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

by Hinshaw & Culbertson LLP

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.”


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