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The U.S. Supreme Court Has Spoken! Employer Sponsored Benefit Plans Can Provide Reasonable Limitations on Time For Filing Suit Over Denial of Benefit Claims, Even if The Time For Filing Starts Running Before The Cause of Action Accrues
By Kathi Chestnut on December 26, 2013 at 7:15 PM

Hourglass isolated on white backgroundOn December 16, 2013, the United States Supreme Court held that an employer sponsored disability plan with a provision requiring a plan participant to file suit within three (3) years after filing a written proof of loss under the plan is enforceable under the Employee Retirement Income Security Act (ERISA). The decision by the Court in Heimeshoff v. Hartford Life & Accident Ins. Co., No. 12-729, resolved a deep split among the federal Courts of Appeals regarding the enforceability of such limitation provisions.

As factual background, Hartford Life & Accident Insurance Company (“Hartford”) acted as the Administrator for Walmart’s Group Long Term Disability Plan (“Plan”). Plaintiff Julie Heimeshoff (“Heimeshoff”) was a 20 year employee of Walmart, who stopped working on June 8, 2005, and submitted a claim for long-term disability benefits on August 22, 2005 based on a diagnosis of lupus and fibromyalgia. Hartford requested additional information concerning her claim, and notified her in November of 2005 that without the additional information, it could not determine whether she was disabled. In December of 2005, not having received the additional information, Hartford denied her claim for failure to provide satisfactory proof of loss. Hartford informed Heimeshoff that she had 180 days to appeal the decision, but later informed her it would reopen her claim if her physician provided the requested information.

In July 2006, a physician evaluated Heimeshoff and opined that she was disabled. In October 2006, Heimeshoff provided the evaluation and submitted additional medical evidence to Hartford. Hartford had the information reviewed by another physician, who opined that Heimeshoff could perform the duties of a sedentary occupation. In November, 2006, Hartford denied Heimeshoff’s claim for disability benefits. After receiving an extension of time to file an appeal with Hartford, on September 26, 2007, Heimeshoff submitted her appeal along with additional testing evaluations. After two additional physicians retained by Hartford reviewed the claim, Hartford issued its final decision on November 26, 2007.

The Plan contained the following limitations provision:

  •  Legal action cannot be taken against the Hartford…[more than] 3 years after the time written proof of loss is required to be furnished according to the terms of the policy.

Heimeshoff filed her lawsuit on November 18, 2010, within 3 years of the final decision, but after 3 years following the time proof of loss was required under the Plan.

The unanimous Court held that: “Absent a controlling statute to the contrary, a participant and a plan may agree by contract to a particular limitations period, even one that starts to run before the cause of action accrues, as long as the period is reasonable.” In its decision, the Supreme Court reasoned that courts have upheld enforcement of contractual provisions providing for limitations periods shorter than what otherwise would be a state law statute of limitations period. The Court further emphasized the importance of the terms of the plan as governing in ERISA claims benefit cases. The Court reasoned that absent a controlling statute, or an unreasonable period of time, the provision must be enforced. As ERISA does not provide for a specific statute of limitations for benefit denial cases, there is no controlling statute. Finally, the Court found that Heimeshoff had almost a year following the final decision denying her claim for disability benefits before the limitations period ran, which the Court concluded was ample time to file suit.

The takeaway for employer sponsored benefit plans - if your benefit plan does not contain a time limitation for filing suit, consider a plan amendment to include a reasonable limit. Otherwise, claimants can use state law statutes of limitation, which in some states, such as Missouri and Illinois, are substantially longer, and delay filing suit. Under this Supreme Court precedent, a 3 year limitation period running from time proof of loss is provided will be considered reasonable.

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