Next month the Supreme Court is  scheduled to hear oral argument in Heimeshoff v. Hartford Life & Accident Insurance Co., et al., an ERISA case concerning when a statute of limitations should accrue for judicial review of an ERISA disability plan’s adverse benefits determination.  This case is particularly interesting since it considers whether a contractual limitations period can runwhile the claimant is proceeding through a plan’s mandated administrative review process.
 Ms. Heimeshoff was a Wal-mart employee who filed a claim for long-term disability (LTD) benefits in 2005  based on her chronic pain and fibromyalgia-related fatigue.  Hartford Life and Accident Insurance Co., the company that insured and administered Wal-mart’s LTD plan, initially denied her claim for benefits in December 2005 based on a failure to receive medical records that supported her claim of disability, as requested by Hartford.
After Heimeshoff obtained and provided the requested functionality records, Hartford denied her claim again in November 2006. At that time, Hartford opined the the provided documentation did not support that she was disabled under the terms of the Wal-mart plan. Heimeshoff appealed that determination and allegedly received a final denial letter in November 2007.  Heimeshoff filed her complaint on November 18, 2010, less than three years after receipt of the final denial letter.
The plan at issue contained a three-year limitations period on legal actions challenging adverse benefit determinations. Under the terms of the plan, the three-year period began as of the date “written proof of loss [wa]s required to be furnished according to the terms of the policy” and such proof of loss must be submitted “within 90 days after the start of the period for which The Hartford owes payment.”
Relying on this language, the district court granted Hartford’s motion to dismiss.  Even though Heimeshoff had filed her lawsuit less than three years after the conclusion of the administrative claims process, the court ruled that her claim was untimely because the limitations period in the plan accrued from the date her written proof of loss was required to be furnished, which in this case was prior to the conclusion of the administrative claims process.  In a succinct opinion, the Second Circuit affirmed the lower court’s finding that Heimeshoff’s claim was time barred.  In reaching ts decision, the Second Circuit ruled that it did not “offend” ERISA to have a contractual limitations period begin to run before the time at which an ERISA plan issues a final claim denial.  The Second Circuit’s ruling is consistent with decisions from several other circuits.  Only the Fourth Circuit has ruled that a plan-mandated limitations period may not commence prior to the completion of the administrative claims process.
The Supreme Court accepted certiorari in this case to resolve the split in the circuits.  Heimeshoff argues that plans should not be allowed to impose a limitations period that begins before the claimant exhausts administrative remedies and is able to file suit because doing so could potentially allow the limitations period to waste away while the claimant is going through the plan’s administrative review process, forcing participants into a “Catch-22” of having to file an ERISA lawsuit before they have exhausted their administrative remedies as required by law.  Hartford and Wal-mart, in turn, argue that ERISA requires courts to uphold and enforce reasonable plan terms, and that if the facts of any case result in the Catch-22 described by Heimeshoff, then the lower courts could declare those plan terms as unreasonable.
The Supreme Court’s decision in this case is expected by next spring.