April 04, 2016 Practice Points

    ERISA Insurers Must Disclose the Policy’s Contractual Limitations Period

    Last month, the First Circuit Court of Appeals helped balance the playing field for plan participants, holding that an ERISA insurer must advise a claimant of the policy’s limitations period before it will be enforced

    by Benjamin C. Hassebrock

    Congress did not provide a statute of limitations for Employment Retirement Income Security Act (ERISA) claims, so federal courts typically adopt the forum state’s analogous limitations period. In 2013, the U.S. Supreme Court held that an ERISA plan’s contractual limitations period will be enforced, if reasonable, and may even begin before the claimant’s cause of action accrues. Heimeshoff v. Hartford Life & Accident Insurance Co, 134 S.Ct. 604 (2013).

    Last month, the First Circuit Court of Appeals helped balance the playing field for plan participants, holding that an ERISA insurer must advise a claimant of the policy’s limitations period before it will be enforced. Santana-Diaz v. Metropolitan Life Ins. Co., --- F. 3d ---, 2016 WL 963830 (1st Cir. Mar. 14, 2016).

    Santana-Diaz appealed from the district court’s ruling that his suit was time barred by the three-year limitations period in MetLife’s policy. The First Circuit reversed because MetLife’s benefit denial letter did not advise Santana-Diaz of the contractual limitations period. The court, interpreting 29 C.F.R. §2560.503-1(g)(1)(iv), held that “a denial of benefits letter must include notice of the plan-imposed time limit for filing a civil action.” The failure to comply is alwaysprejudicial to the claimant, and therefore renders the contractual limitations period inapplicable.

    The Third and Sixth Circuits also require ERISA insurers to advise claimants of a contractual limitations period when communicating an adverse benefit decision. Mirza v. Ins. Administrator of America, Inc., 800 F.3d 129 (3d Cir. 2015); Moyer v. Metropolitan Life Ins. Co., 762 F.3d 503 (6th Cir. 2014). These rulings are well reasoned and likely to be followed across the country. ERISA insurers that wish to enforce contractual limitations periods are well-advised to comply, and should be aware that this notice requirement applies “even when the information is also contained elsewhere in the plan documents, and regardless of when the claimant last received a copy of the plan documents.”

    For claimants, Santana-Diaz is a positive development but provides no assurances in ERISA’s often unforgiving landscape. Sophisticated insurers will quickly adapt, while their experienced counsel challenge the reach of this authority. Claimants should adhere to an ERISA plan’s limitations period whenever possible, recognizing expired deadlines may be overcome when absent from the insurer’s decision letter.

     

    Keywords: insurance, coverage, litigation, ERISA, disability

    Benjamin C. Hassebrock is with Ver Ploeg and Lumpkin PA, Miami.

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