By Raymond R. Rinkol, Jr.
Heimeshoff v. Hartford Life & Accident Ins. Co., No. 12-729 (US 2013)
The United States Supreme Court recently ruled that a three year statute of limitations period, established by an employee benefit plan covered by the Employee Retirement Income Security Act of 1974 ("ERISA"), which began to run from the date proof of loss is due, is enforceable, because ERISA was silent on a particular limitations period and three years was otherwise reasonable.
In 2005, Julie Heimeshoff ("Heimeshoff"), a senior public relations manager for Wal-Mart Stores, Inc., began to experience chronic pain and fatigue. Her physician diagnosed her with lupus and fibromyalgia, and she stopped working on June 8. On August 22, 2005, she filed a claim for long-term disability benefits with Hartford Life Insurance Co. ("Hartford"). After Heimeshoff failed to provide additional proof of loss, Hartford initially denied her claim. Heimeshoff later provided additional information and requested an appeal, which Hartford granted. After Hartford reviewed Heimeshoff's additional information and reports by Hartford's retained physicians, Hartford issued its final denial on November 26, 2007. On November 18, 2010, more than three years after her proof of loss was due, but less than three years from Hartford's final denial of her claim, Heimeshoff filed suit in District Court seeking judicial review of her denied claim.
While ERISA generally requires plan participants to exhaust administrative remedies before seeking judicial review, ERISA does not specify a specific statute of limitations for filing suit under § 502(a)(1)(B). In this case, however, the plan at issue (a contract) required participants to bring suit within three years after their proof of loss is due. Chronologically, Heimeshoff's proof of loss was due before she exhausted her administrative remedies and, thus, before she knew if the plan administrator would ultimately grant or deny her claim. Accordingly, Heimeshoff argued that this contractual statute of limitations was unenforceable, because the limitations period began to run before her claim "accrued" – traditionally when a plaintiff can file suit and seek relief.
The Supreme Court disagreed. The Court stated: "Absent 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." In this case, the Court determined that ERISA was silent on a particular limitations period. The Court stated: "If parties are permitted to contract around a default statute of limitations, it follows that the same rule applies where the statute creating the cause of action is silent regarding a limitations period." Also, the Court determined that the three year contractual limitations period was an otherwise reasonable period of time. In particular, the Court observed that a three year limitations period that begins to run from the date proof of loss is due is quite common in certain insurance policies. Accordingly, the Supreme Court affirmed the dismissal of Heimeshoff's claim as barred by the three year statute of limitations.
If you have any questions regarding the statute of limitations of an ERISA plan, please contact Ray Rinkol.