Plan-imposed Limitations Periods for Claims, and

Shortened Statutes of Limitation for Civil Actions

     >>> Checklist: Contractual Precautions against Benefit Plan Litigation

2018.12 "Limitations Periods in Benefits Plans" - excellent article in Benefits Journal

2018.02  Benefits Denial Letter Must Warn of Shortened Limitations Period.  See Starnes v. Universal Fidelity Administrators Co., in which a South Carolina federal district court held that an ERISA plan's one-year contractual limitations period for filing suit was unenforceable against a participant because the plan's benefit denial letter failed to disclose the limitations period to the participant.

2018.01.05  8th Cir. Applies 90 Day Limitation Period for Initial Claims.  In Boyd vs. Conagra, the 8th Circuit found that a good reason resignation had occurred within the 90-day period required under a severance plan, but dismissed claims because the employer had not abused its discretion by finding that good reason did not exist (because "a reasonable person could have reached a similar decision").

2016.03.14  Claim Denial Notice Must Alert Participant to Plan-shortened Limitations Period for Legal Action.  The First Circuit held in Santana-Diaz. v. Metro Life that a plan-imposed contractual limitations period for legal action did not foreclose relief for a plan participant who did not receive notice of that shortened period in the plan's adverse benefit determination letter. Rejecting the employer's argument that its denial letter merely needed to disclose deadlines associated with its claims procedures, and that the plan and its SPD provided notice of the contractually-shortened period for legal action, the court simply stated as follows:

  • Based on the plain language of the regulation, we hold that the correct interpretation of section 2560.503-1(g)(1)(iv) is that a denial of benefits letter must include notice of the plan-imposed​ time limit for filing a civil action.

In accord, Mizra v. Ins. Adm'r, 800 F.3d 129 (3rd Cir. 2015) and Moyer v. Metro Life, 762 F.3rd 503 (6th Cir. 2014); but compare Wilson v. Standard Insur (11th Cir 2014).

2014.Oct.06 Plan Claims - Limitations Period Enforced (Object Lesson)
Suppose an SPD sets forth a limitations period within which participants must bring claims for benefits. Whether or not that gets enforced mainly depends on (1) incorporating it into the plan document, and (2) not misleading or misinforming affected participants.  Those are the central holdings in Tetreault v.Reliance Standard Life, in which the First Circuit enforced a long-term disability plan's 180 day period within which to file an internal appeal after an adverse benefit determination.  Plan sponsors should be sure they close the loop - as The Limited did in this case - by expressly incorporating those SPD terms into the plan itself. Had that incorporation by reference not occurred, the Supreme Court's Amara decision could have driven a different result. 

2013.Dec.17  "Internal" Limitations Period for Claims - Supreme Court Upholds; Six Months Suffices (6th Cir.)  The Supreme Court has upheld a three-year limitations period that Hartford’s Long Term Disability Plan imposed on claims, holding that “[a]bsent 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.” Heimeshoff v. Hartford Life & Accidental Ins. (12/16/2013). A day later, the 6th Circuit decided Claeys v Aetna, upholding a health plan's six-month limitations period commencing with an adverse benefits determination - for the reasons stated in the underlying district court decision. 

2013.Feb.28   Plan's Three-year Period for LTD Claims Enforced - ED MI. 
See Moyer v. Metropolitan Life Ins. Co., No. 2-cv-10766 (E.D. Mich., Feb. 28, 2013).

2012.Sept.17  ERISA Severance and DE Law: Limitations Period Thwarts Claims by Former Martha Stewart GC. Employers should take note of Barton v. Martha Stewart, in which a S.D.N.Y. court dismissed a former General Counsel's severance claim because it was untimely due to a one-year statute of limitations applicable under Delaware law (which the plan designated as controlling, and which NY law enforced because of the employer's incorporation there). Here are relevant quotes from the court's decision:

  • Because ERISA does not provide a statute of limitations, "the controlling limitations period is that specified in the most nearly analogous state limitations statute." Miles v. N.Y. State Teamsters Conf. Pension & Ret. Fund Emp. Pension Benefit Plan, 698 F.2d 593, 598 (2d Cir. 1983). However, courts will enforce choice of law provisions in ERISA plans if they are not "unreasonable or fundamentally unfair ... viewed from the time when the contract was made, when a particular individual could not know whether he would be a litigant." Wang Laboratories, Inc. v. Kagan, 990 F.2d 1126, 1129 (9th Cir. 1993).
  • Defendant has proffered nothing to indicate that resort to Delaware law was unreasonable or fundamentally unfair from the point of view of the parties when the contract was made. Indeed, it is plain from the face of the Amended Complaint that Plaintiff is a sophisticated lawyer who exercised significant bargaining power in negotiating the Employment Contract, including obtaining an exception from the normal expiration provisions of the Plan. Furthermore, the connection of the Plan and the parties' relationship with Delaware, which is Defendant's state of incorporation, constitutes a connection with that state that is sufficient to support the choice of law provision.
  • Delaware law establishes two arguably analogous statutes of limitation — a three-year statute generally applicable to actions "based on a promise," and a one-year statute applicable to actions related to "work, labor or services performed." See 10 Del. C. §§ 8106, 8111. Plaintiff argues that the three-year statute governs here. However, the Delaware Supreme Court has held that, where "Plaintiffs['] claims are for separation pay allegedly due ... under an employee welfare benefit plan adopted by defendant ... the claims arise out of work, labor or personal services performed for defendant." Turner v. Diamond Shamrock Chemicals Co., 1987 WL 17175 (Del. Sept. 14, 1987). Additionally, the fact that the pro-rata bonus is calculated on the basis of how many days Barton worked in the final year suggests that the severance pay at issue here is, by definition, a benefit arising from "work, labor, or services performed." Syed v. Hercules Inc., 214 F.3d 155 (3d Cir. 2000) (holding that one-year statute governed where a Summary Plan Description provided that an employee had to work in order to be entitled to disability benefits); . . .