The accrual date for the statute of limitations in pension benefits and other denial of benefits cases under ERISA continues to be a critically important issue in ERISA class action litigation. On February 1, 2011, Magistrate Judge Sorokin in the U.S. District Court for the District of Massachusetts issued a favorable decision for plans and plan sponsors when he held in Kingsbury v. Marsh & McLennan Cos., Inc. and Marsh & McLennan Cos., Inc. Retirement Plan, Civil Action No. 10-11279 (LTS) [ruling link], that the statute of limitations in a denial of pension benefit case accrues when a plan "clearly and unequivocally repudiates the plaintiff's claim for benefits and that repudiation is known, or should be known, to the plaintiff." Applying that principle, the Court granted summary judgment in favor of the defendants, concluding that the limitations period accrued when the Plan clearly repudiated the plaintiff's claim for benefits by not paying her deceased sister a pension upon turning age 65.
The plaintiff, Joan Kingsbury, filed an ERISA action seeking to recover pension benefits for her deceased sister, Lorna Hutcheon. Kingsbury claimed that Hutcheon was employed by Marsh & McLennan Cos. ("MMC") as an actuary from 1956 to 1977, but never sought retirement benefits due to her under the MMC Retirement Plan when she turned age 65 on July 5, 2000. A claim was filed with the Plan in October 2007, but Hutcheon submitted no proof that she was a participant under the Plan or that she had not taken an early distribution from the Plan. The Plan had no such records on Hutcheon. The Court noted that the absence of records was not surprising, given that the claim was filed 33 years after Hutcheon's employment had ended. The Plan denied the claim and, thereafter, Kingsbury filed suit.
The parties filed cross-motions for summary judgment. The MMC defendants sought summary judgment on the ground, inter alia, that the ERISA claim was barred by the 6-year limitations period applicable to denial of benefits claims in Massachusetts. In granting the MMC Defendants' motion, Magistrate Judge Sorokin concluded that Hutcheon's claim for benefits was time-barred because it expired on July 5, 2006 -- 6 years after she turned age 65 and allegedly should have started to receive pension benefits. The Court reasoned that, when Hutcheon reached age 65, it should have been clear to her that she missed receiving a pension payment. Yet, no claim was filed with the Plan until October 2007. While the Court acknowledged that judges in the District of Massachusetts have ruled that the limitations period in certain ERISA cases does not begin to accrue until after the plaintiff has exhausted the administrative claims review process, the Court declined to adopt such a rule because it would give a plaintiff an unlimited amount of time to file a lawsuit, and thus allow a plaintiff to trigger the statute of limitations at her own discretion and create an indefinite limitations period.
This decision should prove helpful to plans and employers in ERISA class actions involving alleged miscalculation of benefits or denial of benefits, where plaintiffs may wait years after receiving allegedly miscalculated benefits (or no benefits) to file suit. By arguing that there was clear repudiation when the plaintiff first received the miscalculated benefits (or shortly thereafter), plans and employers can argue that the limitations period accrued at that point, and not at a much later point when the plaintiff claims to have first discovered the error or completed the plan's administrative review process.