Are those three year suit limitations provisions in ERISA-governed long term disability plans enforceable? YES!
Here’s today’s case, Heimeshoff v Hartford Life & Accident Insurance Co., __ U.S. __ (December 16, 2013) (“3 year from time proof of loss must be submitted” suit limitation provision enforced as reasonable).
FACTS. Heimeshoff made an ERISA-governed long term disability claim on August 22, 2005. The claim, administered by the Hartford, was denied. Then Heimeshoff received extensions to file an appeal by September 30, 2007. The appeal was denied on November 26, 2007.
The plan had a suit limitations provision which reads: “Legal 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.”
Heimeshoff filed suit on November 18, 2010.
ISSUE. Was Plaintiff’s claim barred by the Plan’s limitations provision? YES
United States Supreme Court Rationale:
- “ERISA Section 502(a)(1)(B) does not specify a statute of limitations. Instead, the parties in this case have agreed by contract to a 3 year limitations period.” Op. at 5.
- “‘[I]n the absence of a controlling statute to the contrary, a provision in a contract may validly limit, between the parties, the time for bringing an action on such contract to a period less than that prescribed in the general statute of limitations, provided that the shorter period itself is a reasonable period.’” Op at 6.
- “We must give effect to the Plan’s limitations provision, unless we determine either the period is unreasonably short, or that a ‘controlling statute’ prevents the limitations provision from taking effect.” Op. at 9.
- “We hold that the Plan’s limitations provision is enforceable.” Op. at 16.
Key Take Aways: The opinion addresses a number of legal and theoretical objections to suit limitations provisions, and rejects them. The decision also provides excellent language emphasizing that ERISA plan language should be enforced. This is a very helpful decision from the Supreme Court.