I have been blogging about ERISA basic principles and respect for boundaries, and just got a little help from the U.S. Supreme Court. In Heimeshoff v. Hartford Life & Accident Insurance Company, a unanimous decision, the Court upheld the three-year statute of limitations set forth in the terms of the ERISA benefit plan document. The Court held that while a cause of action does not commence until the plan issues a final denial in the claims appeal process, the plan and its participants can agree to commence the limitation period before that time (here, at the proof of loss due date).
The Plan Is at the Center of ERISA
In resolving the circuit split, the Court explained that under U.S. Supreme Court authority (Order of Unite Commercial Travelers of America v. Wolfe), a limitations period is enforceable provided it is of reasonable length and there is no controlling statute to the contrary. This approach necessarily allows the parties to agree to the length of a limitation, and its commencement.
Citing CIGNA Corp. v. Amara, the Court found this agreement approach particularly well-suited in the context of ERISA claims, given the “particular importance of enforcing plan terms as written in §502(a)(1)(B) claims.” The Court explained, “The plan, in short, is at the center of ERISA,” citing US Airways, Inc. v. McCutchen. Citing Curtiss-Wright Corp. v. Schoonejongen, the Court further explained that because the rights and duties are built around reliance on the face of written plan documents, the Court would not presume from statutory silence that Congress intended a different approach here. The Court further reminded us, “This focus on the written terms of the plan is the linchpin of a ‘system that is [not] so complex that administrative costs, or litigation expenses, unduly discourage employers from offering [ERISA] plans in the first place,’” citing Varity Corp. v. Howe, emphasis added. In other words, the United States (Department of Labor, et al.) as amicus curiae got it backwards with their argument that ERISA, not the plan, controls, and that the plan terms violated ERISA’s structure.
This makes me feel so much better about the fact that the U.S. Supreme Court decided on Friday to review Dudenhoeffer v. Fifth Third Bancorp. In that case, the United States has made virtually the same argument, regarding plan provisions requiring investment primarily in employer securities that purportedly violate ERISA structure. Keep in mind, the Court knew on Friday that it was about to announce this unanimous decision. We can hope the Court decides this argument is backwards, too. But I digress.
In finding the provision reasonable, the Court observed that the vast majority of states require certain insurance policies to include three-year limitation periods that run from the date proof of loss is due. But the Court also rejected arguments about applying state law regarding statutes limitations, because the plan terms controlled.