When litigants brings claims for benefits allegedly due them under ERISA, a participant usually must exhaust administrative remedies before filing suit to enforce his or her rights under the plan. While this requirement is codified by federal statute, cf. 29 USC § 1132(a)(1)(B), the time a plan participant has to file a claim in court is not set by statute. The Supreme Court recently addressed whether an ERISA plan may provide in the plan documents the timeframe during which a participant must file suit, and answered in the affirmative.
In Heimeshoff v. Hartford Life & Accident Insurance Company, No. 12-729 (December 16, 2013), the Supreme Court examined an ERISA plan that required a participant to file suit within three years after “proof of loss” was due. The twist in the case is that “proof of loss” was due before the plan’s administrative process could have been completed. Put another way, the deadline under the plan to file a lawsuit began to run before the claim actually accrued. Accordingly, a participant would likely have less that the full three years to file suit because he or she could not file until the administrative process was complete.
The Supreme Court ruled that a plan can set its own limitations so long as the time limit is reasonable and not contrary to any controlling statute. The Court, while noting the prevailing view that limitations begin to run when the cause of action accrues, relied upon contractual rights and recognized that parties to a contract can agree to their own limitations provision and agree when that time period begins to run.
Two salient points come from this decision. First, plan participants should look to the specific plan language to determine how long they have to file a lawsuit seeking review of any administrative decision and, perhaps more importantly, when that timeframe begins to run. Second, plan administrators and sponsors can take solace in the fact that, in most cases, they will be able to set a nationwide limitations provision applicable to all participants.