High Court Limits Timing Of Certain ERISA Claims

by Fisher Phillips
Contact

The U.S. Supreme Court unanimously upheld a contractual clause that limited a participant’s ability to file a lawsuit pursuant to a long-term disability (LTD) policy.  The contractual limitation was three years from the date proof of loss was required.  The decision confirms that there is no requirement under the Employment Retirement Income Security Act (ERISA) that such a contractual clause be based on the time period after administrative remedies are exhausted and a participant is actually able to bring a lawsuit.  

The decision allows employers to include reasonable statute of limitations clauses in their ERISA plans based on start dates other than the exhaustion of administrative remedies.  Heimeshoff v. Hartford Life & Accident Insurance Co. 

Background

Julie Heimeshoff was employed by Wal-Mart from April 1986 to June 2005.  At the time of her departure, she was Senior Public Relations Manager. Six months before she left, Heimeshoff began exhibiting symptoms of fibromyalgia and lupus. By June, her condition was so severe that she had to leave work. 
In August 2005, Heimeshoff filed a claim with Hartford Life & Accident Insurance Co. for long-term disability benefits. Hartford requested analysis of her condition from her doctor in October and November, but the doctor failed to provide it.  In December of 2005, Harford denied her claim for lack of information.  In May 2006, Heimeshoff hired a lawyer to help her collect benefits. In November 2006, after several evaluations by other doctors, Hartford denied Heimeshoff’s claim again, finding that her conditions did not meet the policy’s definition for total disability. Heimeshoff appealed the decision, but Hartford denied her claim for a final time in November 2007.
Heimeshoff sued in district court, alleging that by denying her claim, Hartford had violated ERISA. The district court dismissed the suit, finding Heimeshoff’s claim was time barred because the plan unambiguously prohibited legal action more than three years after proof of loss was required. Heimeshoff argued the three-year statute of limitations should instead run from the date when Hartford denied her claim for the final time, in other words, upon exhaustion of her administrative remedies. 

Heimeshoff appealed the district court’s decision, and the U.S. Court of Appeals for the 2nd Circuit affirmed in an unpublished summary order.

Legal Analysis

To frame the issue, the Court cited to a prior decision, Order of United Commercial Travelers of America v. Wolfe, which held that a “contractual limitations provision is enforceable so long as the limitations period is of reasonable length and there is no controlling statute to the contrary.”
Heimeshoff brought her claim under Section 1132 of ERISA, which creates a cause of action for beneficiaries of an ERISA plan to recover benefits, enforce rights, or clarify rights to future benefits. But ERISA does not contain a specific limitations period for challenging the denial of benefits. Instead, courts look to the most nearly analogous state limitations statute.  In this case, the lower court looked to Connecticut law, which allows parties to contractually agree on a statute of limitations period as long as the period is at least one year.  As the Court noted in its opinion, the parties did not dispute this point.
The important question tackled by the Court is whether a statute of limitations specified by an ERISA plan for bringing a claim may begin to run before a claimant has exhausted her administrative remedies and can actually bring a legal action. The Court found it can, noting that it is “unlikely that enforcing limitations periods that begin to run before the internal review process is exhausted will endanger judicial review.”  As evidence, the Court points out that administrators who delay internal review processes in bad faith will allow participants immediate access to judicial review, and it is very rare for internal review processes administered in good faith to last three years.
Heimeshoff’s arguments could not overcome the precedent set by Wolfe because the statute of limitations is of reasonable length and there is no controlling statute to the contrary.  The Court noted that the principle that contractual limitation provisions should generally be enforced is particularly relevant in this context, because “ERISA authorizes a participant to bring suit ‘to enforce his rights under the terms of the plan.’”
Significance For Employers
For employers who maintain ERISA health and welfare plans, this decision confirms that there are no requirements under ERISA with respect to when a reasonable statute of limitations can begin to run.  Employers should check their plan documents to ensure that any limitation on a participant’s ability to bring a lawsuit is reasonable, and that the limitation is spelled out unambiguously in the policy.  It is also a good idea to include such language in denial of claim letters. 

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Fisher Phillips | Attorney Advertising

Written by:

Fisher Phillips
Contact
more
less

Fisher Phillips on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!