ERISA-First Circuit Rules That Suit Under ERISA For Disability Benefits Was Timely Filed, Based on Equitable Tolling

In Candelaria v. Orthobiologics LLC, No. 09-2305 (1st Cir. 2011), the plaintiff, Rolando Candelaria (“Candelaria”), suffered a disability while employed by Orthobiologics, LLC, a Puerto Rico-based subsidiary of Johnson & Johnson, Inc. He sought payment of benefits under the company’s long-term disability plan (the “Plan”) and was denied. Three years later, Candelaria filed suit under ERISA to obtain the long-term disability (“LTD”) benefits from the Plan. The district court found the suit untimely and granted summary judgment in Orthobiologics’s favor. The question for the First Circuit Court of Appeals (the “Court”): was Candelaria’s suit timely filed?

In this case, Candelaria became disabled in 2002, and had filed a claim for LTD benefits from the Plan in 2003. On June 1, 2004, while Candelaria was in the midst of the Plan’s internal appellate process, he requested a current copy of the Plan, which he received three weeks later. At that point, the Plan did not contain any limit on the period for filing suit to contest a claim denial. Only one week later, on July 1, 2004, the Plan was amended to establish a limitations period of one year. Candelaria did not receive any notice of this change. On January 26, 2005, Orthobiologics issued a final written rejection of Ortega’s claim. The rejection contained no information about Ortega’s judicial options or the reduced limitations period. Candelaria filed this suit on December 14, 2008.

The Court said that Candelaria’s argument on appeal is based on the doctrine of equitable tolling. That doctrine is used to excuse a party’s failure to take an action in a timely manner, where such failure was caused by circumstances that are out of his hands. Equitable tolling suspends the running of the limitations period, if the plaintiff, in the exercise of reasonable diligence, could not have discovered information essential to his claim. The tolling proponent must establish that extraordinary circumstances beyond his control prevented a timely filing or that he was materially misled into missing the deadline.

In this case, the Court found that Candelaria missed the critical one-year deadline because he was materially misled into doing so by Orthobiologics. Citing 29 C.F.R. § 2560.503-1(g)(1)(iv), the Court said that Orthobiologics was required by federal regulation to provide Candelaria with notice of his right to bring suit under ERISA, and the time frame for doing so, when it denied his request for benefits. Orthobiologics failed to provide this notice. This is the case, even though the Plan’s summary plan description informed Candelaria of his right to sue; the information had to be included with the benefit denial. Without this information, Candelaria reasonably thought that he had 15 years to file the suit. The Court concluded that Candelaria was entitled to equitable tolling, so that his suit was not untimely filed. As such, the Court reversed the district court’s summary judgment against Candelaria, and remanded the case back to the district court.

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