On December 16, the Supreme Court of the United States resolved a split among the Circuit Courts of Appeals on an issue of critical importance to disability claimants and administrators alike: the statute of limitations. By way of background, we begin by noting that ERISA does not contain a statute of limitations for “benefit recovery” claims — that is, claims brought under 29 U.S.C. 1132(a)(1)(B). When forced to analyze a claim’s timeliness in the face of a statute that does not specify a limitations period, courts generally apply the most analogous state law limitations period, which in New York State would be 6 years (the statute of limitations applicable to claims for breach of contract). Notably, however, most states (New York included) allow contracting parties to make adjustments to the limitations period, and indeed many long-term disability plans contain clauses that purport to do just that. In that regard, the clause at issue in the case required claimants to bring suit within 3 years after “proof of loss” is due.

Notice that the clause actually functions to shorten the limitations period in two (2) distinct ways. The first (and more obvious) way is that it reduces the number of years that a claimant has to sue from 6 (in New York) to 3. The other (more subtle) change is that it sets as the event that serves to “start the clock” the date when proof of loss is due, as opposed to the date that the claim accrues. Couple that with ERISA’s administrative remedy exhaustion requirement, and what this all means is that where there is present a clause like the one in question, a claimant’s time to sue will begin to expire before (sometimes well before) he or she is empowered to commence suit.

And as illogical and potentially inequitable as this arrangement may seem to some, it has now received the blessing of all 9 justices of the Supreme Court, who indicated that in the “rare case” where an administrative review is so drawn out that the claimant is prevented from bringing suit in a timely manner, courts are “well equipped to apply traditional doctrines” that would serve to allow the claimant to proceed nevertheless.

Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S. Ct. 604 (2013)