Applying Heineshoff To Plans' Contractual Limitations

In Heimeshoff v. Hartford Life & Acc. Ins. Co., 134 S. Ct. 604 (2013), the Supreme Court held that an ERISA plan's contractual limitations period can be enforced, so long as the claimant has a reasonable time after exhausting his or her administrative remedies to file suit. Under Heimeshoff, a plan's language can shorten the limitations period and can make the shorter limitations period start to run before the claim's administrative denial is final, if the participant still has a reasonable period to file suit after the claim is denied. Applying Heimeshoff's holding often may depend on what court finds is a "reasonable" period to file suit.

To apply the Heimeshoff holding, the reasonableness analysis includes four possible questions: (1) Is the total time for a participant to file suit reasonable? (2) Is the time after the final claim denial reasonable for a typical participant to file suit? (3) Is the information about the limitations provision given to the participant enough to make enforcing it against him or her reasonable? And (4) is the time otherwise reasonable, under the circumstances, for the particular participant to file suit? Answering the first and second questions should be simple; one only needs a rule for how many days are sufficient for a typical plaintiff to file suit. The third question should be simple, yet is the subject of a circuit split. The fourth question cannot be answered with a simple rule, because what might be equitable would depend on the particular participant and his or her circumstances, and thus could vary case by case.

Heimeshoff: The Facts and Holding

In Heimeshoff, the ERISA plan's limitation provision required Heimeshoff to file any suit seeking disability benefits within three years after proof of loss was due. "Proof of loss was due" in this context meant telling the insurer within 90 days that plaintiff considered herself to be disabled and thus to be entitled to disability benefits. Heimeshoff filed suit less than three years after the final denial of her claim but more than three years after proof of loss was due.

The contractual limitation issues in Heimeshoff arise frequently in ERISA cases, because many insured welfare plans are funded by insurance policies. As the Supreme Court recognized in Heimeshoff, the type of "limitations provision at issue is quite common; the vast majority of States require certain insurance policies to include 3-year limitations periods that run from the date proof of loss is due." Id. at 614; see id. at n. 5 (citing state statutes for 40 states).

Before the Supreme Court, Heimeshoff argued that the plan's limitations period should be tolled until the date of her final claim denial, giving her three years from the date of the final denial to file suit. Until that date, her administrative remedies had not been exhausted, her claim for ERISA plan benefits had not accrued, and she thus could not file a lawsuit. Heimeshoff further argued that the limitations period was unreasonable because it began to run during the administrative review process, in effect reducing the three-year limitations period, and could even run before the final denial of her claim.

The Supreme Court first held that her employer had the right to include a shorter contractual limitations provision in its plan: "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." 134 S. Ct. at 610. The Supreme Court emphasized the importance of the plan documents, stating that the plan "in short, is at the center of ERISA" and "[t]his focus on the written terms of the plan is the linchpin of 'a system that is [not] so complex that administrative costs, or litigation expenses, unduly discourage employers from offering [ERISA] plans in the first place.'" Id. at 612.

The Supreme Court said, "[e]ven in this case, where the administrative review process required more time than usual, Heimeshoff was left with approximately one year in which to file suit." 134 S. Ct. at 612. Actually, using the dates in the Supreme Court's opinion, Heimeshoff's time left to file suit after the final denial appears to have been almost three months less than one year. Heimeshoff stopped working June 8, 2005, 90 days after June 8, 2005 would be September 7, 2005, three years after that date is September 7, 2008, and the final denial was November 26, 2007. Id. at 608-09. In other words, Heimeshoff apparently had nine months and ten days after the end of her administrative remedies to file suit.

Proceeding with its analysis, the Supreme Court concluded that the plan's three-year limitations period in Heimeshoff was reasonable. The Supreme Court declined to import into ERISA state law tolling rules when the parties adopted a contractual limitations period in the plan. Because Heimeshoff had no obstacles to bringing a timely claim within one year, the plan's limitation period was upheld as reasonable.

The Supreme Court in dicta noted that in "rare cases" equitable doctrines can apply to toll a plan's limitations period. Id. at 615. For example, the Supreme Court hypothesized that "[i]f an ERISA plan administrator's conduct causes a plan participant to miss the deadline for judicial review of an internal denial of benefits, waiver or estoppel may prevent the administrator from invoking a contractual limitations provision as a defense." Id. Additionally, "[t]o the extent the participant has diligently pursued both internal review and judicial review but was prevented from filing suit by extraordinary circumstances, equitable tolling may apply." Id. (internal citations omitted).

Is the Total Time to File Suit Reasonable?

One question is how much total time to file suit is required for a plan's limitations provision to be reasonable? The provision held to be reasonable in Heimeshoff ran three years after proof of loss was due and proof of loss was due within 90 days after the start of the first disability benefit period. Id. at 608 n. 1. Accordingly, the total time in Heimeshoff for the plaintiff to file suit was 39 months (90 days plus three years) total time after her alleged disability.

Based on the Supreme Court's reasoning in Heimeshoff, limitations periods shorter than three years should be reasonable. As to whether the total time for a plaintiff to file suit is reasonable, one court has already applied Heimeshoff to hold "[a]ny civil action under Section 502(a) of the Employee Retirement Income Security Act must be filed within two years of the date of the Trustees'...