Because the ERISA statute lacks a statute of limitations, courts have had difficulty in determining both the applicable limitations period and affixing a date upon which the limitation period accrues. Wise v. Verizon Communications, Inc., 2010 U.S.App.LEXIS 7244 (9th Cir. April 8, 2010) promotes certainty on these issues.
In Wise, the plaintiff, Nancy Wise, was diagnosed with multiple sclerosis while working for GTE in 1997. Shortly thereafter, she became employed by Qwest and was covered by that organization’s long-term disability plan. In 1999, though, Wise was recruited to return to GTE. Because of her concern that she would be without long-term disability insurance coverage due to the MS being deemed a pre-existing condition, she negotiated an assurance that her benefits would be “bridged” back to her initial start date with GTE in 1995. Shortly after Wise returned to GTE, that organization became part of Verizon Communications due to a merger.
In 2000, Wise was diagnosed with breast cancer; and on account of both that condition and the MS, she applied for long-term disability benefits. The benefits were approved by MetLife, the plan’s administrator and continued until 2001. Despite receiving a report from Wise’s neurologist that Wise’s MS symptoms had worsened, MetLife terminated her benefit payments. MetLife also advised Wise that it considered her MS a pre-existing condition and therefore not covered by the Verizon long-term disability plan. After exhausting appeals, Wise filed suit in 2008. However, the suit was dismissed on statute of limitations grounds. The district court held the claim was governed by Washington’s three-year limitations period applicable to partly oral contracts.
The court began by noting that the ERISA statute itself, like many federal statutes, is devoid of an explicit statute of limitations for benefit claims. In such cases, the settled practice is to “borrow” the most analogous state law limitations period applicable to such a claim. However, the practice is to select only one limitations period per state for any given claim. The court referenced Wilson v. Garcia, 471 U.S. 261, 266-67, 105 S. Ct. 1938, 85 L. Ed. 2d 254 (1985), superseded by statute on other grounds, Pub. L. No. 101-650, 104 Stat. 5089, 5114-15 (1990), which dealt with the limitations period for a civil rights claim under 42 U.S.C. § 1983.
In Wilson, in order to avoid the possibility that several limitations periods would be borrowed for any given claim, the court chose the option of requiring a “simple, broad characterization” of § 1983 claims for limitations purposes: a personal injury tort action for damages. Id. at 272, 276. One year later, in Owens v. Okure, 488 U.S. 235, 109 S. Ct. 573, 102 L. Ed. 2d 594 (1989), the court addressed another conflict in choosing a statute of limitations applicable to a § 1983 claim – the intentional-tort statute of limitations or the state’s residual limitations period for torts. The court selected the residual period alone in order to avoid “chaos and uncertainty” (Id. at 243, 249-50) and advance the goal of “predictability.” Id. at 240.
The 9th Circuit determined the same rationale applies to ERISA. Looking at prior precedent, Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Ins. Program, 222 F.3d 643 (9th Cir. 2000) (en banc), the court determined the proper limitations period is the one applicable to written contracts. The court noted the 6th Circuit had acted similarly in Laborers’ Pension Trust Fund v. Sidney Weinberger Homes, Inc., 872 F.2d 702 (6th Cir. 1988) (per curiam), to resolve a dispute about whether a six-year limitations period based on a written contract would apply to an ERISA benefit claim.
The court acknowledged an argument that if Congress had desired a uniform statute of limitations it could have enacted one, and pointed out that Congress has enacted a 4-year statute of limitations for civil actions arising under federal statutes enacted subsequent to Dec. 1, 1990. 28 U.S.C. § 1658. However, since ERISA was enacted in 1974, and its remedial provisions have not been amended since 1990, that provision is inapplicable. Thus, the court ruled it needed to choose a single applicable limitations period to Wise’s claim.
In examining the choices, the court found the appropriate limitations period applicable to an ERISA benefit claim brought pursuant to 29 U.S.C. § 1132(a)(1)(B) was Washington’s 6-year statute of limitations for written contract claims. The court then next examined when the claim accrued. Under prior precedent, an ERISA claim “accrues either at the time benefits are actually denied, or when the insured has reason to know that the claim has been denied.” Wetzel, 222 F.3d at 649 (internal citation omitted). “Reason to know” occurs when the plan communicates 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 [or her] benefits had been finally denied.” Chuck v. Hewlett Packard Co., 455 F.3d 1026, 1031 (9th Cir. 2006) (internal quotation marks and citation omitted). The record showed Wise received four letters communicating the decision with respect to her benefits. The first three letters advised that she could seek further internal review, while the fourth letter notified Wise that “all decisions of the [Verizon Claims Review Committee] are final.” The letter also, for the first time, advised her of her right to bring a civil enforcement action. Hence, the court determined it was the fourth letter that triggered the accrual of the limitations period. Because Wise filed suit within six years of that date, her action was timely and the district court’s dismissal was overturned.
The court then turned to Wise’s other claims, which the district court had also dismissed. In addition to her benefit claim, Wise alleged a breach of fiduciary duty. The court easily disposed of those claims as either duplicative of the benefit claim or barred by the ERISA statute.
There have been several recent cases involving the accrual of limitations periods in ERISA benefit claims, most of which relate to contractual limitations periods contained in the plans themselves. White v. Sun Life Assur.Co. of Canada, 488 F.3d 240 (4th Cir. 2007) held that an ERISA limitations period accrues when the initial benefit determination is communicated to the beneficiary, but the period is tolled during mandatory pre-suit appeals. However, in Abena v. Metropolitan Life Ins.Co., 544 F.3d 880 (7th Cir. 2008), the court did not toll the limitations period during the pre-litigation appeal. Abena did note, though, that if the limitations period expired during the mandatory appeal, it could be equitably extended.
Other cases holding that the limitations period accrues when the initial benefit decision is communicated to the insured include Rice v. Jefferson Pilot Financial Ins.Co., 578 F.3d 450 (6th Cir. 2009), Burke v. PricewaterhouseCoopers LLP Long Term Disability Plan, 572 F.3d 76 (2nd Cir. 2009), and Salisbury v. Hartford Life and Accid. Ins. Co., 583 F.3d 1245 (10th Cir. 2009). Also, in Abdel v. U.S.Bancorp, 457 F.3d 877 (8th Cir. 2006), the 8th Circuit ruled that the limitations period accrued when an insurer notified the insured that a mental impairment limitation applied to the claim and not when the pre-suit appeals were exhausted.
The approach taken here, though, promotes the goal the 9th Circuit deemed paramount – the avoidance of uncertainty and chaos. By advancing a rule that commences accrual of the ERISA limitations period when the claimant is advised of her right to bring a civil enforcement action, there can be no doubt as to the accrual of a limitations period and certainty in resolving a defense of untimeliness.
This article was initially published in the Chicago Daily Law Bulletin.