On December 16, 2013, the Supreme Court decided Heimeshoff v. Hartford Life & Accident Insurance Co. et al., holding that contractual limitations provisions in ERISA plans are enforceable unless the time they set is unreasonably short or a controlling statute preempts them.
In 2005, Julie Heimeshoff reported chronic pain and fatigue that interfered with her duties as a senior public relations manager for Wal-Mart Stores, Inc. After she was diagnosed with lupus and fibromyalgia, Heimeshoff stopped working and filed a claim for long-term disability benefits with Hartford Life & Accident Insurance Co., the administrator of Wal-Mart's Group Long Term Disability Plan (the "Plan"). Hartford denied Heimeshoff's claim because it concluded that she had failed to provide satisfactory proof of loss.
In 2006, another physician evaluated Heimeshoff and determined that she was disabled. That evaluation and other evidence were submitted to Hartford, but her claim was denied later that year after a physician retained by Hartford concluded that Heimeshoff was able to perform the activities required by her sedentary occupation. In 2007, Heimeshoff requested and was granted an extension of the Plan's appeal deadline, but Hartford ultimately issued a final denial in 2007. In 2010, within three years after Hartford's final denial of her claim, but more than three years after proof of loss was due, Heimeshoff sued in district court seeking review of her denied claim under ERISA § 502(a)(1)(B).
Hartford and Wal-Mart moved to dismiss, arguing that Heimeshoff's complaint was barred by the limitations provision in the Plan which provides that "[l]egal action cannot be taken against The Hartford...[more than] 3 years after the time written proof of loss is required to be furnished according to the terms of the policy." The district court granted the motion to dismiss, and the Second Circuit affirmed.
The Supreme Court affirmed, holding that unless there is a controlling statute to the contrary, "a participant and a plan may agree by contract to a particular limitations period, even one that starts to run before the cause of action accrues, as long as the period is reasonable." The Court reasoned that parties may contract around a default statute of limitations as well as when the statute of limitations will commence. This is especially true, according to the Court, in ERISA cases because there is particular importance in enforcing the terms of a plan as written in § 502(a)(1)(B) actions.
The Court concluded that a plan's limitations provision is to be given effect unless (1) the period is unreasonably short or (2) a "controlling statute" prevents the limitations period from taking effect. The three-year limitations provision in the Plan was not unreasonable because Heimeshoff was left with almost one year to file suit after the administrative review process had concluded. The Court also rejected the argument that ERISA is a "controlling statute" that is contrary to the Plan's limitations provision. It was "highly dubious" that the Plan's limitations provision would undermine ERISA's remedial scheme requiring an internal review process of all claims filed for disability benefits by participants. There is also no risk of endangering judicial review by allowing plans to set limitations periods that begin to run before internal review is complete. A three-year limitations period is quite common and courts may apply traditional doctrines such as waiver or estopped to prevent an administrator from invoking a limitations provision as a defense when the administrator's conduct causes a participant to miss a deadline for judicial review.
Justice Thomas delivered the opinion for a unanimous court.