The U.S. Supreme Court recently determined that a plan may 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”. The Hartford plan provided that its three-year limitations period ran from the time that proof of loss was due under the plan.
Heimeshoff , an employee of Walmart, filed a claim for disability benefits with Hartford who provided the long term disability policy for Walmart employees. Hartford denied the claim and Heimeshoff appealed within the 180 day deadline. The denial was upheld several times. The plan provided that litigation must be filed within three years of the proof of claim. Heimeshoff filed her claim in federal court within three years of the final denial, but more than three years after proof of loss was due.
Taken literally, the claim had to be filed before the internal appeals period was exhausted. The general rule was that statute of limitations commence upon accrual of the cause of action.
The Supreme Court in Heimeshoff v. Hartford Life & Accident Co. 571 US__(2013)provided rationale for its decision, that ” “[t]he principle that contractual limitations provisions ordinarily should be enforced as written is especially appropriate when enforcing an ERISA plan… This focus on the written terms of the plan is the linchpin of a “system that is [not] so complex that administrative costs, or litigation expenses, unduly discourage employers from offering [ERISA] plans in the first place. ”
Heimeshoff argued that the limitations period in this case, running from when “proof lf loss” is due undermines ERISA’s two-tiered remedial scheme that provides for judicial review after exhaustion of the internal review process.
The court said that “even in the rare cases where internal review prevents participants form bringing Section 502 (a)(1)(B) actions within the contractual period, courts are well equipped to apply traditional doctrines that may nevertheless allow participants to proceed.
The Supreme Court upheld the District Court’s decision to grant Hartford’s motion to dismiss the claim because it had not been filed in time.
Unfortunately for our clients, the Supreme Court rejected a per se rule requiring tolling of the limitations period during the claim appeal, in the absence of a regulation requiring the tolling. It is clear to us, the the Secretary of Labor should amend the ERISA regulations to include a provision that is already adopted in many states that toll or stop the running of a limitations period between the time the appeal is submitted and the final claim determination. Oftentimes claimants are caught short because they file an appeal and believe their right to file a lawsuit are thus protected. We at Bonny G. Rafel LLC carefully monitor all deadlines to protect our client’s rights to the disability benefits they deserve.