Boom: The ERISA Law Blog

ERISA Litigation Attorney | Lane Powell Law Firm

Must a Disability Benefit Denial Letter Inform Claimant of the Time Period to File Legal Action? Not in This Case….

By Mike Reilly on Posted in ERISA

ERISA regulations require that the benefit denial letter contain “a statement of the claimant’s right to bring a civil action….”  29 C.F.R. Section 2560.503-1(g(1)(iv).

What does this mean?

Does this mean you have to include specific language detailing the time limitations for bringing a legal action?  Depends on your venue.

Here’s a great new case on the topic: Heimeshoff v. Hartford Life & Accident Ins. Co. and Wal-Mart [PDF], __F. Supp. 2d __ (D. Conn. January 16, 2012)(attached)(Benefit denial letter not required to specify time limitations for suit because the ERISA regulation language “suggests that the DOL did not intend to require such a time limit notification in the benefit determination.”).

FACTS:

Claimant claimed she became disabled as of June 8, 2005.  She applied for disability benefits under Wal-Mart’s ERISA plan in August 2005. Hartford was the administrator and sent Claimant “group forms” to be completed and returned.

The plan language states: “[l]egal action cannot be taken against The Hartford…3 years after the time written proof of loss is required to be furnished according to the policy. The plan also provides: “Proof of loss must be sent to The Hartford within 90 days after the start of the period for which The Hartford owes payment.”

Under the Plan, Claimant had to file suit by September 30, 2010.

Hartford sent Claimant a letter denying the claim for failure to “provide satisfactory proof of loss.” The letter did not include notice of the limitations period by which a lawsuit should be filed.

Claimant files suit November 18, 2010.

QUESTIONS PRESENTED:

  1. Is claim barred by contractual limitations period?
  2. Whether an initial adverse determination letter must include the limitations period for judicial review imposed by the Summary Plan Description?

HELD: TRIAL COURT GRANTED Rule 12(b)(6) MOTION TO DISMISS BECAUSE LAWSUIT WAS UNTIMELY

RATIONALE:

  1. A limitations period that begins to run before a claimant may bring a legal action is enforceable.  Op. at 7.

  2. Given that claimant alleged she was disabled as of June 8, 2005, “then the period for which The Hartford would have owed payment began on June 8, 2005, and written proof of loss would have to be due on September 6, 2005.”  Op. at 8.

  3. “The Plan unambiguously disallows legal action more than three years after the time written proof is required to be furnished.” Op. at 8.

  4. Claimant could not take legal action later than September 30, 2010. “She filed her complaint on November 18, 2010 and it is therefore untimely under the terms of the Policy.”  Op. at 9

  5. 29 C.F.R. Section 2560.503-1(g(1)(iv) unambiguously requires that the notification of benefit determination include “a statement of the claimant’s right to bring a civil action….”  Although the regulation requires notification of the time limits for claim review procedures, the regulation “says nothing about time limits with respect to civil actions….”  This “suggests that the DOL did not intend to require such a time limit notification in the benefit determination.” Op. at 10 (emph. Added).

  6. Hartford was “not required to inform [claimant] of the Plan’s limitations period for legal action in its benefit determination letter….”  Op. at 11.

  7. But see contrary cases: Chappel v. Lab. Corp. of America, 232 F.3d 719, 726-7 (9th Cir. 2000)(benefits denial letters must include time limits applicable to post denial arbitration.)

A Plan’s Choice of Law Provision Might Not Trump State Insurance Regulations Banning Discretionary Language

By Mike Reilly on Posted in ERISA

Can an ERISA plan’s “choice of law” provision trump a state’s insurance regulation banning discretionary review? Sometimes yes, this time no.

Here’s the case of Curtis v. Hartford Life and Accident Insurance Company, [PDF], No. 11 C 24489 (N.D. Illinois, January 18, 2012)(Magistrate Judge Jeffrey Gilbert)(Opinion attached)(Plan’s choice of law provision, applying another state’s law which does not ban discretionary language was found to be contrary to public policy).

FACTS: Illinois resident Curtis sought ERISA disability benefits under a plan administered by Hartford. Hartford determined that Curtis was not disabled, and terminated the benefits. Curtis sued. The plan had discretionary language, but Illinois has an insurance regulation banning discretionary language. Noteworthy: the plan included a choice of law provision requiring application of Delaware law.

ISSUE: Does the Illinois Insurance regulation banning discretionary language apply when the ERISA Plan’s choice of law provision requires application of Delaware law?

HELD: The ERISA Plan’s Choice of Law Provision Did Not Trump the Insurance Regulation Banning Discretionary Language

  1. The Illinois insurance regulation applies to this ERISA plan and de novo standard of review controls. Op. at 17. ERISA does not preempt the Illinois insurance regulation. Op. at 19.
  2. The Plan’s choice of law provision (requiring application of Delaware law which does not have a regulation banning discretionary language) does not control. Delaware allows inclusion of discretionary clauses in policies. This is clearly contrary to the Illinois regulation “and the public policy of Illinois.” Accordingly the Illinois regulation is not displaced by the Plan’s choice of law provision. Op. at 19.

Ninth Circuit: What Happens When the Plaintiff is not a Plan “Participant”? Move to Dismiss for Lack of Subject Matter Jurisdiction? Think Again.

By Mike Reilly on Posted in ERISA, Uncategorized

Courts had dismissed ERISA cases for lack of subject matter jurisdiction when the plaintiff was not a plan “participant, beneficiary or fiduciary.” Harris v. Provident Life Accident Ins. Co., 26 F.3d 930, 934 (9th Cir. 1994).

Not any more in the Ninth Circuit. The issue is now merely an element of the ERISA case. Rather than a subject matter motion, attorneys in the Ninth Circuit are advised to fashion their motions to dismiss as a “failure to state a claim.”

Here’s the case of Leeson v Transamerica Disability Income Plan, __F.3d__ (9th Cir. January 23, 2012)( “The issue of participant status goes to the merits of the claim and not to the subject matter jurisdiction of the district court.”)(Overrules prior Ninth Circuit precedent including Curtis v. Nevada Bonding Corp. (9th Cir. 1995) 53 F. 3d 1023, 1027)).

FACTS: This case has a long sordid history, but here are some key facts. While Leeson was employed with Transamerica, he participated in the long term disability ERISA plan. Plan documents provided that “if an Eligible Employee is on an unpaid leave of absence, his or her status as a Long-Term Participant shall be suspended and he or she shall not be eligible for Long Term Benefits.”

Leeson was injured in a car accident and applied for disability benefits in 1996. Prudential, the plan administrator, deemed him eligible and paid disability benefits for four years. Benefits were denied and Leeson sued. In 2008 the Ninth Circuit determined the de novo standard of review should apply, and remanded the case to the district court.

On remand the Plan argued for the first time that Leeson was not a plan participant because he had been on unpaid leave when he applied for disability benefits. The Plan then moved to dismiss the case for lack of subject matter jurisdiction, relying on Franchise Tax Bd. v. Const. Laborers Vacation Trust, 463 U.S. 1, 21 (1983)(district court lacked subject matter jurisdiction because ERISA is “limited to suits brought by certain parties….”).

TRIAL COURT: GRANTED MOTION TO DISMISS FOR LACK OF SUBJECT MATTER

ISSUE: Whether Plaintiff’s status as a plan participant goes to the merits of the ERISA claim, or implicates federal subject matter jurisdiction?

NINTH CIRCUIT REVERSES, OVERRULES PRIOR PRECEDENT and HOLDS: “The issue of participant status goes to the merits of the claim and not to the subject matter jurisdiction of the district court.” Op. at 8

RATIONALE:

  1. Federal courts have broad adjudicatory authority. A claim should not be dismissed for lack of subject matter if “the right of the petitioners to recover under this complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another.” Op. at 5.
  2. ERISA authorizes a plan participant to initiate a civil action. A “participant” includes former employees who have “a colorable claim that…she will prevail in a suit for benefits.” Op. at 6.
  3. The key case relied on by the court is Vaughn v. Environmental Management, 567 F.3d 1021, 1024 (9th Cir. 2009)(A motion for dismissal because Plaintiff is not a plan participant is properly viewed as a motion for failure to state a claim and not a dismissal for lack of subject matter jurisdiction.)
  4. Nothing in ERISA requires that a plaintiff assert anything more than a colorable claim that he or she is a participant to assert an ERISA claim. Op. at 7.
  5. “Because Leeson’s ERISA claim rises and falls on the district court’s determination of participant status, the construction of the term “participant” involves a merits-based determination, even if it results in dismissal.”

ERISA–How much weight can the Plan give to surveillance video? How the Plan can lose discretionary review by failing to properly designate claims administrators

By Mike Reilly on Posted in ERISA

Two interesting issues come up in today’s case:

  1. An ERISA Plan can lose discretionary standard of review if it failed to properly delegate third parties to make benefit decisions. How do you prove the Plan properly delegated benefit decision-making?
  2. How much weight can one give to sporadic surveillance video of a claimant?

Here’s the case of Maher v Massachusetts General Hospital Long Term Disability Plan, [PDF] _-F.3d_ (1st Cir. December 7, 2011) (The Plan must (1) expressly provide for procedures to designate third parties to make benefit decisions, and (2) delegation must actually occur. The Court can look to Plan terms and affiliated documents, like trust documents and the Summary Plan Description to make that determination.)

FACTS:  Maher, a nurse at Mass General Hospital(“MGH”), received long term disability ERISA Plan benefits from 2001-2007.  The plan contained abuse of discretion language.  

Surveillance video and a Doctor’s record review convinced the Plan’s “claim processor” — Liberty — to conclude Maher was no longer “totally disabled.”  Maher appealed to Liberty and to the plan administrator — “Partners.”  On appeal, different doctors reviewed the claim and concluded disability had not been established. Partners then denied the appeal, and Maher sued.

TRIAL COURT:  Termination of Benefits Affirmed.  Plaintiff appealed.

ISSUES BEFORE THE FIRST CIRCUIT:

  1. Whether the Plan properly delegated Partners authority to determine benefit eligibility?
  2. Whether the plan “expressly provided for procedures” to designate Partners as a fiduciary with discretionary authority to make benefit decisions?
  3. How much weight can one give to surveillance in denying a claim?

FIRST CIRCUIT REVERSES AND REMANDS, with the following rationale:

  1. Absent a proper delegation of authority, the Plan cannot rely on the abuse of discretion standard of review. Op. at 6
  2. The primary plan document reserves to the Hospital the authority to determine eligibility.  Partners, which decided the appeal, “appears” to operate in part as a coordinating body that performs functions for member hospitals like MGH.
  3. “Viewed as a conventional delegation [of authority]–the MGH Plan has not relied on affiliation or provided detailed information about it.”  “[T]he treatment of Partners as a proper inheritor of ‘the Hospital’s’ discretionary authority is justified, but perhaps only by a modest margin.”  Op. at 6.
  4. As to whether the plan “expressly provide[s] for procedures to designate Partners as a fiduciary with discretionary authority to administer the plan, the court first looks to the primary plan document. Op. at 8. “Nothing there expressly identifies decisional authority to determine benefits as a power that can be delegated.”  
  5. Any uncertainty about express delegation can be “resolved by looking to associated documents” like trust agreements and the summary plan description. Op. at 8. These plan documents make clear that the plan authorized delegation to Partners, and that such delegation actually occurred. Op. at 9.
  6. The court has in the past upheld termination of benefits based upon “sporadic surveillance capturing limited activity.”  Op. at 13.  But the weight of surveillance will depend upon the “amount and nature of the activity observed.” Op. at 14.  The video evidence and failure to produce pain clinic information is overstated.  Op. at 14.

HAPPY HOLIDAYS — Mike Reilly, Lane Powell PC–Seattle,Portland,Anchorage

3rd Cir. Plan Seeking Reimbursement of Medical Expenses–Beneficiary May Assert Equitable Defenses to Reduce Recovery

By Mike Reilly on Posted in ERISA

When a Plan seeks reimbursement from a beneficiary under ERISA Section 503(a)(3) (“appropriate equitable relief”) for medical expenses the Plan paid, can the beneficiary assert equitable defenses?

The Circuits are split on this.  A new case, applying recent United States Supreme Court precedent, concludes the beneficiary can assert equitable defenses.

This new case highlights the issue.  US Airways, Inc. Plan v. McCutchen [PDF], __F.3d__ (3rd Cir. 11/16/2011)(beneficiary may assert equitable defenses to reduce reimbursement amount sought by ERISA Plan).

FACTS: McCutchen was injured in an auto accident. The US Airways ERISA Plan paid $66,866 in medical expenses.  McCutchen then obtained a personal injury settlement for $110,000.  After paying his attorneys, McCutchen netted $66,000. The Plan sought reimbursement, asserting a claim under ERISA Section 502(a)(3), seeking “appropriate equitable relief” in the form of a constructive trust. The Plan terms also required reimbursement from “any monies recovered” from a third party.

TRIAL COURT: Summary Judgment GRANTED for PLAN, requiring McCutchen to reimburse Plan $66,866.

APPEAL ISSUE: Whether Section 503(a)(3)’s requirement that equitable relief be “appropriate” limits the Plan’s recovery from a beneficiary by equitable defenses “typically available in equity.”

THIRD CIRCUIT:  REVERSES— EQUITABLE DEFENSES MAY REDUCE PLAN RECOVERY.

RATIONALE:

  1. “Appropriate equitable relief” under ERISA 502(a)(3) means “something less than all equitable relief.”  Congress intended to limit equitable relief available under this section through the application of equitable defenses.  Op. at 11. (Emph. in original).
  2. Equitable liens by agreement are not subject to the asset tracing requirements imposed on liens sought as a matter of equitable restitution.  Op. at 9.
  3. Equitable relief must mean “something less that all relief.”  Op. at 10.
  4. “Unjust enrichment” is applicable to claims for equitable relief.  Op. at 12.  The Court rejects the Plan’s argument that equitable doctrines limiting reimbursement recovery are inapplicable.  Op. at 14-15.
  5. The Court rejects decisions from other circuits (8th and 11th Circuits) that have held “that it would be pioneering federal common law to apply equitable limitations on an equitable claim.”  Op. at 15.
  6. Applying the doctrine of unjust enrichment, McCutchen prevails because the net amount of his recovery from the third party is less than full payment of his medical bills, “thereby undermining the purpose of the Plan.”  Op. at 17.

ERISA: State Law Claims Against Independent Medical Reviewers …. Preempted

By Mike Reilly on Posted in ERISA

“No one loves the messenger who brings bad news.” Antigone (lines 276-77).

What happens when an ERISA claimant brings state law claims against independent medical consultants retained by the Plan to provide medical reviews eventually relied upon in claim denials?

Are these claims preempted by ERISA?

Good news: Sometimes yes.

Here’s the case of Cacoperdo v Hartford Life Ins. Co., 2011 WL 4632881 (S.D.N.Y October 5, 2011) [PDF] (state law claims against plan’s independent medical consultants preempted by ERISA; Court also denies Plaintiff discovery propounded to independent physicians as a “fishing expedition”).

FACTS: Cacoperdo sought ERISA disability benefits from his employer’s plan. He received benefits for a while but eventually Hartford retained two different companies to prepare independent medical review reports. Hartford relied on these reports to deny the disability claim.

Plaintiff then sued, asserting ERISA claims against Hartford and state law tortious interference claims against the physicians providing independent reviews.

Plaintiff’s theory: The independent medical consultants are not ERISA entities. “[The independent medical consultants] knew or should have known of a valid contract between Hartford and the Plaintiff, and that they induced Hartford to breach the contract by creating medical findings that would lead Hartford to fail to discharge its duties and obligations under the contract.”

ISSUE: Whether claims against medical consultants are preempted by ERISA?

TRIAL COURT HELD: The claims against the physicians are preempted. The Court also denies discovery from the physicians.

RATIONALE:

  1. Unlike other court decisions which allowed state law invasion of privacy claims (Dishman v. UNUM, 269 F.3d 974 (9th Cir. 2001)) or outrage claims (Barker v. Hartford, 2007 U.S. Dist Lexis 55532 (N.D. Tex. July 31, 2007)), Plaintiff’s claim here specifically “derive[s] from his benefits claim….[T]he state law claim here stems from the Plan that is breached—not an independent duty of care owed to the Plaintiff [by the independent medical reviewers].” Op. at 5.
  2. “There was no direct evidence that [the physicians] breached an independent duty of care owed to Cacoperdo.” Op. at 5.
  3. The Court denied discovery from the physicians. The Court said: “[N]o factual allegations have been pled with any amount of specificity against [the reviewing physicians] that would support an independent state law tort cause of action against them. The Court will not allow Cacoperdo to engage in a fishing expedition against non-fiduciary third party vendors in order to determine whether any factual allegations can be made.” Op. at 6 (Emph. added).

Can an ERISA Plan Offset Veterans Disability Benefits? Maybe Yes, Maybe No.

By Mike Reilly on Posted in ERISA

You already know that ERISA disability payments can often be reduced or offset by disability payments the beneficiary receives from the Social Security Administration.

 But…. 

 Can the ERISA Plan offset Veterans Administration (VA) disability benefits as “other income?”  

 It depends on what the “other income” ERISA plan language says.

 AND, courts may conclude the issue involves construing “existing law” and will endeavor to apply de novo review.

 Here’s the case of  Riley v. Sun Life and Health Insurance Co., __F.3d __ (8th Cir. October 7, 2011) (PDF)  (VA benefits cannot be offset because they are not “similar to” ERISA long term disability benefits.)  This case also gives a good road map how ERISA Plans should construct offset provisions.

 FACTS:  Riley had multiple sclerosis symptoms and sought ERISA disability benefits under his Employer’s ERISA qualified long term disability plan with Sun Life. He also received VA disability benefits from the Department of Veterans Affairs. The plan stated that  offsets would apply to benefits received from Social Security Administration or the Railroad Retirement Act or “any other similar act or law provided in any jurisdiction.” Sun Life offset from the disability benefits amounts received for his VA disability benefits. 

 Riley sued contending Sun Life should not offset his VA disability benefits.

 TRIAL COURT: Granted Defendant Sun Life summary judgment, concluding the offset of VA disability benefits was appropriate.

EIGHTH CIRCUIT COURT OF APPEALS:  REVERSES and finds VA Disability benefits should not be offset.

 RATIONALE:

             1. The Court reviewed the decision de novo because the plan’s decision involved construction of existing law.

             2. Some cases have allowed for an offset of VA disability benefits;  some cases have not—depending on plan language. 

-High v. E-Systems, Inc., 459 F.3d 573 (5th Cir. 2006) (broad plan language allowed VA disability benefits offset).

-Jones v. ReliaStar Life Insurance Co.,  615 F.3d 941 (8th Cir. 2010) (upheld Plan’s decision to offset VA benefits because the plan language defined “other income” as income based on “the same or related disability for which [the plan participant is] eligible to receive benefits under the Group Policy.”)

 -But see, Williams v. Group Long Term Disability Ins., 2008 WL 2788615 (N.D. Ill. July 17, 2008)(VA benefits cannot be offset because VA benefits are “different” and the language was not “clear [to the employer] at the outset” that VA benefits would be offset.)

            3.  KEY QUOTE: “We disagree with the Plan administrator’s decision to offset Riley’s VA benefits. Those benefits for a war-time service disability, as a matter of statutory construction, do not derive from an act that it “similar to ” [the Social Security Act  (SSA) or the Railroad Retirement Act (RRA)].”  The Court explains how SSA and RRA are not “similar” to long term disability benefits.

            4. GOOD DISSENT:

-Discretionary review should have been applied: the issue does not involve construing an “existing law.” It deals  with the meaning of plan terms.

-ERISA disability benefits are substantially similar to SSA and RRA disability benefits and should be offset.

ERISA: Murder for Profit and Life Benefits–State Slayer Statutes NOT Preempted by ERISA

By Mike Reilly on Posted in ERISA
“Murder is always a mistake.  One should never do anything that one cannot talk about after dinner.” –Oscar Wilde
 
We’ll end the week on the uplifting note that “murder does not pay.”
 
What happens when the sole beneficiary of an ERISA plan life benefit kills the plan participant (insured)? 
 
Are state slayer statutes (which prohibit murder for profit) preempted by ERISA?  No. 
 
Here’s the case of Union Security Life Insurance Co. v. JJG-1994; JJG-2002, [PDF], a minor, __F.Supp.2d__, 2011 WL3737277 (N.D.NY August 24, 2011)(attached)(State slayer rules NOT preempted by ERISA).
 
FACTS:  An employee was covered under the employer’s group life insurance benefits.  He was murdered by the sole beneficiary of the employee’s group life benefits. No contingent beneficiary was identified in plan documents.
 
ISSUE: Whether one who kills the ERISA plan participant may continue as the sole beneficiary of the life insurance benefits?
 
HELD:  No. State law prohibiting a killer from profiting from his crime is NOT preempted by ERISA.
 
RATIONALE: Some state laws of “general application” may have only an incidental effect on ERISA and are therefore not preempted.

ERISA: “Most Convenient” Venues for ERISA claims

By Mike Reilly on Posted in ERISA
Where do you litigate an ERISA disability claim?  What venue is the most convenient?
 
Under ERISA, venue is proper in “the district where the plan is administered, where the breach took place, or where defendant resides or may be found.” 29 U.S.C. 1132(e)(2).
 
But how do you decide which is the more “convenient” venue?  Here are two cases (attached) that highlight the point.
 
Key point: If the only connection to the venue is Plaintiff’s counsel, Defendant’s Motion to Transfer Venue has a good shot at winning.
 
Girgis v. The Hartford Life and Accident Insur. Co. [PDF], 2011 WL 2115814 (D.N.J. May 25, 2011).
 
    FACTS: Plaintiff worked in Texas, and in 2003 asserted a disability claim under the ERISA plan, claiming total disability due to Fibromyalgia. Hartford paid on the disability claim until September 2009, when it concluded Girgis was no longer disabled under the terms of the plan. Girgis appealed, which was denied, and he commenced suit in … New Jersey.
 
    ISSUE:  Is Texas or New Jersey the most convenient venue?
 
    HELD:  Defendant’s Motion to Transfer Venue was GRANTED.
 
    RATIONALE:
 
            1. The Court applies a multi-factor test.  Plaintiff’s choice of forum is important, but is not dispositive.  Op. at 2-3.
 
            2. The defendant’s choice of forum counterbalances Plaintiff’s choice of forum. Op. at 3.  Strong factors for Defendant include the fact that both the administrator of the plan and the alleged breach of the contract occurred in Texas.  Plaintiff lives in Texas.  The only person involved in this litigation with an interest in litigating in New Jersey is the Plaintiff’s attorney.
    
            3.  Plaintiff lived and was employed in Texas, by a Texas corporation, with a plan administered in Texas. Op. at 3
 
            4.  Plaintiff alleges that he ceased work due to disability.  “[W]hile the Court hesitates to conclude travel would be difficult, both physically and financially, … logic dictates that the fourth factor favors Defendant.”
 
            5.  The “convenience of the witnesses” factor does not pertain to ERISA cases and thus does not help Plaintiff’s argument. Op. at 3
 
            6.  The “location of books and records” factor is insignificant because they “may be easily reproduced and transmitted to any district….” 
 
Smith v. Aetna Life Insurance [PDF], __ F. Supp. 2d __ (N.D. Cal.September 6, 2011)
 
    FACTS:  Smith was a Bank of America employee, working in North Carolina. She sued in California alleging Aetna wrongfully denied disability benefits.
 
    ISSUE:  Is North Carolina or California the most convenient venue?
 
    HELD:  Defendant’s Motion to Transfer Venue to North Carolina GRANTED.
 
    RATIONALE:
 
            1. Where Plaintiff does not reside in the forum, the Court may afford Plaintiff’s choice considerably less weight.  Op. at 3.
 
            2. The Court found unpersuasive Plaintiff’s argument that there are a “limited number of attorneys in the country who handle ERISA disability” cases.  Op. at 3
 
            3.  The only link to the venue was the Plaintiff’s attorney.  The convenience of counsel is not considered for purposes of deciding whether venue is convenient.  Op. at 3
 
DISCUSSION.  These cases highlight that connection to the forum is important.  Give serious consideration whether you bring a motion to transfer under 29 USC 502(e)(2) or under 28 USC 1404(a).  The outcomes may be different.  See, e.g.,  Smith v. Aetna, supra at 4. 

When is an ERISA claim timely? New Case Explains

By Mike Reilly on Posted in ERISA
When is an ERISA claim timely? 
 
You need to look at: the state statute of limitations, the limitations provisions in the plan, and… when the claim “accrues.”
 
BUT… Is there a difference when the claim involves just the calculation of the benefit, rather than whether the claimant is entitled to a benefit at all? Yes.
 
A new case worth reading is Withrow v. Bache Halsey Stuart Shield (PDF),  __ F.3d __ (9th Cir. August 23, 2011). 
 
FACTS:  Withrow had ERISA long term disability coverage, insured by Reliance Standard.  Withrow became totally disabled in 1986, and applied for benefits in January 1987. 
 
    1987 and 1990:  Withrow tells Reliance that she should receive $5000 per month, rather than $3950. Reliance disagrees and explains how the benefit was calculated.
 
    2002: Twelve (12) years later Withrow raises the benefit calculation issue again. Reliance explains its decision and denies the claim. 
 
    July 21, 2003: Withrow appeals the denial.  
 
    January 14, 2004. Reliance upholds the claim determination. 
 
    February 16, 2006. Withrow (finally) files suit.
 
 
ISSUE: Whether this ERISA claim was timely?
 
DISTRICT COURT:  GRANTS Defendant’s Motion to Dismiss the Claim, as Untimely.
 
NINTH CIRCUIT COURT OF APPEALS:  REVERSES–Claim Timely, with the Following Rationale:
 
        1. There are two parts to the determination of a timely ERISA claim:
 
                    (a) whether the action is barred by the statute of limitations, and
 
                    (b) whether the action is contractually barred by the limitations provision. Op. at 4.
 
        2.  Statute of Limitations Analysis: Reliance did not clearly communicate repudiate 1990 claim; claim does not “accrue” until 2004.
 
                    A. Under Ninth Circuit precedent,  the court must apply the state statute of limitations most analogous to the ERISA benefit recovery.
 
                B.  When the action “accrues” is governed by federal law. Op. at 4.  An ERISA cause of action “accrues ‘either at the time benefits are actually denied, or when the insured has reason to know that the claim has been denied.’”
 
                C. Reliance “actually denied” the appeal on January 14, 2004, and that’s when the claim accrued.
 
                D.  A claimant has “reason to know” of a claim denial “when the plan communicates a ‘clear and continuing repudiation’ of the claim ‘such that the claimant could not have reasonably believed but that his or her benefits had been finally denied.’”  Op. at 4.
 
                E.  The substance of Reliance’s response  to Withrow’s issues raised in the 1990s is unclear. The only evidence regarding the denial is a handwritten note in the file. This is insufficient to constitute “clear and continuing repudiation.”  Consequently, Withrow’s 1990 claim did not accrue with regard to the statute of limitations, until January 14, 2004.
 
    3. Limitations Provision Analysis–Does Not Apply to Calculation Issues. 
 
              A.  The plan provides that no legal action may be brought after “the expiration of three years…after the time written proof of loss is required….” Op. at 6
 
            B. “[C]ontract limitations provisions in benefit policies still have force independent of ERISA in long term disability benefit cases.”  Id.
 
            C.  Under California law, the limitations provisions are “meaningless as applied to disputes over the proper calculation of the amount of monthly disability benefits, as opposed to disputes over whether an applicant is entitled to benefits at all.” Op. at 7.
 
Have a great Labor Day.