Unanimous Supreme Court in Heimeshoff Permits Contractually-Based SOLs in ERISA Denial of Benefit Cases

CourtThis morning, the United States Supreme Court issued its decision in Heimeshoff v. Hartford Life & Accidental Life Ins. Co., concerning statute of limitation accrual issues for benefit claims under Section 502(a)(1)(B) of ERISA.

The Court unanimously held that Hartford’s Long Term Disability Plan’s requirement that any suit to recover benefits be filed within three years after “proof of loss” is due is enforceable.  More specifically, “[a]bsent a controlling statute to the contrary, a participant and a plan may agree by contract to a particular limita­tions period, even one that starts to run before the cause of action accrues, as long as the period is reasonable.”  Causes of action for benefits under ERISA do not start to accrue until a final internal appeal decision.  Because Heimeshoff failed to file a claim for long-term disability ben­efits with Hartford within the contractual SOL period, the Court concluded her claim was rightfully denied by Hartford.

While ERISA does not provide a statute of limitations for denial of benefit claims, many plan administrators have in place a contractual 3-year limitations period like Hartford’s. 

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“The Past Is a Foreign Country” — Or Is It?

dean bookI’ve recently finished reading Dean Strang’s fascinating new book, “Worse Than the Devil: Anarchists, Clarence Darrow, and Justice in a Time of Terror.”  The book recounts the story of a once-famous (or infamous) criminal case that was tried in Milwaukee nearly a century ago.  The case arose from a short, armed skirmish between police and residents of Milwaukee’s largely Italian, working-class Bay View neighborhood in September 1917. In the wake of that violence, police indiscriminately arrested dozens of Italian immigrants, ultimately resulting in the trial of eleven suspected anarchists in November 1917 on charges of assault with intent to murder.

America’s recent entry into the First World War had already created a public atmosphere that was hardly favorable to immigrants and political dissidents, but a terrible local tragedy may have wiped out any remaining hope that the defendants would receive a fair trial.  Just days before the jury was selected, a bomb exploded in a Milwaukee police station, killing ten — America’s single greatest loss of officers in the line of duty before 9/11. Although the Bay View defendants were not formally charged with this crime — indeed, the case was never solved and no one was ever formally charged — the bombing was widely believed to be the work of the defendants’ supporters.

Little wonder that all of the defendants were convicted on a dubious conspiracy theory in a trial that reeked of pro-prosecution bias from start to finish.  

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6th Circuit: ERISA Remedy for Wrongful Denial of Benefits May Include Disgorgement Remedy Under Section 502(a)(3)

gavelThanks to Mark DeBofsky for bringing to my attention a potentially game-changing ERISA legal remedies case, Rochow v. Life Insurance Co. of North America (6th Cir. Dec. 6, 2013).

Without seeking to lay out the byzantine world of ERISA remedial law, the important question in the case is whether a plaintiff can maintain both a Section 502(a)(1)(B) claim for benefits and Section 502(a)(3) claim for breach of fiduciary at the same time.  If so, the question remains whether disgorgement of profits is cognizable remedy under Section 502(a)(3) against the insurance company for failure to pay the benefits on a timely basis.

It seems like this is the important holding by the 2-1 majority: “[W]e hold that disgorgement is an appropriate equitable remedy under § 502(a)(3) and can provide a separate remedy on top of a benefit recovery.”  This is a welcome development for ERISA plaintiffs and their attorneys, as ERISA’s remedial scheme has been narrowly construed over the years to prevent plaintiffs from receiving full recovery for their losses.

The debate going forward is whether the Supreme Court’s Varity case allows this outcome.

Continue Reading6th Circuit: ERISA Remedy for Wrongful Denial of Benefits May Include Disgorgement Remedy Under Section 502(a)(3)