ERISA claims administrators sometimes are asked to “reopen” a claim, after appeal denial, to consider additional information.
How does “reopening” a claim affect the statute of limitations defense?
If the statute of limitations has already run, does the claim administrator “waive” the statute of limitations defense by agreeing to reopen a claim? NO.
Here’s last Friday’s Ninth Circuit case Gordon v. Deloitte & Touche, __ F.3d __ (April 11, 2014)(Even when MetLife “reopened” the claim in 2009, five years after claim denial, the 2004 statute of limitations defense applied, barring the 2011 lawsuit.). This also is a good case to review because it discusses how an appeal denial letter should be written, when considering the statute of limitations defense.
FACTS. Gordon was eligible under Deloitte’s long term disability (LTD) ERISA plan. The plan granted discretion to MetLife to make benefit decisions. Gordon sought disability benefits due to depression. Two appeals followed. MetLife denied the claim on November 4, 2003, indicating her benefits ended on March 2, 2003 due to the 24 month mental/nervous limitation. The letter also indicated Gordon had a 180-day appeal deadline, which meant she had to file an appeal by May 4, 2004. Then, four (4) years passed. In 2009 Gordon called to “reopen” her claim. MetLife informed her the appeal deadline had passed.
In April 2009 the California Department of Insurance asked MetLife to reevaluate the issues. MetLife agreed and allowed Gordon to submit additional evidence. On December 8, 2009, MetLife informed Gordon it was upholding the prior denial based on the Plan’s 24 month limitation for mental/nervous benefits. The letter advised Gordon she could appeal within 180 days (by May 4, 2004). The letter also stated that if the appeal was denied, she could then bring suit under Section 502(a) of ERISA. Gordon timely appealed, submitting 480 pages of exhibits. Gordon filed suit on January 31, 2011.
NINTH CIRCUIT HOLDS:
An ERISA claim “accrues either at the time benefits are actually denied or when the insured has reason to know that the claim has been denied.” A claimant should know that the claim is denied when “there has been a ‘clear and continuing repudiation of a claimant’s rights under a plan such that the claimant could not have reasonably believed but that his benefits had been finally denied.’” Op. at 7.
“We conclude that Gordon’s right to file an ERISA action accrued no later than May 4, 2004 (applying the California four year statute of limitations). Gordon did not file the pending complaint until January 31, 2011.” The claim is barred by the California four year statute of limitations. Op. at 8.
“Reopening” Gordon’s claim in 2009 does not in and of itself revive the statute of limitations. Op. at 9.
MetLife is not estopped from asserting the statute of limitations defense based on MetLife’s statement in its December, 2009 letter that Gordon could bring an ERISA action (after the matter was reopened). By the time MetLife issued this letter, “the statute had already run and so Gordon could not have relied on that statement to her detriment.” Op. at 10.
MetLife did not waive the statute of limitations defense by stating in the December 8, 2009 letter that Gordon could bring an ERISA action after the matter was reopened. Under California law, an insurance company “cannot waive the statute of limitations after the limitations period has run.” Op. at 11 (Emph. added).