When Does The Time To Sue An ERISA Plan Expire?
Answer: usually not until the plan satisfies ERISA's claims procedure requirements.
One of the fundamental safeguards ERISA was designed to provide relates to notice and disclosure of information. ERISA plans must provide notice to participants of all material terms of the plan including benefits, exclusions, limitations and conditions under which benefits may be lost. In the absence of notice, restrictions on benefits may not be enforced.
After a claim for benefits has been submitted, plan administrators are bound by another set of notice and disclosure requirements to ensure that plan participants get a full and fair review of a denied claim. However, in the absence of meaningful remedies when these notice and disclosure requirements are violated by plan administrators, they are really pretty meaningless. A right without a remedy is just a suggestion.
Which leads us to Chuck v. Hewlett Packard Co, a Ninth Circuit decision from the day before yesterday. In Chuck a plan participant argued that he had been shorted pension benefits promised him by his employer. He raised the issue in 1981, at the time he retired and didn’t get a satisfactory answer to his concerns. Several years passed and he raised the matter with the plan administrator, HP, again in correspondence. HP maintained its denial of Chuck’s claim. Again, several years passed before Chuck retained an attorney and finally sued in 2003.
HP asked that the case be dismissed arguing that the limitation of actions for Chuck’s filing of the case had expired. Chuck responded that HP should not be allowed to raise this defense because HP had not given Chuck the information required by ERISA as part of the process of providing a full and fair review of Chuck’s claim.
The Ninth Circuit ruled in favor of HP but used some interesting language that will be of help in future cases in the Western states that are part of the Ninth Circuit. It stated, “we hold that a plan’s material violation of . . . [ERISA’s “full and fair review” requirements for a denied claim] is a factor that militates strongly against a finding that the statute of limitations has begun to run against a claimant . . ..” In a nutshell, in most circumstances, plan administrators may not shut the door on the ability of plan participants to sue for denied benefits unless and until they have substantially complied with ERISA’s claims procedure requirements to provide to a plan participant all the information the statute requires.