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ERISA Plan Can Contractually Provide for Denial of Benefits Claims Limitations Period


A woman received treatment for uterine fibroids tumors. She submitted a claim for reimbursement from the healthcare benefits plan provided by her employer. The plan concluded that her treatment fell outside the plan’s coverage because the treatment was investigative, experimental, and required prior approval. The woman exhausted her administrative appeals.

 

The plan specified that any civil action for wrongful denial of medical benefits under Employee Retirement Income Security Act (ERISA) must be brought within two years of the date of denial. The plan also stated that the terms and provisions of the plan shall be construed first, in accordance with the Internal Revenue Code and with ERISA and secondly, in accordance with the laws of the State of Missouri. About two and a half years after she learned her claim had been denied, the woman sued the plan for wrongful denial of medical benefits.

 

The plan filed a motion for summary judgment arguing that the woman’s claim was time-barred. The woman argued that the plans contractual two-year statute of limitations was invalid because the plans rules of construction stated that its terms should be read to comply with Missouri law. The woman asserted that state of Missouri’s ten year statute of limitations governed her claim and that a separate Missouri statute barred contracting parties from shortening that ten year limitations period. The United States District Court for the Eastern District of Missouri concluded that the claim was time-barred and granted summary judgment in favor of the health care plan.

 

The Eighth Circuit United States Court of Appeals affirmed. The court held that the two-year limitations period specified in the health care plan applied rather than the state of Missouri’s ten-year limitations period.

 

The two-year limitations period specified in the health care plan applied rather than the state of Missouri’s ten-year limitations period. The court noted that ERISA contains no statute of limitations for actions to recover benefits under a regulated plan, and parties to a plan may fill this gap by agreeing to a reasonable limitations period in their contract. In the absence of a contractual limitations period for actions to recover benefits under an ERISA plan, or if the parties have expressly agreed to incorporate a state law limitations period into the plan, the court applies the most analogous state statute of limitations. State law does not apply of its own force to a suit based on federal law, especially a suit under ERISA, with its comprehensive preemption provision. Although parties may specifically choose to incorporate state law when drafting the substantive terms of an ERISA plan setting forth the time limitations for bringing claims, they may not broadly contract to choose state law as the governing law of an ERISA plan. If the parties have adopted a limitations period for actions to recover benefits under an ERISA plan by contract, there is no need to borrow a state statute of limitations unless a court concludes either that the period is unreasonably short, or that a controlling statute prevents the limitations provision from taking effect. The court reasoned that the two-year limitations period in the health care plan was not unreasonably short. Also, there was no conflict between the two-year limitations period in the health care plan and Missouri law that would require recourse to the plan's rules of construction providing for application of Missouri law. The plan's rules of construction were not substantive provisions that specifically incorporated Missouri's' statutory prohibition against shortening limitations period for enforcing contracts. ERISA preempted Missouri’s statutory prohibition against shortening limitations periods for enforcing contracts, and thus Missouri’s statutory prohibition did not preclude the application of the plan’s contractual two-year limitations period. Applying the Missouri statute would negate the plan’s contractual statute of limitations, negatively impact administration of ERISA plans, and create inconsistencies with other ERISA provisions.

 

The Eighth Circuit United States Court of Appeals affirmed the District Court’s grant of summary judgment in favor of the health care plan.

 

See: Munro-Kienstra v. Carpenters' Health and Welfare Trust Fund of St. Louis, 2015 WL 3756712 (8th Cir.(Mo.) Jun 17, 2015) (not designated for publication).

 

See the Medical Law Perspectives December 18, 2014, Blog: Fourth Circuit Explains Non-Adversarial Duties of ERISA Plan Claims Administrators

 

 

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