Time’s Up: Supreme Court Upholds Enforcement Of Claim Limitations On ERISA Plan Language

Christmas may have come a little early for plan administrators and companies looking for clarity in ERISA litigation. Last Monday, the U.S. Supreme Court ruled 9-0 in Heimeshoff v. Hartford Life & Accident Insurance Co. that contractual limitations provisions in ERISA plans are enforceable unless the time limitation is unreasonably short or is preempted by statute.

In 2005, Julie Heimeshoff, a senior PR manager for Wal-Mart, reported chronic pain and fatigue that interfered with her duties. After being diagnosed with lupus and fibromyalgia, Heimeshoff stopped working and filed a claim for long-term disability with Hartford Life & Accident Insurance Co., the administrator of Wal-Mart's Group Long Term Disability Plan.

Hartford was not persuaded by the evidence provided by Heimeshoff's doctors and issued a final denial of her claim in 2007. Less than three years later, but more than three years after her proof of loss was due under the Plan, Heimeshoff filed suit, challenging the denial under ERISA § 502(a)(1)(B). She did so despite the Plan's limitation provision, which provided that "Legal action cannot be taken against The Hartford . . . [more than] 3 years after the time written proof of loss is required to be furnished according to the terms of the policy."

Ruling in favor of Hartford, the Court held that the requirement that ERISA plan participants exhaust the plan's administrative remedies before suing to recover benefits does not prohibit a plan and its participants from agreeing to a limitations period that begins to run before the final decision to deny benefits.

The decision resolved a circuit split on the enforceability of contractual limitations provisions under ERISA. The Second and Sixth Circuits took the view that the limitations were enforceable (see Burke v. PriceWaterHouseCoopers LLP Long Term Disability Plan, 572 F. 3d 76, 79-81 (2d Cir. 2009) and Rice v. Jefferson Pilot Financial Ins. Co., 578 F. 3d 450, 455-456 (6th Cir. 2009)), while the Fourth and Ninth Circuits have struck down such limitations (see White v. Sun Life Assurance Co. of Canada, 488 F. 3d 240, 245-248 (4th Cir. 2007) and Price v. Provident Life & Acc. Ins. Co., 2 F.3d 986, 988 (9th Cir. 1993)).

ERISA does not contain a statute of limitations, and many ERISA plans spell out specific limitations periods. The tension behind the circuit split centered on a dispute over how to determine when the statute of limitations starts to run (i.e., when a claim...