The U.S. Supreme Court announced on April 15, 2013, that it would address the question of when, under the Employee Retirement Income Security Act (ERISA), the statute of limitations begins to run for judicial review of an adverse disability-benefit determination (Heimeshoff v. Hartford Life & Accident Ins. Co., U.S., No. 12-729).
The case is on appeal from the 2nd U.S. Circuit Court of Appeals, which enforced a contractual agreement stating that the limitations period began when the employee’s proof of loss was due, not upon the final denial of the request for benefits. How long a participant has to bring a legal action challenging a claims denial is set by the limitations period.
In 2005, Julie Heimeshoff, a Wal-Mart employee, applied for long-term disability benefits from a plan administered by Hartford Life & Accident Insurance Co. Heimeshoff suffered from fibromyalgia and chronic pain. Hartford denied her claim in December 2005, concluding she had failed to provide satisfactory proof of her disability. After an appeal, Hartford issued its “last and final denial letter” on Nov. 25, 2007, according to Heimeshoff.
The Hartford plan had a three-year limitations period for legal actions challenging adverse benefit determinations. The plaintiff filed a lawsuit challenging Hartford's decision on Nov. 18, 2010. Hartford moved to dismiss her claim, arguing that it was barred by the limitations period. According to Hartford, the plan required Heimeshoff to file suit by Dec. 8, 2008, which was three years after her “proof of loss” was due to Hartford.
A federal district court in Connecticut sided with the insurer, concluding that the Hartford policy “unambiguously” provided that no legal action could be brought more than “3 years after the time written proof of loss is required to be furnished according to the terms of the policy.” Proof of loss must be submitted “within 90 days after the start of the period for which The Hartford owes payment,” the district court said. It found these provisions unambiguous and granted Hartford's motion to dismiss Heimeshoff's claim as time-barred.
The 2nd Circuit affirmed the ruling. It held that ERISA does not prohibit a contractual limitations period that begins to run before the time that an ERISA plan issues a final claim denial, causing the claimant's legal claim to accrue. Here the “policy language is unambiguous,” and it does not offend ERISA “to have the limitations period begin to run before the claim accrues,” the appellate court said.
Is Contractual Limitation Period Enforceable?
In December 2012, Heimeshoff sought Supreme Court review. She claimed that many ERISA plans require claimants to exhaust administrative remedies before filing suit while “the limitations period begins running and wastes away while the claimant is going through the administrative review process.” This “contradicts ERISA's well-established requirement that the beneficiary exhaust her administrative remedies before filing suit,” she argued.
She also noted that the circuits are in conflict over the accrual time for ERISA statutes of limitation, with the 4th and 9th Circuits prohibiting limitations periods that begin running before a legal claim has accrued and the 2nd, 5th, 6th, 7th, 8th and 10th Circuits upholding such limitations periods.
In its brief filed in opposition to Supreme Court review, Hartford argued that Heimeshoff mischaracterized “the nature and degree of conflict among the circuits” on the issue of contractual limitations periods. According to Hartford, she misstated the position of the 9th Circuit, and it was only the 4th Circuit that had taken a position contrary to the majority of the circuits, which have held that a contractual limitations period like the one included in Hartford's Policy is enforceable unless its application would be unreasonable in a particular case.
The high court will hear the case in its 2013-14 term, which begins in October 2013.
Joanne Deschenaux, J.D., is SHRM’s senior legal editor.