SCOTUS Unlikely to Reject Three-Year Limit for Filing Lawsuit in ERISA Disability Claim

by Hinshaw & Culbertson LLP
Contact

The transcript from this morning’s oral argument at the United States Supreme Court reflects that a majority of justices seem poised to uphold an ERISA plan provision imposing a three-year limit for claimants to file their lawsuits following the original submission of proof of loss. 

Several justices expressed skepticism over the need to intervene in this particular case, where the plaintiff/petitioner had approximately one year following the final denial of her claim within which to sue. Moreover, at least one justice noted that the federal government would be empowered to issue a clarifying regulation only if the Court ruled against the plaintiff and upheld the three-year limit.

In Heimeshoff v. Hartford Life & Accident Ins. Co., et al., the District Court of Connecticut had dismissed Julie Heimeshoff’s case, deeming it 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. For a more in-depth analysis of the District Court’s and Second Circuit’s rulings, see our prior blog entry, Accrual of Statute of Limitations for ERISA Disability Claim to be heard by SCOTUS.

Early in the oral argument before the Supreme Court, Justice Ruth Bader Ginsburg asked Heimeshoff’s counsel how much time was left in this case following the issuance of Hartford’s final denial decision on the administrative appeal. Heimeshoff’s counsel responded “approximately one year.” When pressed “[w]hat accounts for the delay? When the clock was running and more than a year went by before this suit was instituted. Why was that – why did that happen?” Heimeshoff’s counsel argued that the provision was “confusing” and “unclear” as to “when the clock actually started ticking” and “how much time after final denial would be left when you’re in the middle of the process.”

Justice Sonia Sotomayor was unpersuaded. “I’m a little confused because it would be the same no matter what rule we instituted. … [Y]ou really never know when the administration process is final, just like you’re arguing you don’t know when the proof of loss date is final. But at least the advantage of proof of loss, you know you got three years from at least the beginning of the process.”

Later, Justice Anthony Kennedy expressed his view: “But in this case, as Justice Ginsburg indicated at the outset, there was a period of I think just over a year, in which it was very clear that the administrative process had ended and nothing happened. I don’t see the unfairness in the application of the rule in this case.”

Justice Stephen Breyer raised the possibility of a claimant filing a “protective complaint” before the exhaustion of administrative remedies had occurred and then asking the judge to delay acting on the case until the administrative process finished. “[Y]ou could file the lawsuit within the three years and if exhaustion had not taken place, well, just don’t hear the case until the exhaustion is done.”

Justice Sotomayor also noted that if the Court were to rule against Heimeshoff (holding that her particular lawsuit was time-barred), the government could issue a clarifying regulation along the lines of “you’ve got to give people at least a year from the end of the administrative process to file.” Justice Sotomayor continued, however, that if the Court were to rule in favor of Heimeshoff, “they [the government] would be estopped from passing a regulation requiring something different than what we say.” Heimeshoff’s counsel expressed his agreement.

Justice Elena Kagan then asked whether Heimeshoff’s counsel had “identified any cases in which this [plan provision] serves to prevent somebody from bringing a suit.” Heimeshoff’s counsel conceded that he had not found any such cases, but he added that “courts are now in the business of having to evaluate, does that give enough time to the claimant to do all the things that she needs to do to file her claim?” Justice Kagan continued, though, that courts have been pretty liberal in saying “take a little bit more time. So it seems just a little bit like a solution in search of a problem.”

Counsel for the United States also encountered resistance from several of the justices. She suggested that “a plan could easily remedy the problem we have here by saying our limitation period runs from 3 years from proof of loss or 6 months from the plan’s final determination, whichever is later.” By contrast, she expressed the view that Hartford’s plan provision undermined ERISA’s remedial framework, to which Justice Antonin Scalia responded: “But it hasn’t undermined the framework. I mean, Petitioner had a year.”

Justice Kagan commented that “[t]here’s actually a big leeway in this statute, because it’s 3 years. The administrative review process only takes about a year.” Justice Sotomayor later echoed a similar view: “Counsel, I could be more troubled by this case if the proof of loss provision required a suit to be brought in a year, because as I’m adding up the timeframe, it’s about 15 months if no exceptions remain for the administrative process.”

Justice Ginsburg raised Justice Breyer’s suggestion – of a claimant filing a lawsuit while the administrative process is underway and asking the judge to hold the case in abeyance – with counsel for the United States. Counsel rejected the idea as a “bizarre scheme that would turn the exhaustion process and the point of exhaustion on its head, and that essentially would require a rush to court by claimants who don’t know yet whether the exhaustion process will be resolved in their favor.”

Very shortly into the argument by counsel for Hartford and Wal-Mart, Justice Scalia interrupted with questions designed to confirm both that employers are not obligated to provide employee benefit plans, but that – if they do – they may do so on their own terms.

Justice Breyer advised that his clerks had located nine cases of potential concern: “[F]ive cases in which the exhaustion period was actually longer than the 3-year statute of limitations; and then they found four others that there – well, there was like 5 days left in one, and there was 5 months left in another. And in most of – almost all those cases, the judge got around the problem by saying the statute begins to run at the time the exhaustion is finished.” 

He added that he could think of other ways to solve the problem, including the issuance of a regulation or the interpretation of the exhaustion doctrine to require leaving at least one year. In the end, he asked for suggestions from counsel for Hartford and Wal-Mart, who responded that “we think courts are well equipped to apply the same equitable doctrines that courts have always applied to statute of limitations when situations like that arise.” Upon further questioning by Justice Breyer, counsel specifically raised equitable estoppel and equitable tolling.

Juxtaposing the time frame since ERISA’s enactment in 1974, Justice Scalia again seemed unpersuaded: “So these seven people, nine people – how many were there? – over 40 years, they probably had a way out?”

Later, though, Chief Justice John Roberts expressed some favorable sentiment toward Heimeshoff’s situation. “I suspect there are more than nine cases where people are looking at the running of the statute of limitations and they’re saying, well, I’ve got to sue if I don’t get this and when do I have to hire a lawyer. And the last thing you want in this process is to get lawyers involved at the claim procedure.” 

As part of his response, counsel for Hartford and Wal-Mart noted that Heimeshoff had actually retained counsel “relatively early on in the process,” to which Chief Justice Roberts replied “[w]ell, she was very prudent.” In summarizing his view, Chief Justice Roberts explained “[i]t just seems to me that you keep it as an informal resolution – inexpensive resolution process if you tell somebody look, you don’t have to worry about getting a lawyer until we tell you whether we’re going to deny your claims or not.”

During rebuttal, Heimeshoff’s counsel faced additional questions from Justice Samuel Alito, who pointed out that plans “specify a lot of different lengths, and then they’re all challenged – different ones are challenged in different courts, and the courts have to say what’s reasonable. And there’s no State statute of limitations that applies to this situation. So it all comes down just to a question of reasonableness.” Heimeshoff’s counsel disagreed, stating that “[o]ne year from final denial would absolutely be enough time, would provide all parties under ERISA with the certainty that they have to file their claim.”

 

Written by:

Hinshaw & Culbertson LLP
Contact
more
less

Hinshaw & Culbertson LLP 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!