Does the claim administrator waive the timeliness defense if it failed to deny the claim on that basis during administrative review? YES!
Here is a nice case that summarizes the point, and the status of waiver in the circuits. Becknell v. Severance Pay Plan of Johnson and Johnson, 2014 WL 1577723 (D. N.J. April 21, 2014).
FACTS: Plaintiff became disabled on April 16, 2008 and made a claim for short term and long term disability benefits under the self-funded ERISA plan. On October 25, 2012 Plaintiff made a written claim for severance benefits under the ERISA plan. The request was four years late. The plan denied the severance benefit, but not because it was untimely. Instead, the claim was denied because Plaintiff’s termination did not result from one of the severance events in the plan.
ISSUE: Did the ERISA plan waive the timeliness defense because it was not asserted in the administrative process?
“Some circuits prevent a plan administrator from relying on a defense…that was not articulated in the administrative proceedings[.]” Op. at 6. (The court cites cases from the 1st, 2nd 5th, 8th 9th, 10th circuits.)
“Other circuits have acknowledged that waiver is possible in some factual circumstances.” (The court cites cases from the 4th, 7th, 11th circuits). Op. at 7.
“Defendants wish to preclude Plaintiff from asserting his claim based on a timeliness defense that they failed to raise during the administrative proceedings. The fact remains that ‘[t]he time to deny Plaintiff’s claim on that basis of untimeliness has come and long gone.’” Op. at 12.