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ERISA Lawsuit Time-Barred Due to Plan’s Limitations Period

by | Aug 31, 2022 |

The Eleventh Circuit Court of Appeals, in Bakos v. Unum Life Insurance Company of America, has upheld the dismissal of a lawsuit for wrongful denial of long-term disability (“LTD”) benefits because the lawsuit was time-barred by a provision in the LTD policy. In reaching this determination, the Eleventh Circuit concluded that it was irrelevant that the plaintiff was not given actual notice of the limitations provision.

Background. The plaintiff was a plan participant in her employer’s welfare benefits plan. The LTD policy provided that a participant could file suit within three years of a denial of benefits.

In August 2014, the plaintiff began to receive LTD benefits. The insurer paid LTD benefits until April 15, 2015, when it determined she no longer met the plan’s definition of disability. The plaintiff subsequently appealed the adverse determination, and the insurer ultimately denied her appeal on June 27, 2016.

While the denial letter informed the plaintiff of her right to file a lawsuit in federal court (under ERISA § 502(a)), it did not specify any deadlines. However, it did advise her that she could request documents and records relevant to her claim for benefits. The documents that the plaintiff could have requested contained a provision that gave the plaintiff three years following the benefit denial to sue.

In March 2020, the plaintiff was awarded Social Security disability benefits. After receiving the favorable decision on her Social Security disability benefits claim, the plaintiff sought to reopen her claim for LTD benefits. However, the insurer refused to reopen the plaintiff’s LTD claim, maintaining that its administrative review was complete.

On April 1, 2021, the plaintiff filed a lawsuit in federal district court, claiming LTD benefits retroactive to April 15, 2015.

District Court. At trial, the insurer moved to dismiss the plaintiff’s lawsuit, arguing that it was time-barred by the LTD policy’s three-year suit limitations provision. The district court granted the motion, rejecting the plaintiff’s argument that she did not have actual notice of the limitation provision.

The plaintiff appealed the district court’s decision to the Eleventh Circuit, arguing that she was entitled to equitable tolling of the limitation provision because it was not specifically mentioned in the denial letter.

Eleventh Circuit.  In reviewing the matter, the Eleventh Circuit rejected the plaintiff’s argument that the three-year period of limitations was equitably tolled due to the failure to expressly reference it in the benefit denial letter. The court explained that there is no equitable tolling when plaintiffs have notice sufficient to prompt them to investigate the basis for their claims. In the instant matter, because the insurer had advised the plaintiff that she could request documentation relevant to her claim, she could have requested a copy of the LTD policy which did contain the limitation provision. Specifically, the court noted that, “[B]ecause [the plaintiff] could have requested a copy of the policy, which was central to her claim and included the limitations provision, she could have easily timely filed her action if she had exercised even minimal diligence in discovering the terms of the policy[.]”

In addition, the Eleventh Circuit observed that the plaintiff agreed to abide by the terms of the LTD policy, which included the limitations provision, when she enrolled in LTD coverage under the plan. Therefore, the Eleventh Circuit upheld the district court’s determination that the plaintiff’s claim was time-barred and that she was not entitled to equitable tolling.