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Claims for STD and LTD Benefits Barred by Contractual and Statutory Limitations Periods

Claims for STD and LTD Benefits Barred by Contractual and Statutory Limitations Periods

Hyatt v. Prudential Insurance Co. of America, 2014 WL 5530130 (W.D.N.C. Oct. 31, 2014)

ERISA and Life Insurance News
(January 16, 2015)

Hyatt sought to recover short-term disability and long-term disability benefits under the Thermo Fisher Scientific, Inc. Health and Welfare Plan, an ERISA plan for which Prudential administered claims.  She sued the plan, Prudential, and Thermo Fisher.

Hyatt alleged that she became disabled on March 16, 2010.  She was initially approved for short-term disability benefits through April 15, 2010, but was denied both short-term and long-term disability benefits after May 25, 2010.  Prudential denied her appeals.  On November 29, 2011, Hyatt was approved for disability benefits by the Social Security Administration.

The plan required written notice of a long-term disability claim within 30 days of the date the disability began, and written proof of the claim no later than 90 days after the elimination period ended.  If written proof was not available within 90 days, it was required to be provided within one year.  The plan also stated that a legal action to recover long-term disability benefits must be initiated within three years of the time the proof of claim was required.

Similarly, the plan required written notice of a short-term disability claim within 90 days of the expiration of the elimination period, but in no case later than one year.  The plan did not specify a limitations period for short-term disability claims.

The defendants all moved to dismiss the complaint, arguing that the Hyatt's claim was barred by the three-year contractual limitations period in the plan.  In granting the defendants' motion, the court reasoned that the three-year limitations period was reasonable, even if it began to run during the period while Hyatt was still required to pursue administrative remedies.

The court rejected Hyatt's argument that the limitations period on her long-term disability claim did not begin to run until the expiration of one year following the deadline for the proof of claim, because she gave her proof of claim before the initial 90-day period expired.  Thus, the three-year contractual limitations period began to run at the end of the 90-day period.

Similarly, the court found that Hyatt's claim for short-term disability was barred by North Carolina's three-year statute of limitations for breach of contract.  The court reasoned that Hyatt provided proof of her claim within the initial 90-day period, and her administrative appeals were exhausted as of February 2, 2011.   Thus, the three-year statutory period expired on February 2, 2014, but Hyatt did not file her lawsuit until February 11, 2014.

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H. Sanders Carter
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Andrea K. Cataland
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Kenton J. Coppage
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