The Wagner Law Group
Wagner Law Group, A Professional Corporation, is a nationally
recognized ERISA & employee benefits, estate planning,
employment, labor & human resources practice.
in 1996, The Wagner Law Group has 22 attorneys engaged
exclusively in employee benefits, estate planning and
employment law. Six of our attorneys are AV rated by
Martindale-Hubbell as having very high to preeminent legal abilities
and ethical standards. The firm is among the largest ERISA boutiques
in the country. Our practice is national in scope, with clients in
more than 40 states and several foreign countries.
Wagner Law Group
Fax: (561) 293-3591
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Francisco, CA 94104
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St. Louis, MO 63102
April 14, 2016
Health and Welfare Law
First Circuit: Benefit Denial
Letters must Explain Plan's Deadline for filing a Lawsuit
Court of Appeals for the First Circuit, in Santana-Diaz v. Metro.
Life Ins. Co, has ruled that an ERISA-covered employee benefit
plan's three year limitation period for filing a lawsuit to contest
adverse determinations did not apply because the plan administrator's
benefits denial letter did not notify the claimant about the deadline.
Law. ERISA allows
plan sponsors to limit the time period during which a claimant may
sue to challenge an adverse benefit determination. Specifically, a
plan sponsor may add a contractual limitations provision to their
plan to achieve this result. In fact, the Supreme Court, in Heimeshoff
v. Hartford Life & Acc. Insur. Co., held that these
contractual limitations provisions are valid and enforceable.
regulations require plan administrators to provide a notice of
adverse benefit determination to a claimant. This notice must include
a description of the plan's review procedures and a statement about
the claimant's right, under ERISA, to file a lawsuit to contest the
Santana-Diaz, plan administrators in the First Circuit
satisfied this requirement by including a description of any
applicable limitation period for filing suit in the plan document and
SPD. As a best practice, many plan administrators provided notice to
claimants about any plan-imposed limitation period in benefit denial
the Third and Sixth Circuit Courts of Appeals have issued decisions
in favor of ERISA plaintiffs, holding that the DOL regulations require
denial letters to include an explanation of any applicable contractual
limitation period for filing a lawsuit under ERISA.
Background. In Santana-Diaz, the employer's LTD
plan imposed a two-year benefit limit on benefits for mental or
nervous disorders. The claimant, who had been receiving mental
disorder LTD benefits for two years, requested an extension of his
LTD. The plan administrator denied the claimant's extension request
and sent the claimant a benefit denial letter. While the plan
administrator's benefit denial letter explained the claimant's right
to sue under EIRSA, it did not notify the claimant about the
plan-imposed deadline for doing so.
the plan's three-year contractual limitation period had expired, the
claimant sued under ERISA. Upon hearing the matter, the district
court sided with the plan administrator and dismissed the lawsuit,
finding that it was barred by the plan's limitations period. In turn,
the claimant appealed to the First Circuit, arguing that the plan's
limitation period should be tolled because the plan administrator's
benefit denial letter did not explain the plan's deadline for filing
Circuit Review. The
First Circuit ruled in favor of the claimant, finding that that the
applicable DOL regulations required the plan administrator's benefit
denial letter to include an explanation of the plan's three-year
limitation period for lawsuits.
administrator had argued that the DOL regulations only required
notice of the time limits for a plan's internal appeal processes and
not the deadline for filing a lawsuit. The First Circuit, however,
rejected this argument, finding that there was no authoritative
guidance to support this interpretation of the DOL regulations.
Outcome. The First Circuit concluded that the plan
administrator's failure to include information in the benefit denial
letter about the plan's three-year limitation period for filing suit
rendered the deadline inapplicable. Accordingly, the First Circuit
held that the claimant's lawsuit was timely filed, and sent the case
back to the district court for further consideration.
the First Circuit did not rule on whether the DOL regulations at
issue require plan administrators' benefit denial letters to explain
the applicable state's statute of limitations where the plan itself
does not impose a time limit for filing suit under ERISA.
for Employers. In the
wake of Santana-Diaz, plan sponsors in the First Circuit who
wish to limit liability for denied benefit claims by relying on their
plans' limitation periods must be sure that their benefit denial
letters clearly explain the deadline for filing lawsuits.
Accordingly, employers that operate plans which contain contractual
limitations periods should carefully review all adverse benefit
determination communications sent to claimants to ensure that they
provide adequate notice about their plan's limitations period.