ERISA Benefit Denial Letter Must Identify Contractual Limitations Period

An Illinois federal court recently held that the failure to identify a contractual limitations period in a benefits denial letter renders the limitations period unenforceable, even before applicable regulations were changed to expressly require that the limitations period be included. Hewitt v. Lincoln Financial Corp., 2021 WL 353884 (N.D. Ill. Feb. 2, 2021).

Rodney Hewitt applied for and was denied long term disability benefits in December 2013. The ERISA-governed disability policy provided that no claimant may initiate an action regarding an adverse benefit determination “more than three years after the time Proof of claim is required.” The denial letter informed Mr. Hewitt that he had the right to bring an action under ERISA but did not mention the policy’s three-year time limit to bring such an action. When Mr. Hewitt sued for benefits in December 2018, the defendants maintained that his claims were time-barred and moved to dismiss.

In 2013, the Supreme Court held that courts should apply contractual limitations provisions in ERISA actions unless, inter alia, a “‘controlling statute’ prevents the limitations provision from taking effect.” Heimeshoff v. Hartford Life & Accident Ins. Co., 571 U.S. 99, 109 (2013). At the time Mr. Hewitt’s claim was denied, the Department of Labor’s implementing regulation regarding ERISA claim procedures provided in pertinent part that a denial letter should contain “[a] description of the plan's review procedures and the time limits applicable to such procedures, including a statement of the claimant's right to bring civil action under section 502(a) of the Act following an adverse benefit determination on review.” 29 C.F.R. § 2650.503-1(g)(1)(iv). In 2018, the Department of Labor amended the regulation to explicitly require that a denial letter contain notice of any contractual limitations period set forth in a policy, as well as the specific date on which the contractual limitations period expires.

Appellate courts have been split in determining whether the pre-2018 claim regulations require notice of a policy’s contractual limitations period. The Ninth and Eleventh Circuits have held that no such requirements exists, while the First, Third and Sixth Circuits held that civil actions to enforce benefits claims are “one of the review procedures” identified in the regulation and therefore “notice of applicable time limits” is required. In Hewitt, Judge Lefkow ruled that the First, Third and Sixth circuits’ opinions are “better reasoned” because they give effect to ERISA’s remedial intent, found Mr. Hewitt’s action was not time-barred and denied the motion to dismiss.

Hewitt is a reminder that many courts view the new contractual limitations requirement as merely clarifying a requirement already contained in pre-2018 Department of Labor claim regulations.