ERISA – Statute of Limitations

One of the most perplexing issues that arise in ERISA cases is the applicable statute of limitations. The ERISA statute itself does not provide a specific statute of limitations for claims for benefits. Instead, Courts look to the Plan document, the insurance policy, and/or state law in making such a determination. Recently, the Ninth Circuit Court of Appeals dealt with this complex issue. In that case, Nancy Wise, an employee of GTE, was suffering with multiple sclerosis. Despite her affliction, she was able to successfully perform her job. In fact, she left GTE in 1997 and began working for a competitor, Qwest. Thereafter, in 1999, GTE attempted to persuade Ms. Wise to return to GTE. Ms. Wise hesitated leaving her current employer giving her medical condition and her eligibility for full benefits with Qwest. In order to procure her return, GTE promised to “bridge back” to her original employment date her benefits eligibility. In other words, GTE promised that her medical conditions would not be subject to pre-existing condition limitations. Therefore, Ms. Wise returned to GTE.

Ms. Wise Becomes Disabled

In 2000, Ms. Wise left work on account of a disability. Benefits were paid for a period of time but were then terminated. Ms. Wise went through several levels of appeal but ultimately, on March 8, 2002, the Claims Review Committee determined that benefits were not payable. As part of the denial, the Claims Review Committee maintained that her condition was pre-existing.

Almost exactly six years later, on March 11, 2008, she filed a claim under ERISA. She also alleged certain state law causes of action including claims for fraud, misrepresentation and negligence. These claims were premised on the false inducement she received with respect to the benefit Plans waiving any pre-existing condition limitations.

Case Dismissed

The lower court dismissed the case finding that her claims were governed by the State of Washington’s three year statute of limitations for oral contracts — instead of the State’s six year statute of limitations applying to written contracts. On appeal, the Ninth Circuit Court of Appeals first determined that only one statute of limitation applies to an ERISA claim. Although Ms. Wise had alleged several causes of action, which arguably could be governed by different statutes of limitation, the Court determined that in order to effectively fulfill the dual aim of ERISA — to protect the interest of employees and to protect employers from conflicting and inconsistent state and local regulations — a bright line statute of limitations should apply. The Court determined that a claim for ERISA benefits should be governed by the six year statute of limitation which applied to litigation arising out of a written contract.

Defendant’s Alternative Argument

Defendant maintained that even if the six year limitations period applied, that the statute had run in Ms. Wise’s case before she commenced litigation. In particular, the law suit was not filed until March 11, 2008 and the Claims Review Committee’s decision was made on March 8, 2002. Therefore, the lawsuit was arguably filed three days late. The Court rejected this argument and found that the claim accrued, not on the day of the Claims Review Committee’s decision, but on the day that this information was communicated to the Plaintiff. The date of the final denial letter was March 14, 2002. Therefore, the Court found that Ms. Wise’s claim was timely filed.

Florida Decisions on the Statue of limitations in ERISA cases

In Florida, Courts routinely borrow the five year statute of limitation for written contracts in determining the appropriate time to file an ERISA claim. The time typically runs from the date of the final denial letter after exhaustion all administrative remedies. However, Court’s will only borrow this limitations period if insurance policy and/or the Plan document does not contain a specific limitation period. If a specific time is set forth in the insurance policy and/or Plan document, the Court will use that limitation period as long as it is not unreasonable. Courts have determined that limitation periods as short as 90 days are reasonable. Therefore, ERISA practitioners carefully review the insurance policy and/or Plan document in determining the appropriate statute of limitation.