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Action to Recover Disability Benefits Barred by Plan

Action to Recover Disability Benefits Barred by Plan's Three-Year Contractual Limitation of Actions Clause

McArthur v. Unum Life Ins. Co. of Am., 2014 WL 4494221 (N.D. Ala. Sept. 4, 2014)

ERISA and Life Insurance News
(January 16, 2015)

In February 2009, McArthur submitted a claim for disability benefits under an ERISA plan sponsored by his employer. The plan consisted of a group disability policy issued in Georgia by Unum and a summary plan description.

In September 2009, Unum determined that McArthur was not entitled to benefits. In November 2009, Unum affirmed that decision by letter, which informed McArthur of his rights to bring a civil action under ERISA and to request copies all documents relevant to the claim decision. Nearly four years later, in September 2013, McArthur requested records from Unum, and in November 2013, he filed an action against Unum under ERISA.

Unum moved for summary judgment on the ground that the plan's limitations period barred McArthur's lawsuit. Both the policy and the SPD provided that a claimant may "start legal action regarding your claim 60 days after proof of claim has been given and up to 3 years from the time proof of claim is required, unless otherwise provided by federal law." Both documents required that a claimant submit proof of claim within 90 days of the end of the "elimination period" of 90 days.

The district court's opinion focused the validity of the plan's three-year limitation period in light of Heimeshoff v. Hartford Life & Acc. Ins. Co., 134 S.Ct. 604 (2013), in which the Supreme Court held that a contractual provision limiting the period during which a claimant may sue is valid, so long as (1) the provision gives the claimant a "reasonable" amount of time to bring suit, and (2) there is no controlling statute that requires a claimant be given more time to bring a legal action.

McArthur did not dispute the reasonableness of the three-year limitations provision.  Instead, he asserted that it was invalid because the Georgia Insurance Code included a "less restrictive" controlling statute, which provided that "[n]o action shall be brought after the expiration of three years after the time written proof of loss is required to be furnished," and that such proof "must be furnished … in the case of a claim for loss for which this policy provides any periodic payment contingent upon continuing loss, within 90 days after the termination of the period for which the insurer is liable …." O.C.G.A. §§ 33-29-3(b)(7) and (b)(11). (Emphasis added.)

McArthur argued that "the period for which the insurer is liable" should be the entire duration of his disability, thus giving him more time to file proof of claim than the plan allowed.  Because the plan's agreed-upon limitations period was more restrictive than the insurance statute, McArthur urged the court to declare the limitations provision invalid, and instead apply the most analogous state limitations period, which was Georgia's six-year statute of limitations for contract claims.

The court rejected McArthur's assertion on several grounds.  First, the insurance code provision cited by McArthur was restricted to individual policies, and other courts had interpreted the "period for which the insurer is liable" as each interval between a plan's scheduled benefit payments, not the total period during which an insurer might potentially be liable for payments. Otherwise, an administrator or insurer would be prevented, perhaps for decades, from evaluating claims.

Second, the court determined that, even if weighed against the insurance code statute applicable to group long-term disability plans, e.g., O.C.G.A. §§ 33-30-6(b)(4) and (b)(7), the plan's limitations provision did not offend a "controlling statute."  For example, section 33–30–6(b)(4) required a claimant to submit proof of loss 30 days after the end of elimination period, whereas the plan provided for 90 days, thus delaying the beginning of the plan's limitations period for longer than required under the insurance code.

Third, the court relied on an unpublished Eleventh Circuit decision, Johnson v. Unum Provident, 363 Fed. App'x 1 (11th Cir. 2009), which suggested that a contractual limitations period begins to run, at the latest, on the date of the final denial of benefits. Thus, even if the court were to consider that the beginning of the limitations period coincided with Unum's final denial of benefits (the last event in the administrative record), McArthur's claim would still be untimely.

Finally, the court rejected McArthur's motion to compel discovery in support of his argument that he could not fairly be expected to calculate when the plan's contractual limitations period would expire. The court determined that the "elimination period" was defined in both the policy and the SPD, and "there is no evidence on record indicating that the ambiguities in the Plan documents contributed to McArthur's nearly four-year delay in bringing this action."

The court granted Unum's motion for summary judgment, and denied McArthur's motion to compel discovery as moot.

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H. Sanders Carter
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Andrea K. Cataland
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