Many ERISA plans provide a time limit for bringing suit on a disallowed claim. A recent Federal appeals court decision held that the time limit should be disregarded where the plan administrator failed to disclose it in its benefit denial letter.
Mr. Moyer participated in an ERISA-governed long-term disability plan sponsored by his employer. Met Life was responsible for processing claims on behalf of the plan. In 2005, MetLife initially approved Moyer’s claim for benefits. MetLife reversed its decision in 2007 after determining that Moyer retained the physical capacity to perform work other than his former job. In an administrative appeal, MetLife affirmed the revocation on June 20, 2008. Moyer’s adverse benefit determination letter included notice of the right to judicial review but failed to include notice that a three-year contractual time limit applied. The Summary Plan Description failed to provide notice of either Moyer’s right to judicial review or the applicable time limit.
On February 20, 2012, Moyer sued MetLife, seeking recovery of unpaid plan benefits. The trial court held that the plan’s limitations period barred Moyer’s claim because the plan documents specifically stated there was a three-year limitation on filing suit so Mr. Moyer was deemed to have notice of the time limitation. The court reached this conclusion even though Mr. Moyer did not have actual knowledge of the limit because he could have requested the plan documents.
The appeals court reversed. It concluded the failure to advise Mr. Moyer of the time limit for bringing suit in the claim denial letter was inconsistent with ensuring a fair opportunity for review; therefore the denial letter was not in substantial compliance with ERISA claims regulations. The regulations provide, in part, that an adverse benefit determination notice must provide: “[a] description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action…following an adverse benefit determination on review.”
The employer also failed to disclose the time limit for bringing suit in its summary plan description. That summary, or SPD, is required to be provided to every plan participant in an ERISA retirement or welfare plan. While the court did not decide whether the SPD had to disclose the time limit, its holding that the adverse determination letter is required to disclose it suggests that the result would not have been different had the SPD made that disclosure.
Although this decision involves a disability plan, the regulation in question applies as well to ERISA retirement plans. Therefore, if a claim for plan benefits is being denied, and the plan contains a time limit for bringing suit, it is imperative that the denial letter set forth the limit for it to be enforceable.
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