Today, in Heimeshoff v. Hartford Life Insurance Company, 571 U.S. __ (2013), the U.S. Supreme Court unanimously affirmed a Circuit Court ruling that dismissed an action for benefits on the ground that the plaintiff failed to commence her action timely as required by her employee welfare benefit plan’s limitation of action provision. Unlike most statutes of limitations which start the clock on the date the claim accrues, the plan’s limitations period required that lawsuits concerning benefit claims be brought within three years from the date proof of loss is due. Justice Clarence Thomas delivered the opinion of the Court, reaffirming the importance of written plan terms in cases brought under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §1001, et seq.
The Supreme Court accepted certiorari in Heimeshoff to resolve a split between the majority of circuits – which have held that plan limitation of actions periods running from the date proof of loss is due are enforceable as written – and the Third, Fourth and Ninth Circuits – which have held that ERISA-plan limitations periods must be tolled until participants complete all internal claim review and appeal procedures, regardless of the plan terms. Notably, ERISA does not have a statute of limitations for benefit claims.
Julie Heimeshoff (“Heimeshoff”) was a participant whose lawsuit for benefits under ERISA § 502(a)(1)(B) was barred by her plan’s three-year limitation of actions period that ran from the date proof of loss was due. Heimeshoff actually had at least one year (from the date she exhausted her internal review and appeal remedies) to commence her lawsuit, but still failed to file her claim in a timely manner pursuant to the plan’s terms. On appeal to the Supreme Court, Heimeshoff argued that the plan’s three-year “clock” should not start until the internal claim and appeal process had been completed. Heimeshoff argued that the application of this rule would bring uniformity to limitations periods under ERISA, and enforcing plan limitation of action terms running from the date proof of loss is due leads to a lack of uniformity because the administrative review and appeal process takes varying amounts of time from case to case, leading to unequal time for participants to file their lawsuits depending on when the administrative process concludes. Heimeshoff argued that the Court can rectify this problem by ruling that no plan limitations period could start running before claimants had exhausted their internal administrative remedies. The Court resoundingly rejected Heimeshoff’s arguments, holding that ERISA plan terms must be enforced as written. The Court also analyzed the governing Department of Labor regulations providing for a full and fair review under ERISA, and noted that the time it takes for claimants to complete the plan’s internal review and appeal process generally will leave more than sufficient time for them to commence a lawsuit in compliance with the plan’s limitation provision. (Slip op., at 10-11).
This holding is entirely consistent with the Court’s recent rulings, which emphasize the importance of the “written plan rule” in ERISA cases. Relying on its recent prior precedents in U.S. Airways, Inc. v. McCutchen, 569 U.S. __ (2013), Conkright v. Frommert, 559 U.S. 506 (2010) and Kennedy v. Plan Administrators for DuPont Sav. and Investment Plan, 555 U.S. 285 (2009), the Court again held that courts must enforce ERISA plan terms as written. (Slip op., at 8).
The Court also reaffirmed the importance of the internal claim and appeal review process, noting that the reviewing court must defer to the determination of the ERISA plan’s claim fiduciary when the fiduciary has discretionary authority to make such decisions under the terms of the plan. The Court explained that it is important for claimants to participate fully in the plan’s internal claim and appeal process in order to “develop evidence during internal review, [or] they risk forfeiting the use of that evidence in district court.” 571 U.S. at __ (slip op., at 11). The Court also encouraged claimants to focus their effort on the internal claims and appeal procedure, stating “[i]n short, participants have much to lose and little to gain by giving up the full measure of internal review in favor of marginal extra time to seek judicial review.” Id. (slip op., at 12).
The Court recognized only a few exceptions to enforcing an ERISA plan’s limitation of actions provision: first, where a controlling statute does not allow for a contractual limitations period (571 U.S. at __ (slip op., at 9)); second, if the plan’s prescribed period is unreasonably short (id.); and third, when the administrator’s conduct causes a participant’s untimely filing (slip op., at 15). In these circumstances, the Court found that a reviewing court may fashion a remedy, noting that equitable tolling also would apply if the administrator chooses to offer another level of review after the mandatory administrative appeal has been exhausted, which is required by ERISA’s regulations. None of these exceptions were present in Heimeshoff.
The Supreme Court’s decision undoubtedly will be welcomed by plans and plan administrators. The decision brings uniformity and predictability when writing ERISA plans. It now also brings the minority of circuits into harmony with those other circuits that had enforced plan limitation of actions provisions as written.