One protection that a plan and its fiduciaries have against litigation under ERISA is the statute of limitations, or any other limit on the time period, for filing a law suit. It is helpful when a court upholds a limit, imposed by the plan itself, on the period of time for bringing suit. This happened in Burke v. PricewaterhouseCoopers LLP, No. 08-1611-cv (2nd Cir. 2009).
The Case: In Burke, an employee had a claim under ERISA against the PricewaterhouseCoopers LLP Long Term Disability Plan (the “Plan”). The lower court had dismissed the employee’s case. The facts were as follows. After the employee had been receiving disability benefits under the Plan for several months, on March 28, 2003, the plan administrator requested a Proof of Loss from the employee. The Plan itself required the employee to furnish the plan administrator with the Proof of Loss within thirty days after the date on which the plan administrator’s request for the Proof of Loss is made. Although the employee furnished the Proof of Loss within the thirty day period, the plan administrator raised some additional matters, and subsequently informed the employee that her disability benefits were terminated, as of April 30, 2003, for lack of medical evidence. On September 25, 2006, the employee filed a suit in federal court, under Section 1132(a)(1)(B) of ERISA (which creates a cause of action for a participant to recover benefits), challenging the plan administrator’s termination of her disability benefits.
The issue before the Court was whether the employee had filed her law suit before the applicable limitations period for filing had expired. The Plan itself provided that a claimant could not bring a legal action more than three years after the date by which Proof of Loss is required to be furnished. The Court noted that ERISA itself does not prescribe a limitations period for claims brought under Section 1132. Therefore, the applicable limitations period is the one specified in the most nearly analogous state statute, which, in this case, was New York States’ six year limitations period for contract actions. However, New York permits contracting parties to shorten a limitations period, and to specify when the shortened limitations period begins, by written agreement. In this case, the three-year limitations period set forth in the Plan controls, and, as the Plan provided, this period begins on the date by which the Proof of Loss is required to be furnished (even though this beginning date could precede the first date on which the suit could be filed). Thus, the employee was required to file the law suit by April 27, 2006 — three years from the date by which the Proof of Loss was due (such due date being April 27, 2003, which is 30 days after the date the Proof of Loss was requested). Accordingly, her filing on September 25, 2006 was late by almost five months. As a result, the Court upheld the lower court’s dismissal of the case.
Thoughts for Employers: In Burke, the plan’s having an express limitation on the period of time for a participant to file a suit resulted in a reduction of the applicable limitation period for filing from six to three years. Burke suggests that employers review their employee benefit plans and make sure that each of the plans expressly sets forth a time limit for a participant to file a suit for benefits or otherwise. At a minimum, the plan’s provision setting forth the limitation period should indicate the length and starting date of the period. The limitation period should be reasonable, but it’s length should be less than the length of the period which would otherwise apply under law. As seen from Burke, when considering the length and start of the plan’s limitation period, attention must be paid to both ERISA case law and relevant State law. If the employer now amends a plan to add or revise a limitation on the period of time for filing a suit, the plan’s participants should be notified of this amendment.