WASHINGTON, D.C. — (Mealey’s) A beneficiary’s claim for wrongful denial of disability benefits under the Employee Retirement Income Security Act does not accrue for limitations purposes until the plan’s internal benefits resolution process has been exhausted, notwithstanding a plan provision providing that the limitations period commences before the plan has resolved the claim for benefits, a plan participant told the U.S. Supreme Court in oral arguments Oct. 15 (Julie Heimeshoff v. Hartford Life & Accident Insurance Co., et al., No. 12-729, U.S. Sup.; See September 2013, Page 13).
Matthew W.H. Wessler of Public Justice in Washington, representing Julie Heimeshoff, argued that the Second Circuit U.S. Court of Appeals erred by holding that a plan’s statute of limitations period may begin running before the claimant exhausted her administrative remedies and thus before the claimant can bring an action in court under ERISA Section 502(a)(1)(B).
Wessler argued that the Second Circuit’s ruling that the plan’s three-year statute of limitations began to run when proof of loss was required to be furnished to the plan and that the limitations period continued to run while the mandatory internal resolution process was ongoing “directly conflicts with ERISA's two-tiered remedial structure, which is designed to maximize the number of claims that are resolved internally without lawyers in courts. The Respondent’s provision undermines this goal by making it impossible for anyone to know in advance how much time will be left on the limitations clock after the internal process is complete.”
“[A] rule of accrual that the limitations clock starts running at final denial is exactly the kind of uniform and clean rule that everyone can rely on ex ante, from the outset, across the board in every jurisdiction in the country,” Wessler said.
Justices Sonia Sotomayor and Ruth Bader Ginsburg asked Assistant to the Solicitor General Ginger D. Anders, representing the United States as amicus curiae in favor of Heimeshoff, whether, if the court ruled in favor of the plan, the U.S. Department of Labor would have the authority to adopt a regulation specifying a minimum amount of time a claimant must be afforded to file a claim in court.
Anders responded that she believed that the government would have that authority, even though Justice Antonin Scalia said he could not think of an example where “a Federal agency has, in effect, prescribed the running of the statute [of limitations] for the courts.”
Representing the plan’s insurer Hartford Life & Accident Insurance Co, Catherine M.A. Carroll of Wilmer Cutler Pickering Hale and Dorr in Washington, argued that the policy’s limitations provision should be enforced. Heimeshoff had more than one year to file suit within that limitations period after the final administrative denial of her claim, Carroll said.
In response to Justice Stephen G. Breyer’s question as to what should be done in cases where the claimants had no time to file a lawsuit, Carroll suggested that the courts can apply equitable doctrines.
“Since ERISA’s enactment, this Court has never held that in a suit to enforce the terms of an ERISA plan those terms can be thrown out the window because we worry that they might be unfair in some case that we can speculate about,” Carroll said, adding that such an approach “would undermine Congress’s goal of wanting to assure employers and plan sponsors that the terms on which they agree to provide benefits will be respected.”
Chief Justice John G. Roberts Jr. commented that “[i]t just seems to me that you keep it as an informal resolution — inexpensive resolution process if you tell somebody look, you don't have to worry about getting a lawyer until we tell you whether we're going to deny your claims or not.”
Proof Of Loss
Heimeshoff worked for Wal-Mart Stores Inc. and was insured under the company’s group disability plan. In August 2005, she filed a claim for disability benefits based on fibromyalgia. In November 2005, Hartford asked for clarification, stating that the policy required Heimeshoff to submit “[w]ritten proof of loss to The Hartford within 90 days after the start of the period for which The Hartford owes payment.” Hartford informed Heimeshoff that her claim would not be affected if the proof was not submitted by that time if “it was not possible to give proof within the required time,” as long as it was given “not later than 1 year after it is due.”
Hartford denied the claim in December 2005 because it did not receive certain clarifying information but indicated that Heimeshoff could still provide that information. The denial letter informed Heimeshoff of the right to administratively appeal the decision within 180 days and stated that Heimeshoff was required to exhaust her administrative remedies before she could file suit. The letter did not provide the time limit to bring a civil action.
In May 2006, Hartford said it would reopen the claim if Heimeshoff provided clarification of her functionality. Heimeshoff provided that information in May 2007, and Hartford extended the deadline for filing additional information to Sept. 30, 2007. Heimeshoff appealed the benefits denial on Sept. 26, 2007. Hartford denied the appeal on Nov. 26, 2007, indicating that her internal appeal remedies had been exhausted. The letter notified Heimeshoff that she could bring a civil action under ERISA but did not provide the time limits for filing a lawsuit.
Heimeshoff sued Hartford in the U.S. District Court for the District of Connecticut in November 2010. The District Court granted Hartford’s motion to dismiss, finding that the complaint was barred by the plan’s three-year statute of limitations.
In affirming, the Second Circuit said “Hartford’s plan provided that its three-year limitations period ran from the time that proof of loss was due under the plan. The policy language is unambiguous and it does not offend the statute to have the limitations period begin to run before the claim accrues. Appellant filed her claim challenging the denial of long-term disability benefits more than three years after her proof of loss was due.”
Heimeshoff is also represented by Leah M. Nicholls of Public Justice in Washington and Leslie A. Brueckner and Arthur H. Bryant of Public Justice in Oakland, Calif.; Steven P. Krafchick and Carla Tachau Lawrence of Krafchick Law Firm in Seattle; and Peter K. Stris, Brendan S. Maher and Victor O’Connell of Stris & Maher in Gardena, Calif.
Hartford is also represented by Seth P. Waxman, Weili J. Shaw and Ari Holtzblatt of Wilmer Cutler Pickering Hale and Dorr in Washington.
Amicus United States is also represented by Solicitor General Donald B. Verrilli Jr. and Deputy Solicitor General Edwin S. Kneedler of the U.S. Department of Justice and Solicitor of Labor M. Patricia Smith, Associate Solicitor Timothy D. Hauser, Counsel for Appellate and Special Litigation Nathaniel I. Spiller and Attorney Jamila Minnicks of the U.S. Department of Labor. All are in Washington.
Amici AARP and National Employment Lawyers Association in support of Heimeshoff are represented by Mary Ellen Signorille of AARP Foundation Litigation and Melvin Radowitz of AARP in Washington; Ronald Dean in Pacific Palisades, Calif.; Nina Wasow of Lewis Feinberg Lee Renaker & Jackson in Oakland, Calif.; and Rebecca Hamburg Cappy of NELA in San Francisco. Amicus United Policyholders in support of Heimeshoff is represented by Cassie Springer and Michelle L. Roberts of Springer & Roberts in Oakland; Amy Bach of United Policyholders in San Francisco; Tybe A. Brett of Feinstein Doyle Payne Kravec in Pittsburgh; and Glenn Kantor of Kantor & Kantor in Northridge, Calif.
Amici American Council of Life Insurers, America’s Health Insurance Plans and The Chamber of the Commerce of the United States of America in support of Hartford are represented by William M. Jay, Joshua M. Daniels of Goodwin Procter; Carl B. Wilkerson and Lisa Tate of ACLI; Kate Comerford Todd, Steven P. Lehotsky and Jane Holman of National Chamber Litigation Center Inc.; and Joseph Miller and Thomas Wilder of America’s Health Insurance Plans. All are in Washington. Amicus DRI— The Voice of the Defense Bar in support of Hartford is represented by Mary Massaron Ross of DRI in Bloomfield Hills, Mich., Jerrold J. Ganzfried of Holland & Knight in Washington and Ariadna Alvarez of Holland & Knight in Fort Lauderdale, Fla.
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