In Santana-Diaz v. Metro. Life Ins. Co., the US Court of Appeals for the First Circuit held that a plan's three-year limitations period for filing suit did not render a participant's claim time-barred because the plan's insurer failed to inform the participant in its claim denial letters of its deadline for filing suit under ERISA (No. 15-1273, (1st Cir. Mar. 14, 2016)). The First Circuit reversed a district court's dismissal of the case, which was based on the participant's failure to meet the plan-imposed time limit.

The participant, who was covered under his employer's long-term disability (LTD) plan, requested an extension of LTD benefits beyond the plan's two-year limit for disability benefits involving mental or nervous disorders. The plan's insurer denied this request at both stages of the plan's internal appeals process. Although the insurer's initial and final denial letters both informed the participant that he could bring suit under ERISA, neither letter informed the participant of the plan's three-year limitations period for doing so.

The limitations period began to run on the plan's proof of disability deadline (under an analysis of plan provisions that the First Circuit characterized as "labyrinthine"). The participant later sued the insurer under ERISA in district court, which dismissed his claim as time-barred under the plan's limitations period. The participant appealed to the First Circuit, arguing that the insurer's denial letters had not informed him of the plan's deadline for filing suit, and that this time limit should be tolled.

The First Circuit held that the participant's lawsuit was not time-barred because the denial letters did not provide notice of the plan's three-year limitations period and therefore did not comply with the DOL's claims regulations. In doing so, the court interpreted a provision of the DOL claims regulations that has now been analyzed by several circuit courts of appeals in disputes similar to this one. That provision says that a denial letter 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….]" (29 C.F.R. § 2560.503-1(g)(1)(iv)). The participant argued that this provision requires plans to furnish notice of both the time limit:

The insurer, however, argued that the disputed provision requires notice of only the time limits for a plan's internal administrative review procedures, and not the time limit for bringing a civil action. Ruling for the participant, the First Circuit reasoned that an Eleventh Circuit decision cited by the insurer as supporting its reading of the provision did not definitively interpret the provision but merely concluded that the provision was ambiguous. (See Legal Update, Circuit Courts Disagree on Whether Claim Denial Letters Must Provide Notice of Limitations Periods.)

Rejecting the Eleventh Circuit's reading, the First Circuit held that claim denial letters must include notice of plan-imposed time limits for filing a civil action. The First Circuit indicated that this conclusion is consistent with recent decisions on this issue from the Third Circuit (Mirza v. Ins. Admin. of Am., Inc.) and the Sixth Circuit (Moyer v. Metro. Life Ins. Co.) (see Legal Updates, Claim Denial Letters Must Provide Notice of Plan Limits for Suing under ERISA: Third Circuit and Circuit Courts Disagree on Whether Claim Denial Letters Must Provide Notice of Limitations Periods). The First Circuit cited with favor the reasoning of the Third Circuit in Mirza, which concluded that the word "including" in the disputed provision meant that civil actions are logically, in the DOL's view, part of the review procedures for which notice must be provided. The First Circuit noted ERISA's remedial purpose and indicated that claimants are more likely to read information provided in a claim denial letter than a lengthy plan document.

Relatedly, the First Circuit addressed a requirement that a plaintiff, in cases involving regulatory violations, must show that the violation prejudiced review of the plaintiff's claims. On this issue, the First Circuit concluded that a claim denial letter that fails to include a plan's time limit for filing suit:

Although the circuit courts don't all agree regarding how much notice of plan-imposed time limits is required, at least three circuit courts have taken the view that a plan's claim denial letter must include the applicable time limit for a participant's right to sue, if such a time limit is to be enforceable. To avoid litigation on this question, it may be advisable to simply include the plan's time limit for filing suit in claim denial letters, as well as in the plan's summary plan description (SPD) (see SPD Compliance Chart for ERISA Plans).

The First Circuit noted, but did not rule on, the question of whether the DOL claims regulation at issue in this case requires plan administrators to provide notice of a forum state's statute of limitations when the plan itself does not impose a time limit for bringing suit under ERISA.