US Supreme Court Holds that a Three-Year Contractual Limitations Period for Benefit Claims is Not Unreasonable nor Contrary to ERISA

Expert Guest Article by Scott J. Stitt – Mr. Stitt will be presenting at ACI’s 7th National Forum on Erisa Litigation  in April.

When a plaintiff files a lawsuit for ERISA benefits, is the time limit contained within the ERISA plan enforceable?  In Heimeshoff v. Hartford Life, the US Supreme Court held (unanimously, 9-0) that the answer is yes, even when the limit starts running before the lawsuit could be filed – a three-year contractual period in an ERISA plan that starts running from the date the plaintiff’s “proof of loss” is due is not unreasonable nor contradicted by ERISA.

The plaintiff in this case was a Wal-Mart employee who asserted a disability claim in August 2005.  Of course, the plaintiff could not file suit until the plan’s administrative claim process was exhausted – which was on November 26, 2007. The plaintiff filed suit less than three years after that final claim denial, on November 10, 2010 – but that was more than five years after she first asserted her claim, and the plan said that claims must be filed three years after proof of loss was required to be submitted.  So the District Court dismissed the case as untimely, and the Second Circuit Court of Appeals affirmed.
The plaintiff asserted that a limitations period that starts running before the administrative process has been completed should not be enforceable.  But the Supreme Court disagreed, and affirmed the dismissal.  Because ERISA’s claims regulation (29 CFR 2560.503-1) usually results in claims being administered within 12-16 months, the Supreme Court concluded that it’s not unreasonable for a participant to be left with 20-24 months to file suit. Page 9 & n.4.  Nor does this limitation conflict with ERISA, because enforcement of a 36-month time limit does not “undermine” ERISA’s remedial scheme. Page 10.  If the administrative claim process takes too long for a plaintiff to file a timely claim, courts can apply equitable remedies – like equitable tolling, or waiver and estoppel – to allow a claim; but those “rare cases” do not make a three-year limitation period unenforceable. Page 14.
This is a big, unanimous win for contractual limitations periods for benefit claims in an ERISA plan.  From the defense perspective, even though this case is about a disability plan every plan sponsor should review all of its ERISA plan documents to determine whether an internal limitations period is appropriate for benefit claims.  And from the plaintiff perspective, every claim should be aggressively pursued through the administrative process and then quickly filed in court if denied; there’s an undertone in the decision that the delays plaintiff had in pursuing her claim were unreasonable, so it was not unreasonable to apply a limitations period that provided three years from start to finish to exhaust administrative remedies and file suit. See pages 2-3.  Plaintiffs will have to be diligent about pursuing their claims after this decision.   Here’s the link to the US Supreme Court’s decision –  Here’s a link to the SCOTUS Blog’s discussion of the decision, which includes an interesting comparison of the decision to the questioning at oral argument –  

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