Attention ERISA plan administrators with too much time on your hands: a recent decision from the Third Circuit Court of Appeals reiterates that you should inform claimants of plan-imposed deadlines for filing suit when you deny benefits. Please update your personal task lists accordingly.
Although Section 502(a) of ERISA authorizes a beneficiary to sue to recover benefits, it does not contain a statute of limitations. Thus, courts have ruled that plan administrators must come up with their own (reasonable) deadlines for judicial review. If they don’t do so, courts will apply the statute of limitations governing the most similar state law claim.
In Mirza v. Ins. Administrator of America, Inc., the plan administrator denied a claim assigned to Dr. Neville Mirza by one of his patients. In doing so, however, the administrator failed to notify Dr. Mirza that he had one year to appeal the decision under the plan-imposed statute of limitations. When Dr. Mirza filed suit nineteen months after the denial, the District Court ruled in the plan’s favor, concluding that his claim was time-barred.
On appeal, the Third Circuit reversed. Noting that ERISA’s regulations require that any adverse benefit determination include a “description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under section 502(a) of the Act following an adverse benefit determination,” the court concluded that the administrator violated the regulations and imposed New Jersey’s six-year statute of limitations, meaning that Dr. Mirza could proceed with his suit. In its opinion, the Third Circuit also pointed out that two of its sister courts (the First and Sixth Circuits) had previously required disclosure of plan-imposed time limits.
While calling these decisions a trend may be a stretch at this point, to be safe, plans imposing their own statute of limitations should add this information within adverse benefit determinations to avoid having to litigate this issue.