In Gordon v. Deloitte & Touche LLP Group Long Term Disability Plan, 2014 U.S.App.LEXIS 6688 (9th Cir. April 11, 2014), the 9th U.S. Circuit Court of Appeals was called upon to decide the question of whether an expired limitations period may be revived by insurer’s conduct after the time for bringing suit had ended.
The plaintiff, Bridget Gordon, worked for the accounting firm Deloitte & Touche USA LLP until October 2000, when she learned she was HIV-positive and ceased working due to depression.
MetLife, the group disability insurer for Deloitte, approved Gordon’s subsequently filed claim for disability benefits. However, the benefits were terminated after a total of 24 months of payments, based on a policy limitation application to mental health conditions.
Gordon was invited to appeal MetLife’s decision, however, she took no action whatsoever for four years – until 2007, when she called MetLife to inquire about whether her claim could be reopened. MetLife advised her that her appeal time had expired and that it would not consider reopening the claim.
However, in 2009, following Gordon’s submission of a complaint to the California Department of Insurance, MetLife agreed to reopen the claim and invited Gordon to submit additional information. After reviewing the evidence again, though, MetLife upheld its initial decision. Gordon was invited to appeal again, and she did so, submitting a lengthy appeal letter along with nearly 500 pages of exhibits.
Before MetLife could issue a decision, though, on Jan. 31, 2011, Gordon filed suit against MetLife and the plan in U.S. District Court. The district court dismissed the action, finding it untimely based on a four-year statute of limitations as well as under the three-year contractual limitations period contained in the policy.
The district court rejected the plaintiff’s argument that the statute of limitations was reset by the 2009 reopening of the claim. The court of appeals affirmed.
Citing 9th Circuit precedent, the court of appeals determined that the accrual of an ERISA cause of action occurs when the insurer evinces “a clear and continuing repudiation of a claimant’s rights under a plan such that the claimant could not have reasonably believed but that his benefits had been finally denied.” (citing Chuck v. Hewlett Packard Co., 455 F.3d 1026, 1031 (9th Cir. 2006) (internal quotation marks and citation omitted)).
That date occurred on Nov. 4, 2003, when MetLife informed Gordon that no disability benefits would be paid following the 24-month limited period applicable to mental health conditions. However, the court alternatively found that the final date of accrual was 180 days from Nov. 4, 2003, when Gordon’s appeal time expired. Either way, her claim was deemed untimely.
Although the plaintiff had argued that MetLife’s willingness to reopen the claim in 2009 reset the statute of limitations, the court found that MetLife’s actions failed to revive the statute of limitations. Following Martin v. Construction Laborer’s Pension Trust, 947 F.2d 1381 (9th Cir. 1991), which presented a similar circumstance, the court ruled that the willingness to reconsider the claim did not revive or reset the limitations period.
Nor was the court persuaded by the plaintiff’s argument that the 2009 reconsideration estopped MetLife from asserting a limitations defense. The court found there was no evidence in the record suggesting “that Gordon missed the statute of limitation deadline because she detrimentally relied on any representation by MetLife.” While MetLife did represent in a Dec. 8, 2009, letter that Gordon could bring an ERISA action, the statute had already run by then, thus, “Gordon could not have relied on that statement to her detriment.”
The court also determined that the facts precluded a finding of waiver. The availability of the doctrine of waiver in ERISA cases has never been firmly decided; however, the courts that have examined the issue have required some reasonable reliance on the part of the non-waiving party and have rejected a “something-for-nothing kind of waiver.” (citing Thomason v. Aetna Life InsuranceCo., 9 F.3d 645 (7th Cir. 1993)).
Another ground for finding waiver is if the waiving party acted to its own advantage. Although MetLife did not previously raise the limitations issue, the court found it still remained a viable defense.
Judge Stephen Reinhardt dissented. He cited California appellate court authority (Prudential-LMI Com. Ins. v. Superior Court, 51 Cal. 3d 674, 274 Cal. Rptr. 387, 798 P.2d 1230, 1240 (1990)) for the proposition that once MetLife invited reconsideration in response to the California Department of Insurance request, it waived its right to assert the limitations bar.
The dissent added, “Certainly it cannot be said that Deloitte risked ‘surprise through the revival of claims that have been allowed to slumber’ when it voluntarily reopened Gordon’s case at the behest of the California Department of Insurance and then falsely told her that if she were ultimately dissatisfied she would have the legal right to sue to enforce her rights under ERISA.” (citing Prudential-LMI, 798 P.2d at 1236 (1990).
This is a very difficult case, particularly since the plaintiff had mental health issues and may not have been able to understand and protect her rights while her right to bring suit remained timely. Obviously, if MetLife was persuaded that it erred, it would have paid Gordon’s benefits rather than admit it was wrong yet invoke a limitations bar.
MetLife had no legal obligation to reopen the claim in 2009, but once it did and further notified the claimant of her right to bring a civil action under ERISA Section 502(a), to then pull the rug out from under Gordon’s feet and assert an untimeliness defense suggests unfairness.
This was not a case involving a claimant seeking “something for nothing.” Nor did involve trickery employed in an effort to revive an untimely claim. After being invited in 2009 to provide a new submission, Gordon endeavored to prepare and submit a lengthy appeal only to find that her efforts came to naught.
This article was initially published in the Chicago Daily Law Bulletin.