Third Circuit Rules Failure To Disclose Deadline To File Suit In Denial Letter Warrants Setting Aside Limitations Of Suit Provision In Plan

The Third Circuit ruled on August 26, 2015, that if a claim administrator fails to disclose in its final denial letter any plan-imposed deadline to challenge the denial in court, then that deadline will be set aside in favor of the most analogous state-law statute of limitations. In Mirza v. Insurance Administrators of America, Inc. et al. (No. 13-3535, 3d Cir. Aug. 26, 2015), the Court applied New Jersey's six-year breach of contract statute instead of the plan's one-year limitation of suit provision.

Background

Dr. Mirza performed spinal surgery on a participant in the self-insured health plan sponsored by Challenge Printing of the Carolinas and administered by Insurance Administrators of America. He sought payment of benefits under the plan pursuant to an assignment of rights executed by the participant/patient. Insurance Administrators denied the claim because the procedure performed was deemed to be medically investigational, and therefore not covered by the plan. The denial letter advised Dr. Mirza of his right to bring a civil action under ERISA, but did not specifically advise him of the plan-imposed limitation of suit deadline for doing so.

Mirza retained counsel, and counsel obtained a copy of the plan document containing the limitation of suit provision approximately four months prior to the deadline. Insurance Administrators pointed out that not only was the beneficiary on notice of the deadline since she had access to the plan document from the outset, but the surgeon's attorneys also received a copy of the plan well in advance of the deadline. The district court agreed and granted summary judgment in favor of the defendants.

Third Circuit Rationale

The Third Circuit vacated and remanded based on its holding that failure to note the deadline to file suit in the denial letter constituted a substantial violation of 29 CFR 2560.503-1(g). The Court observed that 29 CFR 2560.503-1(g)(1)(iv) requires a denial letter to set forth a description of the plan's review procedures and any applicable time limits, "including a statement of the claimant's right to bring civil action" under ERISA. The Court found that this language mandates inclusion of any applicable time limitations on the filing of suit, and cited decisions from two other circuits in support: Moyer v. Metro. Life Ins. Co., 762 F.3d 503, 505 (6th Cir.2014); Ortega Candelaria v. Orthobiologics LLC, 661 F.3d 675, 680 (1st Cir.2011).

In so holding, the Third Circuit expressly...