AARP filed a brief asking the court to imply a bright line rule that tolls the statute of limitations so mandatory exhaustion of internal claims procedure can be completed.
Julie Heimeshoff suffered from fibromyalgia and chronic pain. She applied for long-term disability benefits from a plan administered by Hartford Life & Accident Insurance Co. (“The Hartford”) that was denied in December 2005. Hartford found that she had failed to provide satisfactory proof of her disability. After an informal appeal, Hartford issued its denial letter on Nov. 25, 2007.
The Hartford plan imposed a three-year limitations period on legal actions challenging adverse benefit determinations. The plan required filing lawsuits challenging denials no later than three years after a “proof of loss” was due to Hartford. Heimeshoff filed a lawsuit challenging Hartford's decision on Nov. 18, 2010. Hartford moved to dismiss her claim, arguing that it was barred by the limitations period set forth in the plan.
A trial court agreed with Hartford and dismissed her claim as time barred. According to the district court, the Hartford policy “unambiguously” provided that no legal action could be brought more than three years after the time written proof of loss is required to be furnished according to the terms of the policy. Proof of loss must be submitted within 90 days after the start of the period for which The Hartford owes payment.
The U.S. Court of Appeals for the Second Circuit affirmed, finding that the federal law overseeing employee benefits, the Employee Retirement Income Security Act (ERISA), is silent on benefit claim limitations periods, and because the policy language is unambiguous, the court permitted the plan's contractual limitations period to begin running before the participant would have been eligible to bring a legal action challenging her claim denial. Heimeshoff appealed to the U.S. Supreme Court.
AARP’s brief (filed by AARP Foundation Litigation attorneys and joined by the National Employment Lawyers Association) argued that it was more consistent with ERISA and the judicially created mandatory exhaustion requirement to let the internal claims process be completed. Permitting benefit claims to accrue before the internal claims process is finished would undermine the private resolution of benefit claims. In contrast, setting the clock ticking at the final benefit denial avoids these problems, respects the integrity of the administrative process, and makes it clear to everyone what the timetable is and what processes they must go through in order to challenge claims.
What’s at Stake
This case will determine whether a plan’s limitations period will be permitted to conflict with ERISA’s judicially created exhaustion requirement. If so, participants will be forced to file a lawsuit prior to the claims and appeals procedure is complete or else risk losing their ability to file a lawsuit to protect their benefits. Such a result would undermine ERISA’s purposes of providing ready access to the courts and would add confusion to a process that does not need to be this confusing.
Heimeshoff v. Hartford Life is before the U.S. Supreme Court.