In the case of Heimeshoff v. Hartford Life & Accidental Insurance Co., Julie Heimeshoff argues that ERISA 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 allow the limitations period to waste away while the claimant goes through the plan’s administrative review process. Heimeshoff, a Walmart employee, submitted a claim for long-term disability benefits under the ERISA-covered long-term disability plan sponsored by her employer.

According to the Defense Research Institute (DRI) in Chicago, which has filed an amicus brief in the case, the insurance policy funding the plan, issued by The Hartford, required Heimeshoff to submit proof of loss by December 8, 2005, and included a contractual three-year limitations period, which began to run from the date proof of loss was due. Heimeshoff’s suit challenging her denial of benefits was not filed until November 18, 2010. 

The U.S. District Court for the District of Connecticut agreed with The Hartford and dismissed the case on the grounds it was barred by the plan’s three-year limitations period. The 2nd Circuit affirmed.

Royal Oakes, a partner in the Los Angeles office of Barger & Wolen LLP, explained to PLANSPONSOR that the Supreme Court will examine the extent to which any ERISA plan, including retirement plans, may specify a deadline to sue and if it is subject to being protected by legal remedies or to being rewritten by courts. If the Supreme Court rules for Heimeshoff and upholds the idea of essentially rewriting plan terms simply because a claimant thinks they are unfair, it could open the door for much additional litigation against plans, he said.

Oakes argued—and the firm argues in its amicus brief—that the provisions of the plan in the case were unambiguous and agreed to by all parties. “If a claimant feels something is unfair because of administrative remedies and the duty to file suit, she has a right to use other legal doctrine,” he noted. As an example, Oakes pointed to a doctrine called “equitable tolling,” which permits a policyholder to go to court and say the plan sponsor or insurance company is trying to enforce a statute of limitations in an unfair manner by being vague or compelling noncompliance. “There are other ways to protect claimants; it is not necessary to rewrite plan terms,” Oakes said, adding that use of other legal doctrines is a far less onerous remedy.

Oakes explained that the case is not about the ERISA statute of limitations. “If a law says you have this time to file, that is a statute of limitations. But if an insurance company has a deadline for filing litigation written in the plan terms, that is a contractual obligation,” he said.

“It’s a matter of common sense and fundamental fairness. When parties agree on plan terms and they are unambiguous, both sides are entitled to rely on those plain, straightforward terms being upheld,” Oakes contended. The law has safeguards against rewriting contracts, and claimants have other recourses when someone is under duress or the plan is wildly ambiguous, he concluded.

More about the case and a link to DRI’s amicus brief is at http://www.dri.org/Article/96.