In Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc., No. 12-17604 (9th Cir. 2014), one issue faced by the Ninth Circuit Court of Appeals (the “Court”) was whether a claim for benefits is time-barred. The Court ruled that it was not. Why?
In this case, Spinedex was a physical therapy clinic whose patients included beneficiaries of various health plans (the “Plans”). Spinedex’s patients signed several documents in connection with their treatment, including an assignment of benefits form (the “Assignment”). The Assignment assigned to Spinedex its patients’ “rights and benefits” under their respective Plans. After treating patients covered by the Plans, pursuant to the Assignements, Spinedex submitted claims to United Healthcare (“United”). United paid some claims, but denied others in whole or in part. Spindex brought suit under ERISA against United and the Plans for the unpaid claims But is the suit time-barred?
The summary plan descriptions (“SPDs”) for the Plans contain two-year limitations periods for claims of benefits. There is no question that Spinedex’s action was filed after the expiration of the two-year period. However, the Court held that because the limitation periods were not properly disclosed in the SPDs, these provisions are unenforceable.
In an SPD, under ERISA, circumstances which may result in disqualification, ineligibility, or denial or loss of benefits must be clearly disclosed. A limitation of the time for bringing suit qualifies as such a circumstance. Under the regulations, at 29 C.F.R. § 2520.102-2(b), either: (1) the description or summary of the restrictive provision-such as a time limit on bringing suit- must be placed in close conjunction with the description or summary of benefits, or (2) the page on which the restrictive provision is described must be noted adjacent to the benefit description. The SPDs in question comply with neither requirement, as the restrictive provision is buried in a section that is not close to the discussion of benefits, and there is no reference, adjacent to the benefits description, to the page number on which the restrictive provision appears. Applying a reasonable plan participant test to 29 C.F.R. § 2520.102-2(b), a reasonable participant would not be expected to find the restrictive provision in this case. As a result, the restriction cannot be enforced, and Spinedex’s suit is not time-barred.