Supreme Court Action: ERISA and Contractual Limitations for Filing Suit

The Supreme Court issued one opinion this morning.  The case is Heimeshoff v. Hartford Life & Accident Ins. Co. (12-279).  Heimeshoff worked for Wal-Mart filed a claim with Hartford for long term disability.  Hartford was the plan administrator for Wal-Mart with the plan covered by the Employee Retirement Income Security Act of 1974 (ERISA).  The statute allows for judicial review of any denial of benefits.  The terms of the plan, however, limits the filing of any suits to within three years after “proof of loss” is due.

Courts have generally required litigants to exhaust their administrative remedies before a suit can be filed.  In Heimeshoff’s case, the administrative process concluded more than three years after proof of loss was due.  The District Court dismissed the suit because it was filed outside of the three year contractual limitation.  The Second Circuit affirmed.

The question before the Supreme Court was whether the contractual limitations provision is enforceable.  The Court held that it is, affirming the Second Circuit.  The Court’s precedent allows the enforcement of contractual limitations if the limitations period is of reasonable length and there is no controlling statute to the contrary.  ERISA, the Court notes, allows suit to enforce rights under the plan, meaning that the plan terms were controlling and not in conflict with the statute.

The Court rejected the argument that participants in the administrative review process would short-change participating in the review as any later suit for denial of benefits would be limited to the administrative record.  It would not be in a claimant’s interest to do so as undeveloped evidence would not be available in a District Court proceeding.

It would not be in a plan administrator’s interest to deliberately slow down the process to avoid judicial review as the administrator’s conduct could be subject waiver or estoppel in invoking the limitations period as a defense.  Tolling the contractual limitations period during the internal review period is not an option as it would rewrite the contract.  ERISA, in any event, does not require this.  Justice Thomas delivered the opinion for a unanimous Court.


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