fidicuary fails to give proper notice of the time limits for filing a judicial action to review denial of disability benefits, what is the remedy?”

In addition to briefing by the parties, numerous groups and entities were permitted to file briefs as amici curiae. The United States (specifically, the Department of Labor), AARP, National Employment Lawyers Association, and United Policyholders filed in support of Heimeshoff. American Council of Life Insurers, America’s Health Insurance Plans, Chamber of Commerce of the United States of America, and DRI – The Voice of the Defense Bar filed in support of Hartford and Wal-Mart.

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