Hidden Limitations of ERISA
Many ERISA plans have an enforceable limitation of action provision. These replace any applicable state law statute of limitations. Courts have enforced these provisions thus barring an action even when the time frame for filing suit was as short as 30 days.
In Northlake Reg. M. C. v. Waffle H. S.E. B. P, 160 F.3d 1301, 1303 (11th Cir. 1998), the Court cited with approval a Seventh Circuit case which drew an analogy between suits under ERISA and suits to challenge an administrative decision, for which ordinarily no more than 30 or 60 days is allowed after a final administrative decision. Both are review proceedings, not evidentiary ones.
The Eleventh Circuit found a 90-day limitation of action period reasonable and enforceable. It would likely also find a 30-day limitation of action period reasonable under the same standard.
Ascertaining the applicable limitation of action period is as simple as reviewing the plan document. But what if the plan document is withheld? What if only a summary plan description is provided? What if a factual determination must be made to establish when the limitation of action commences?
Many insurance policies (plan documents) provide that the limitation of action runs three years from the date proof of loss was required to be given. Proof of loss is required to be given within 90 days of the date of disability but in no event later than one year. What if the individual was on claim for five years when the claim was terminated? When does it run when the claimant is already more than four years out from the initial claim filing?
A recent case, Landry v. Metro. Life Ins. Co., 19 Civ. 3385 (KPF), at *16 (S.D.N.Y. Mar. 5, 2021), thoughtfully explores these issues.
In that case, the plaintiff received a summary plan description that did not contain a limitation of action provision. Counsel thus believed that New York’s six-year statute of limitation would apply. If a plan does not contain a limitation of action provision, the most analogous state law statute of limitation applies under ERISA. The plan document actually had a limitation of action provision -- “three years from the date proof of loss is required to be filed.” Applying that limitation, the plaintiff filed suit about eight months too late.
The court noted, “Plaintiff disputes that the three-year limitation in the Plan is binding on him because he was not provided a copy of the Plan until this litigation and the SPD [summary plan description] does not contain the three-year limitation provision.”
The United States Supreme Court had unfortunately already weighed in on the issue. The New York court, clearly feeling constrained, offered:
Here, the Plan provides that "[a] legal action on a claim may only be brought against [MetLife] during [the] period begin[ning] 60 days after the date Proof [of claimant having satisfied the conditions and requirements for any benefit] is filed and end[ing] 3 years after the date such Proof is required." (Plan 44). "The principle that contractual limitations provisions ordinarily should be enforced as written is especially appropriate when enforcing an ERISA plan" because "'[t]he plan, in short, is at the center of ERISA.'" Heimeshoff, 571 U.S. at 108 (quoting US Airways, Inc. v. McCutchen, 569 U.S. 88, 101 (2013)). Id. at 17.
According to the United States Supreme Court, the limitation of action “clock” commences during the administrative appeal process.
It appeared the plaintiff was too late. However, there were procedural violations during the claim process which were referred to as Halo violations, in reference to the case Halo v. Yale Health Plan, 819 F.3d 42 (2d Cir. 2016). The case was remanded to MetLife for further consideration to correct those violations. At least that’s better than outright dismissal.
Clearly, there are many moving parts in determining when a limitation of action bars a claim under ERISA. But some things are clear:
Demand and obtain the full plan document. Do not rely on the summary plan description. Demand it of the plan administrator in writing on behalf of the claimant.
Determine what the insurance company says is the claim bar date. Once adverse action has been taken the claimant has a right to know what the insurance company contends is the claim bar date.
 This is the subject of a great deal of dispute given that most insurance companies do not operate the ERISA plans as a true administrative agency operates i.e. full disclosure and clear standards. Given such comments by courts, insurance companies are incentivized to withhold information from the claim record thus making much ERISA litigation more than a mere review process.