On Tuesday, October 15, 2013, the United States Supreme Court heard oral arguments in a case likely to have wide-ranging consequences for employers who offer employee benefit plans under Employee Retirement Income Security Act (“ERISA”).
The petitioner in the case is a former Wal-Mart employee who became permanently disabled. She filed a claim for long-term disability benefits under the employer’s benefit plan, which contains a three-year statute of limitations commencing on the date that proof of loss was required to be submitted under the plan. The administrator of the benefit plan denied the employee’s claim, and she sued in to challenge the denial. Her suit was dismissed as untimely because it was filed more than three years after the date on which proof of loss was required under the plan.
The employee is appealing the Second Circuit’s decision affirming that dismissal. She contends that a beneficiary’s claim for wrongful denial of disability benefits under ERISA should not be allowed to accrue limitations purposes until the ERISA plan’s internal benefits resolution process has been fully and completely exhausted, regardless of the limitations period set forth in the plan. The employee’s core argument is that ERISA requires predictability, and that the only way to provide maximum predictability to employees is by ensuring that the statute of limitations does not begin to accrue until there has been a final denial of a claim. In essence, the Supreme Court is being asked to decide between dual goals of predictability, on the one hand, and enforcement of contractually bargained-for plan language, on the other. The outcome is sure to have broad ramifications for employers everywhere. Stay tuned.