ERISA Lessons In The Supreme Court’s Heimeshoff Decision

In Heimeshoff v. Hartford Life & Accident Ins. Co. 134 S. Ct. 604 (2013), the Supreme Court held that an ERISA disability plan's three-year limitations period, running from the date of proof of loss, was enforceable even though the statute of limitations began to run before the participant's cause of action accrued. The case contains important lessons for plan sponsors, well beyond the narrow ruling of the case.

Facts

The group long-term disability plan of Wal-Mart Stores, Inc. provided that any suit to recover benefits must be filed within three years after "written proof of loss" is due. Generally, written proof of loss must be sent to the insurer within 90 days after the start of the period for which the employee claims disability benefits. Under the Wal-Mart plan, the limitations period begins before the participant can exhaust the plan's claims procedures and before the right to sue for benefits accrues under ERISA Section 502(a)(1)(B).

In 2005, Julie Heimeshoff filed a claim with Hartford for long-term disability benefits. The insurer issued its final denial in 2007. In 2010, she filed suit for benefits under ERISA, more than three years after proof of loss had been due, but less than three years from the date of Hartford's final denial.

Supreme Court Enforces Plan's Limitations Period

The district court enforced the plan's limitations period and dismissed Heimeshoff's lawsuit. After the Court of Appeals for the Second Circuit affirmed, the Supreme Court granted certiorari to resolve a split among the courts of appeals on this issue.

In a unanimous decision written by Justice Thomas, the Supreme Court held that courts should enforce the limitations period as written in the Wal-Mart plan because such period is reasonable and there is no controlling statute to the contrary.

Justice Thomas' opinion is noteworthy for its detailed discussion of ERISA exhaustion principles that the Supreme Court had not previously addressed. In Heimeshoff, the Supreme Court unanimously recognized that "courts of appeals have uniformly required that participants exhaust internal review before bringing a claim for judicial review under §502(a)(1)(B)" and that a participant's cause of action for ERISA benefits "does not accrue until the plan issues a final denial."

ERISA does not prescribe a statute of limitations for bringing a suit for benefits. Accordingly, courts typically apply the state statute of limitations for breach of written contracts, which are...