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. 

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

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)

Zelinsky: Use of HSAs and HRAs as Compromise to ACA Contraceptive Mandate Dispute

stethoscopeEd Zelinsky (Cardozo) has an interesting post on his OUP blog discussing a possible compromise in the on-going dispute between for-profit religious corporations, like Hobby Lobby, and the Obama administration’s Affordable Care Act’s (ACA’s) contraceptive coverage mandate.

Here’s a taste:

This entire controversy is unnecessary. The tax law contains devices for reconciling the religious concerns of employers like Hobby Lobby with the policy of expanding medical coverage: health savings accounts (HSAs) and health reimbursement arrangements (HRAs). The current regulatory exemption from the contraception mandate should be amended to include for-profit employers and to exempt from the federal contraception mandate employers (both non-profit and profit-making) who maintain HSAs or HRAs for their respective employees. Compromise along these lines would respect the genuinely-held views of religious minorities while implementing the federal policy of broadening access to health care.

An HSA/HRA compromise would eliminate the complicity of religious employers in the provision of contraception methods to which they object while enabling such employers’ employees to obtain on a pre-tax basis any medicines or devices such employees want, including contraception to which their employers object. Employers’ payments into their employees’ HSAs and HRAs would be the equivalent of the cash wages paid to such employees, wages which the employees are free to spend as they choose.

Personally, I do not see a RFRA or free exercise problem with ACA’s mandate because it is not a law that targets religion or otherwise substantially burdens religious rights of individuals.

Continue ReadingZelinsky: Use of HSAs and HRAs as Compromise to ACA Contraceptive Mandate Dispute