Courtroom Declines to Implement Plan-Imposed Limitations Durations Not Disclosed in Profit Denial Notices

In two almost similar rulings, a federal trial courtroom has concluded that plan-imposed deadlines for submitting lawsuits didn’t apply as a result of they weren’t set forth in last denial letters to the members. Whereas the instances concerned separate ERISA plans (one totally insured and one self-insured) sponsored by totally different employers, each plans concerned denials by the identical entity (as insurer for the insured plan and claims administrator for the self-insured plan). Each members had been represented by the identical legislation agency, and the choose was the identical for each instances. The insurer/claims administrator requested the courtroom to dismiss every lawsuit as a result of it was not filed throughout the time restrict specified by the plan.

The courtroom famous that, generally, plan provisions setting a deadline for bringing a lawsuit will apply supplied they’re affordable (see our Checkpoint article). The members argued that the respective plans’ deadlines mustn’t apply as a result of they weren’t disclosed within the profit denial notices, which, beneath ERISA’s claims process laws, should present a “description of the plan’s overview procedures and the closing dates relevant to such procedures, together with an announcement of the claimant’s proper to convey a civil motion.” Making use of the evaluation of a number of circuit courts (see, for instance, our Checkpoint article), the courtroom reasoned that using the phrase “together with” in that provision signifies that lawsuits are among the many overview procedures for which denial notices should specify closing dates. The insurer/claims administrator argued that this line of reasoning was now not sound in mild of subsequent adjustments to the claims process laws including an categorical requirement that plans offering incapacity advantages should embrace any plan-imposed deadline for submitting a lawsuit of their last denial notices. However in response to the courtroom, these adjustments merely added a separate requirement for incapacity claims with out disturbing the prevailing discover necessities for all profit denials. Discovering that the plan-imposed deadlines didn’t apply, the courtroom turned to essentially the most carefully analogous state-law statute of limitations, which was six years. As a result of the lawsuits had been filed inside that time-frame, each had been allowed to proceed.

EBIA Remark: With out a plan-specific deadline for submitting lawsuits, a plan could also be topic to diverse and prolonged state statutes of limitation. However establishing the deadline will not be sufficient if it’s not adequately communicated to plan members. To maximise the chance of enforcement by courts, the plan’s deadline ought to be set forth in profit denial notices and within the SPD. For extra info, see EBIA’s ERISA Compliance guide at Sections XXXIV.E.7 (“Notification of Adversarial Profit Willpower (All Forms of Well being Claims)”) and XXXVI.E (“Time Limits for Submitting Profit Claims: Statute of Limitations”). See additionally EBIA’s Self-Insured Well being Plans guide at Sections XXVI.D (“Documentation for Group Well being Plan Claims Procedures”) and XXVI.J (“Litigation Points”).

Contributing Editors: EBIA Employees.