On August 26, 2015, the US Court of Appeals for the Third Circuit, in Mirza v. Ins. Admin. of Am., Inc., held that the Department of Labor (DOL) claims regulations require written disclosure of plan-imposed deadlines for seeking judicial review under ERISA, and that the remedy for violations of this rule is to disregard the plan's limit and apply the limitations period that applies under the most analogous state-law cause of action (No. 13-3535, , at *1 (3d Cir. Aug. 26, 2015)).

A participant in an employer-sponsored ERISA health plan underwent surgery and assigned her right to benefits under the plan to her doctor, who then submitted a benefits claim for more than $34,000 to the plan's claims administrator. The claims administrator denied the claim on the grounds that the procedure was medically investigational, and the denial was later affirmed in a final appeal letter dated August 12, 2010 (see Practice Note, Internal Claims and Appeals Under the ACA). Although the August 2010 letter informed the doctor of his right to sue under ERISA Section 502(a) (29 U.S.C. § 1132(a)), it did not mention the plan's one-year contractual time limit for seeking judicial review. In March 2012, nearly 19 months after receiving the denial letter, the doctor sued the claims administrator for unpaid benefits.

As background, ERISA does not impose a statute of limitations for benefits claims, so the courts generally apply the most closely analogous limitations period under state law unless the parties agree to a different one under the plan terms (assuming that period is not unreasonably short) (see Practice Note, ERISA Litigation: Statutes of Limitation and Legal Update, Supreme Court Upholds Limitations Period in ERISA Disability Plan). In this case, but for the plan's one-year limitations period, a six-year period for contract actions would have applied under state law.

The law firm retained by the doctor may have received verbal notice of the time limit in November 2010 (the parties disagreed regarding the substance of that conversation). However, it was undisputed that the law firm received written notice of the one-year deadline in April 2011, when the firm was provided a copy of the governing ERISA plan documents in response to a request regarding its representation of a different client (but involving the same participant and health plan).

The district court granted summary judgment in favor of the claims administrator, on the ground that the lawsuit was time-barred because it was filed more than one year after the final benefits denial. The doctor appealed.

The Third Circuit held that the doctor's lawsuit was not time-barred because the claim denial letter did not provide notice of the plan's one-year contractual limitation. To reach this conclusion, the court analyzed a rule from the DOL claims regulations under which denial notices must contain "a description of the plan's review procedures and the time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action [under ERISA] following an adverse benefit determination on review" (29 C.F.R. § 2560.503-1(g)(1)(iv)). The Third Circuit rejected the claims administrator's position that the notice of the right to sue under ERISA (which follows the comma and word "including" in the regulation) is in addition to and entirely separate from the notice of the plan's review procedures (which are required to state a time limit). According to the Third Circuit, a better reading of the regulation's plain language is that it requires claim denial letters to include the applicable time limits for both the review procedures and the claimant's right to sue. The court reasoned, moreover, that to the extent that the regulation is ambiguous, it must be construed broadly and in favor of the doctor because ERISA is a remedial statute.

The Third Circuit also observed that other circuits have reached the same conclusion (see Moyer v. Metro. Life Ins. Co., 762 F.3d 503, 505 (6th Cir. 2014) and Ortega Candelaria v. Orthobiologics LLC, 661 F.3d 675, 680 (1st Cir. 2011)), and noted certain practical considerations in support of its interpretation, including:

As the Third Circuit notes in this decision, several circuit courts of appeals have now weighed in on the question of whether plan administrators must inform claimants of plan-imposed deadlines for judicial review in their notices denying benefits. In June, we covered an Eleventh Circuit decision in which the court assumed (for purposes of that appeal only) that the correct interpretation of 29 C.F.R. § 2560.503-1(g)(1)(iv) was that a claim denial letter must notify the claimant of the time limit for filing a lawsuit under ERISA (see Legal Update, Circuit Courts Disagree on Whether Claim Denial Letters Must Provide Notice of Limitations Periods). In doing so, however, the Eleventh Circuit observed that characterizing the word "including" in the regulation to mean a lawsuit is part of the plan's review procedures seemed like a "strained reading" of the regulation. As a result, it's possible that one or more circuit courts could interpret this regulation as not requiring notice of plan-imposed deadlines for judicial review. For now, however, the safer course of action for plans that wish to avoid litigation on this issue may be to update their claim denial letters to include any plan-imposed contractual limitations period deadline for filing suit.