In two recent cases, a judge in the United States District Court for the District of Utah has ruled that, if an ERISA welfare benefit plan sets a time limit on when a claimant may file a civil action after receiving an adverse benefit determination, that time limit must be stated in the final claim denial letter. Otherwise, the limitation will not be enforced by the court.
Law. ERISA benefit plans must have claims and appeals procedures that satisfy ERISA’s requirements and regulations. When these procedures are not followed, a claimant may immediately file a lawsuit in federal court. Furthermore, when the required procedures are followed, but the claimant disagrees with the final benefit determination (e.g., where payment for a benefit is denied, reduced, terminated, or not provided or paid to the claimant), the claimant may also file a civil action in federal court.
ERISA does not specifically set a deadline for filing a civil action after a final adverse benefit determination. Therefore, to avoid being subject to lengthy and varying state statutes of limitations, many plans establish their own deadlines. Most plans incorporate these deadlines into the ERISA plan document well as the claims and appeals portion of the plan’s summary plan description (“SPD”).
District Court. The two cases ruled on by the District Court involved separate ERISA welfare benefit plans: one fully insured (E.F. v. United HealthCare Ins. Co.) and one self-funded (Anne A. v. United HealthCare Ins. Co.).
Both cases involved group health plan claim denials made by the same entity, acting as the insurer in one case and plan administrator in the other. Moreover, both plans contained a three-year limitations provision for commencing a civil action after a final adverse benefit determination.
In both cases, the insurer/plan administrator asked the court to dismiss the claims because they were not filed within the time limits specified in the plan documents. However, because in both cases, the final adverse benefit determination did not provide the claimants with notice of the plans’ time limit for filing a civil action, the court held that the limitation provisions could not be enforced.
In reaching this decision, the court observed that a number of courts have interpreted DOL regulations to require that any adverse benefit determination set forth the time limits on a claimant’s right to bring a civil action under ERISA. The court noted that the plain language of the regulation alone indicates that final denial letters must provide notice of time limitations provisions in order to later enforce such limitations in court.
Based upon the foregoing reasoning, the court determined that the claimants’ civil actions were not time-barred by the plans’ limitation provisions.
Employer Takeaway. Plan sponsors for group health plans should review their ERISA plan documents, SPDs and claims denial letters (including those furnished by third-party claims administrators adjudicating claims on the plan’s behalf) to ensure that any deadline for filing a civil action on a final adverse benefit determination is clearly stated and properly included in the denial letter.