On December 16, 2013, in Heimeshoff v. Hartford Life & Accident Insurance Co., the US Supreme Court in a unanimous decision upheld a contractual limitations period in a disability plan governed by the Employee Retirement Income Security Act of 1974 (ERISA) against a challenge by a plan participant (No. 12–729, (U.S. Dec. 16, 2013)). The Court held that absent a controlling statute to the contrary, an ERISA plan participant and the plan may agree in the plan document to a particular limitations period, even one that starts to run before the cause of action accrues, as long as the period is reasonable.

In August 2005, the participant, Julie Heimeshoff (Heimeshoff) filed a benefits claim under her employer's long term disability plan with the plan's insurer and administrator, Hartford Life & Accident Insurance Co. (Hartford). Following a lengthy internal administrative appeals process marked by an extension, requests for additional information and multiple evaluations, Hartford issued a final denial of the claim in November 2007.

The plan provided that a suit challenging the denial of a claim must be filed in court within three years of the date proof of loss is due for a benefit claim under the insurance policy. (Proof of loss is usually due around the start of the internal administrative claims process, which in this case was August of 2005. However, there was a disagreement about exactly when proof of loss was due. According to the District Court, even accepting a view of the facts most favorable to Heimeshoff, written proof of loss was due by the end of September 2007, at the latest.) However, Heimeshoff did not file suit for judicial review under ERISA Section 502(a)(1)(B) until November 2010, which was more than three years after proof of loss was due.

Hartford moved to dismiss the action on the grounds that Heimeshoff's claim was untimely under the three-year limitations period in the plan document. Heimeshoff argued that the three-year limitations period should run instead from November 25, 2007, the date on which the plan issued its final denial. The District Court dismissed the action, finding that the plan's limitations period was enforceable under applicable law. The Second Circuit affirmed, holding that the plan's limitations provision is enforceable so long as the limitations period is of reasonable length and there is no controlling statute to the contrary.

The Supreme Court granted certiorari to resolve a split among the Courts of Appeals on the enforceability of this common contractual limitations period.

The Supreme Court upheld the District Court and Second Circuit decisions, holding that the plan's three-year limitation period is reasonable and enforceable.

The Court reasoned that although a statute of limitations usually begins to run when the cause of action "accrues" or when the plaintiff is permitted to file suit and obtain relief, that is a default rule that can be modified by a contractual agreement to a particular limitations period. In this case, the plan document evidenced the agreement between the plan and its participants for a three-year limitations period applicable to disputed claims that begins on the date proof of loss is due. The Court further reasoned that if the parties can agree to the length of the limitations period, they may also agree to the date on which the limitations period starts to run.

Relying on Cigna Corp. v. Amara, among other precedent, the Court stated that the principle that contractual limitations provisions should be enforced as written is "especially appropriate" when enforcing the terms of an ERISA plan as written in ERISA Section 502(a)(1)(B) claims (131 S. Ct. 1866, 179 L. Ed. 2d 843 (2011) and see Expert Q&A on the Impact of CIGNA Corp. v. Amara). Accordingly, unless the period is unreasonably short or there is a controlling statute to the contrary, a plan's limitation period must be enforced, even if it begins to run before the plan's administrative process has been exhausted.

The Court did not agree with Heimeshoff's argument that this framework permits insurers and administrators to prevent judicial review by delaying the internal resolution of claims in bad faith, noting that:

This decision should provide employers with ERISA plans (and insurers) that include limitations periods for disputed claims that run from the date proof of loss is due with comfort that the plan's limitations period is enforceable, provided that the length of the period is reasonable.

As a result of this decision: