Since Heimeshoff, three district court cases have already held that lawsuits to recover ERISA plan benefits were barred by the plan’s contractual limitation period.
The Supreme Court’s recent decision in Heimeshoff v. Hartford Life & Accident Insurance Company held that an ERISA plan’s contractual limitation period can effectively be used to shorten a plan participant’s time to file suit following a claim denial.
The contractual limitation period at issue in Heimeshoff precluded a plan participant from bringing suit more than three years after “proof of loss” was due under the plan’s terms. ERISA, however, has been judicially construed to require that plan participants exhaust administrative remedies through an internal review and appeal process before a participant can sue to recover benefits. Notably, this means that under Heimeshoff, a contractual limitation period can begin running during the administrative review process and before the cause of action, or right to sue even accrues.
The unanimous Heimeshoff decision affirmed the 2nd Circuit’s ruling that the three-year contractual limitation period for filing suit to recover benefits under an ERISA plan is enforceable even though that limitation period begins to run before the participant’s right to sue accrues. The court concluded that “[a]bsent a controlling statute to the contrary, a participant and a plan may agree by contract to a particular limitations period, even one that starts to run before the cause of action accrues, as long as the period is reasonable.”
Originally posted on InsideCounsel.