Last week, the Ninth Circuit Court of Appeals issued its opinion in LeGras v. AETNA Life Insurance Company, No. 12-56541 (May 28, 2015), holding that the 180-day period to appeal a denial of a long-term disability claim was extended to the following Monday because the last day to submit the appeal fell on a Saturday. The court concluded that “where the deadline for an internal administrative appeal under an ERISA-governed insurance contract falls on a Saturday, Sunday, or legal holiday, the period continues to run until the next day that is not a Saturday, Sunday, or legal holiday.”
The court characterized this conclusion as a further development of the federal common law that governs the Employee Retirement Income Security Act (ERISA). Citing the Federal Rules of Civil Procedure, the court noted that extending a deadline that falls on a weekend or holiday to the following Monday is widespread. The court also deemed this rule necessary to protect the reasonable expectation of plan participants, holding that:
LeGras faces the possibility of losing his long-term disability benefits because of a two-day difference in the computation of the time period to pursue an administrative appeal. Although the stricter time-computation method may be convenient for AETNA’s purposes, it would be contrary to the purposes of ERISA to adopt a method that is decidedly protective of plan administrators, not plan participants.
The majority in the LeGras opinion missed a significant issue. As argued by the dissent, the court was simply interpreting the unambiguous terms of an ERISA plan; there were no terms in the plan that extended the time if the deadline landed on a Saturday, Sunday, or holiday. The dissent stated it bluntly: “LeGras messed up; he failed to abide by his contract and now seeks an excuse to set aside his failure.” The majority changed the terms of the plan through the application of federal common law.
The majority’s reliance on the Federal Rules of Civil Procedure also was misplaced because the rules that govern the calculation of time periods expressly provide that deadlines that land on a weekend or holiday are extended to the next business day. The plan provided no such exception. Finally, as the dissent pointed out, the majority improperly extended the doctrine of the “reasonable expectation of the insured” by applying it to terms that did not implicate the question of coverage. The dissent correctly concluded that,
the doctrine was never intended for this purpose. Instead, the “reasonable expectations” doctrine is meant to protect insureds “regarding the coverage afforded by insurance carriers even though a careful examination of the policy provisions indicates that such expectations are contrary to the expressed intention of the insurer (emphasis in the original).
The opinion will not be hugely significant if it is limited to its specific facts. However, it will be far more problematic if it is a signal by the Ninth Circuit that the express and unambiguous terms of a plan can be changed or modified through the application of federal common law.