Consistent with recent decisions from the Third and Sixth U.S. Circuit Courts of Appeal, the First Circuit recently held that a notice of benefit denial under ERISA must include a statement of any time limits for filing a claim for judicial review in order for such limits to be enforceable. In Santana-Diaz v. Metropolitan Life Ins. Co., a participant in an employer-sponsored disability benefits plan subject to ERISA (the “Plan”) filed a civil action under ERISA Section 502 after he had exhausted the Plan’s internal appeals process and received a final benefit denial letter which did not mention the Plan’s three-year limitations period for filing a lawsuit. The district court dismissed the participant’s lawsuit as being time-barred because it was filed beyond the Plan-imposed three-year limitations period (of which the participant had notice through the group policy booklet). In reversing, the First Circuit interpreted the ERISA claims regulations as requiring a notice of adverse benefit determination to disclose a plan’s applicable time limits for bringing suit under ERISA Section 502. Consequently, the First Circuit held that the participant’s lawsuit was not time-barred because a failure to disclose the limitations period in a benefits denial letter is per se prejudicial to a claimant and thus renders the Plan-imposed limitations period inapplicable. The take-away from this opinion is that ERISA plan administrators and claims fiduciaries are well-advised to ensure that any time limits for judicial review imposed by an ERISA plan are included in all benefit denial notices, in addition to meeting all other ERISA regulatory requirements for this type of notice. Many benefit denial notices being prepared by third parties for employer-provided plans do not contain all of the information and statements required for ERISA compliance, which creates adverse consequences for the plan parties if a participant who received an inadequate notice files a lawsuit challenging the benefits denial.
Santana-Diaz v. Metropolitan Life Ins. Co., No. 15-1273 (1st Cir. Mar. 14, 2016) is available here.