In Heimeshoff v. Hartford Life & Acc. Ins. Co. the United States Supreme Court held that a contractual limitations period in an ERISA long-term disability plan was enforceable and began to accrue before the administrator had made a final determination on the claim because the three-year limitations period was reasonable. 

In other words, under the terms of the Plan, the contractual limitations period commenced before a final benefit determination was made and before the claimant had exhausted her administrative remedies under the Plan.

The Plan at issue provided as follows: “Legal action cannot be taken against The Hartford . . . 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.”  

Thus, the Plan provided that the limitations period would begin to run before any final determination on the claim was made and before the Plan’s administrative remedies were exhausted.

On November 18, 2010, Julie Heimeshoff (“Heimeshoff”) filed suit against Hartford Life & Accident Insurance Company (“Hartford”) and her former employer, WalMart Inc. She filed her lawsuit less then three years after Hartford issued its final adverse benefit determination, but more than three years after “proof of loss” was due under the Plan. Hartford filed a motion to dismiss on the ground that Heimeshoff’s claim was barred by the three-year contractual limitations period. The district court granted Hartford’s motion and the Court of Appeal for the Second Circuit affirmed the dismissal. See Heimeshoff v. Hartford Life & Accid. Ins. Co, et al., 2012 U.S. App. LEXIS 19269 (2d Cir. 2012). 

The Supreme Court granted a writ of certiorari on April 15, 2012, as to the following question: “When should a statute of limitations accrue for judicial review of an ERISA disability adverse benefit determination?” Heimeshoff v. Hartford Life & Accid. Ins. Co, et al., Case No. 12-729. 

In a unanimous decision, the Supreme Court affirmed the Second Circuit’s dismissal of Heimeshoff’s complaint. In so ruling, the Supreme Court recognized that while an ERISA claim “typically does not accrue until the plan issues a final denial,” this general rule did not apply where “the parties have agreed by contract to commence the limitations period at a particular time.” The Court reasoned:

[I]n the absence of a controlling statute to the contrary, a provision in a contract may validly limit, between the parties, the time for bringing an action on such contract to a period less than that prescribed in the general statute of limitations, provided that the shorter period itself shall be a reasonable period.” Order of United Commercial Travelers of America v. Wolfe, 331 U. S. 586, 608 (1947).

The Court observed that “[t]he principle that contractual limitations provisions ordinarily should be enforced as written is especially appropriate when enforcing an ERISA plan” given the importance of adhering to Plan language in ERISA claims. Thus, the Court held: “We must give effect to the Plan’s limitations provision unless we determine either that the period is unreasonably short, or that a ‘controlling statute’ prevents the limitations provision from taking effect.  Wolfe, 331 U. S., at 608. Neither condition is met here.”

In concluding that the limitations period was reasonable, the Court noted that the administrative review process would normally be completed within a year, “leaving the participant with two years to file suit.” 

The Court, however, left open the possibility that a court could rule differently if substantially less time remained after the final benefits determination was made, such that a claimant was effectively barred from bringing a timely §502(a)(1)(B) claim.

The Court also rejected the argument that ERISA’s statutory remedial scheme precluded enforcement of the contractual limitations period. As a result, there was no statute that prevented the contractual limitations provision from being enforced.

For further analysis of this decision, please see You Can Plan On The Plan: United States Supreme Court Rejects Invitation To Rewrite Plan Terms In Heimeshoff v. Hartford Life & Accident Insurance Company on Barger & Wolen's Life, Health, Disability Insurance Law blog.