The Supreme Court of the United States recently granted certification in the matter of Heimeshoff v. Hartford Life & Accident Ins. Co., 496 Fed. Appx. 129 (2d. Cir. 2012), in which the Second Circuit determined that Heimeshoff, who had been denied disability benefits in 2005, had no remedy against Hartford because she was in violation of her policy’s three-year time-limit–known as a statute of limitations–for bringing suit to contest the denial of her benefits. The applicable policy contained a statute of limitations requiring Heimeshoff to file suit within three years of after her “proof of loss” was required to be given. Heimeshoff applied for and was denied Short Term Disability benefits in 2005. She filed an administrative appeal contesting the denial as required under the policy, and received a final denial in 2007. She filed suit in 2010, less than 3 years after the final denial. Although Heimseshoff contended that the three years did not begin to run until she received the final denial and her right to sue was triggered, the Second Circuit read the limitations provision literally and concluded that “it does not offend the statute to have the limitations period begin to run before the claim accrues.”
The Supreme Court will resolve a split in the law amongst Circuit Courts nationwide. For example, recent cases in the Third Circuit have held that in the case of an insurance company denying disability benefits upon a finding that the insured is not medically disabled under the terms of the policy, the statute of limitations does not accrue until the plaintiff receives a final denial of benefits on administrative appeal. In Whittaker v. Hartford Life Ins. Co., 2012 U.S. Dist. LEXIS 166983 (E.D. Pa Nov. 26, 2012), the court found Whittaker’s claim timely by holding that the statute of limitations began to run at the time of Hartford’s final denial. Among other considerations, the court explained, “Although Whittaker’s benefits were first terminated on August 7, 2008, her case would have been dismissed for failure to exhaust her administrative remedies had she filed this lawsuit before her administrative appeal was denied on June 2, 2009. To start the running of the limitations period before the conclusion of the administrative appeals process would encourage plan administrators to drag their feet in deciding administrative appeals so as to minimize the amount of time a plaintiff has to prepare her case.” In Rumpf v. Metropolitan Life Ins. Co., 2010 U.S. Dist. LEXIS 74388 (E.D. Pa. Jul. 23, 2010), the initial denial of Rumpf’s benefits stated that she had the right to appeal the denial and to file an ERISA suit in the event the appeal was denied. The letter upholding the denial on appeal stated that Rumpf had the right to file an ERISA suit at that time. When Rumpf filed suit four years after the final denial, the defendants claimed that the statute of limitations had lapsed by calculating from the time of the initial denial. The court disagreed, finding that Rumpf’s claim did not accrue until the final denial and was therefore timely. The court explained, “In this case…the Court concludes it would be unfair and inequitable to hold Plaintiff to any disadvantage because she followed the instructions in the letter she received…denying her benefits. Consistent with the Plan, this letter specifically noted that Plaintiff could appeal, and stated that…she would…have the right to bring a civil action [if her appeal was denied]; in turn, Plaintiff justifiably filed the internal appeal on January 13, 2004, which was denied on February 16, 2005. Plaintiff, meanwhile, received no document mentioning any limitations period or any specific timetable within which she must file her lawsuit.”
As is evident from Heimeshoff and other similar decisions, ERISA is full of traps for the unwary, such as time limitations and various other contractual provisions that a typical consumer would be unaware of. Do not handle your claim on your own and simply trust the insurance company to “do the right thing.” Contact us at Bonny G. Rafel for a consultation to ensure that your ERISA rights are protected.