After Heimeshoff: Applying An ERISA Plan’s Contractual Limitation Of Actions Provision

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. In other words, a plan's language can shorten the limitations period and can make the shorter limitations period start to run before the administrative claim denial that accrues the claim, if the participant still has a reasonable period to file suit after the claim is denied.

For practitioners, applying Heimeshoff's holding would depend often on what the Supreme Court means by a "reasonable" period to file suit. An inquiry into what might be reasonable can be understood as including (1) how long a plaintiff had to file suit after whatever gives rise to a claim under the plan (in Heimeshoff, becoming allegedly disabled), (2) how long a plaintiff had to file suit after the final denial of an administrative claim, and (3) whether a particular plaintiff had any obstacles to filing suit that might warrant allowing that plaintiff more time to file suit than other plan participants would have under the plan's language.

Heimeshoff: The Facts, the Holding, and Possible Questions

In Heimeshoff, the petitioner, Heimeshoff, began to report chronic pain and fatigue in 2005 and was later diagnosed with lupus and fibromyalgia. Her employer's disability plan's insurer denied her claim based on her not having provided satisfactory proof of loss. The 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 in this context meant telling the insurer within 90 days that plaintiff considered herself to be disabled and thus entitled to disability benefits. Heimeshoff filed suit on November 18, 2010, which was 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 have arisen more frequently than one might expect, because many insured welfare plans are funded by insurance policies that are required to have such a provision. As the Supreme Court recognized, the plan's "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).

Following the plan language, the district court granted the insurer's motion to dismiss on the grounds that the suit was barred by the plan's limitations provision. The Second Circuit Court of Appeals affirmed that decision, finding that "it did not offend [ERISA] to have the limitations period begin to run before the claim accrues." Heimeshoff v. Hartford Life & Acc. Ins. Co., 496 Fed. App'x 129, 130 (6th Cir. 2012), aff'd, 134 S.Ct. 604 (2013).

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 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: "[a]bsent 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; but see White v. Sun Life Assurance Co. of Canada, 488 F.3d 240, 249 (4th Cir. 2007) (rejecting the reasonableness approach adopted by the Supreme Court in Heimeshoff, because a "sometimes-enforcing approach ... would disregard the written plan requirement" itself, since the "reasonableness" inquiry is "nowhere contained in [the] plan").

The Supreme Court said, "[e]ven in this case, where the administrative review process required...