Summary: ERISA plans should consider updating their plan’s claim denial letters to include notice of a plan imposed time limit for filing a suit challenging a denial of benefits. For claim denial letters sent without notice of the time limit, a supplemental notice of the time limit may be considered.
In Santana-Diaz v. Metropolitan Life Insurance Co., No. 15-1273 (1st Cir. Mar. 14, 2016), the First Circuit became the latest Federal Court of Appeals to hold that an ERISA plan administrator must include notice of its plan’s contractual time limit for filing a lawsuit in the plan’s final claim denial letter or the contractual time limit will be rendered inapplicable. The Third and Sixth Circuits previously issued similar decisions.
Santana-Diaz is the latest in an outgrowth of the Supreme Court’s decision in Heimeshoff v. Hartford Life & Accident Insurance Co. and Wal-Mart Stores, Inc., 134 S.Ct. 604 (2013). In that case, the Supreme Court gave its approval to reasonable contractual limitations periods for bringing suit under ERISA Section 502(a) which are included in an ERISA plan’s terms. Following the Heimeshoff decision, many plans chose to add a time limit for filing a lawsuit challenging a denial of benefits and Federal courts have begun to issue decisions regarding their application.
While this latest case still leaves us far from a majority of circuits that require notice of plan imposed limits in claim denial letters and even included its own hints that the requirement might apply only to final claim denial letters (as opposed to both initial and final claim denial letters), there is a growing signal that an ERISA plan may be able to avoid arguing over the application of its time limits in costly litigation by updating its claim denial letters to include notice of the plan’s time period for filing a lawsuit challenging a denial of benefits.
In addition to its holding, the First Circuit’s suggested that a plan may be able to remedy its failure to include notice of the time period for bringing suit in final claim denial letters which have already been sent by providing a follow up notice to the participant which still leaves a participant with enough time to file a lawsuit. While it is not certain this would completely remedy the failure to include the notice in the final claim denial letter, it could potentially limit a plan’s existing liabilities at relatively low cost.
You may download a copy of the First Circuit’s Santana-Diaz here: Download Santana-Diaz v. Met Life-22935140.