ERISA-Supreme Court Upholds A Plan’s Own Statute Of Limitations For Filing A Lawsuit For A Benefit Claim Denial

In Heimeshoff v. Hartford Life & Accident Insurance Co., No. 12-729 (decided December 16, 2013), the defendant, Hartford Life & Accident Insurance Co. (“Hartford”), was the plan administrator of Wal-Mart Stores (“Wal-Mart”), Inc.’s Group Long Term Disability Plan (the “Plan”). The Plan’s insurance policy requires any suit filed in a court to recover benefits under ERISA § 502(a)(1)(B) to be filed within three years after “proof of loss” is due. The plaintiff, Heimeshoff, had filed a claim for long-term disability benefits under the Plan with Hartford. After Heimeshoff exhausted the mandatory administrative review process, Hartford issued its final denial. Almost three years after that final denial, but more than three years after proof of loss was due, Heimeshoff filed a claim in court pursuant to ERISA § 502(a)(1)(B). Hartford and Wal-Mart moved to dismiss on the ground that the claim was untimely. The district court granted the motion, recognizing that while ERISA does not provide a statute of limitations, the contractual 3-year limitations period was enforceable under applicable State law and circuit precedent. The Second Circuit affirmed.

In analyzing the case, the U.S. Supreme Court (the “Court”) held that the Plan’s limitations provision is enforceable. It said that the courts of appeals require participants in an employee benefit plan covered by ERISA to exhaust the plan’s administrative remedies before filing suit to recover benefits. A plan participant’s cause of action under ERISA § 502(a)(1)(B) therefore does not accrue until the plan issues a final denial. But it does not follow that a plan and its participants cannot agree to commence the limitations period before that time.

Further, the Court said that the rule set forth in Order of United Commercial Travelers of America v. Wolfe, 331 U. S. 586, 608, provides that a contractual limitations provision is enforceable so long as the limitations period is of reasonable length (i.e., as here, not unreasonably short) and there is no controlling statute to the contrary. That is the appropriate framework for determining the enforceability of the Plan’s limitations provision. The Wolfe approach necessarily allows parties to agree both to the length of a limitations period and to its commencement. The principle that contractual limitations provisions should ordinarily be enforced as written is especially appropriate in the context of an ERISA plan. Heimeshoff’s cause of action is bound up with the written terms of the Plan, and ERISA authorizes a participant to bring suit “to enforce his rights under the terms of the plan.” ERISA § 1132(a)(1)(B). This Court has thus recognized the particular importance of enforcing plan terms as written in § 502(a)(1)(B) claims, see, e.g., CIGNA Corp. v. Amara, 563 U. S. ___, ___, and will not presume from statutory silence that Congress intended a different approach here.

Based on the above, the Court affirmed the lower courts’ decisions.

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