This month’s Friday Five covers cases relating to the enforceability of contractual statute of limitations provisions described as a “labyrinth,” ERISA claims when the carrier allegedly misrepresents benefits, federal courts retaining ERISA jurisdiction following a related state court case, a court excusing an administrator’s regulatory violations under the arbitrary and capricious standard, and a court enforcing the clear terms of a plan relating to when coverage for benefits ends.

1. Federal Circuit Court Certifies Nuanced Statute of Limitations Issue to State Supreme Court for Review. The district court in a recent long-term disability dispute encountered a “mystifying six-step calculation” set forth in the underlying insurance policy for calculating the deadline for litigation on denied claims. The court described this procedure as a “limitations scheme,” “labyrinth,” and a process “designed to confuse” claimants. After disposing of a handful of other issues, the court certified an issue to the state supreme court regarding whether the “limitations scheme” violated state public policy. As applied to the claimant in this case, the limitations period could have run just a few weeks after the administrative process concluded, which the plaintiff argued was unfair and did not provide him with sufficient time to institute litigation. Smith v. Prudential Ins. Co. of Am., No. 23-1168, 2023 WL 8446510 (1st Cir. Dec. 6, 2023).
2. Court Refuses ERISA Section 502(a)(3) Claim, and Related Claims, When Insurer Allegedly Misrepresented Waiver of Premium Benefits. The plaintiff, the wife and beneficiary of the decedent, challenged a denial of life insurance benefits. According to the insurer, the life insurance policy lapsed when the decedent failed to continue paying premiums after his employment was terminated. According to the plaintiff, the insurer and employer failed to fully inform the plaintiff and decedent that premium payments were required post-termination, while the plaintiff further noted that notices related to disability benefits suggested that the premium requirement was waived. On judgment on the pleadings, the court dismissed plaintiff’s ERISA Section 502(a)(2) and (a)(3) claims, including holding that an (a)(3) claim was limited to equitable relief which the plaintiff was not seeking from the outset because she wanted the death benefit, not some other form of relief. The court also denied the employer’s request to amend its answer to include a misrepresentation cross-claim against the insurer, finding that any such common law claim, even postured as a cross-claim, was preempted by ERISA. Anderson v. Reliance Standard Life Ins. Co., No. 22-4654, 2023 WL 8271931 (D. N.J. Nov. 30, 2023).
3. Federal Court Retains Jurisdiction Under ERISA Despite Related State Court Battle. During the pendency of divorce proceedings, an Iowa state court issued an injunction prohibiting the parties from altering the details of their health or life insurance. Prior to the injunction, the husband asked for the beneficiary on his life insurance policy to be changed from the wife, but the change only became effective after the state court injunction was entered. When the husband died, the insurance company paid the life insurance death benefit to the new beneficiary, not the wife, which led to the wife suing for a return of the benefit. The case was removed to federal court and the wife asked for a remand to state court. The federal court decided to retain jurisdiction, reasoning that the life insurance policy was subject to ERISA and the relief demanded by the wife was akin to restitution, which was a form of relief clearly covered by ERISA. Bentley v. Symetra Life Ins. Co., No. 23-1008, 2023 WL 8455043 (N.D. Iowa Dec. 6, 2023).
4. Court Imposes Heightened Standard of Review and Excuses Administrator’s Violation of ERISA Regulation. In a challenge to the denial of benefits, the plaintiff contended that because the administrator made missteps during the administrative process that could violate ERISA regulations, the arbitrary and capricious standard of review should not apply. The court noted that these violations, if true, impact only whether the denial of benefits was proper as a substantive matter, not the court’s standard of review. Therefore, the arbitrary and capricious standard of review applied. On the merits, the court also made quick work of most of the plaintiffs’ arguments and determined that the plan correctly denied benefits. Notably, the court even excused the administrator’s failure to provide a peer review relied upon by the plan to the plaintiff on appeal. The court found that this procedural misstep, which was a violation of ERISA regulations, did not warrant a remand because the plaintiff failed to satisfy the definition of disability to trigger benefits in the first place. Brown v. Covestro LLC Welfare Bene. Plan, No. 22-954, 2023 WL 8481914 (W.D. Pa. Nov. 15, 2023).
5. Court Enforces Clear Terms of Plan Ending Coverage at Same Time as Separation of Employment. The plaintiff, a beneficiary of a former employee covered by the underlying plan, sued to recover life insurance and accidental death benefits. The decedent resigned from employment but died in an accident seven days later. Although the plan was clear that coverage ended the moment employment terminated, the beneficiary attempted to save the claim through a variety of arguments, including an allegation that the decedent could have ported his coverage to an individual plan within thirty-one days of termination, but was never able to do so because of his death. The court, on a motion to dismiss, enforced the clear terms of the plan and dismissed the complaint. The court noted that the plaintiff “provides no basis warranting a different result,” and also disposed of the plaintiff’s ancillary arguments that the administrator committed procedural missteps along the way. King v. Metropolitan Life Ins. Co., No. 23-1175, 2023 WL 8656023 (N.D. Tex. Dec. 14, 2023).