First Circuit Requires Plan Administrators to Include Time Limitations for Civil Actions in Denial Letters
A plan participant sued MetLife claiming an improper denial of his long-term disability benefits under ERISA. Participant Dionisio Santana-Díaz was a financial analyst at Shell Chemical and a participant in the company’s employee welfare benefit plan issued by Metropolitan Life Insurance Company (“MetLife”). Mr. Santana-Díaz suffered from major depression, high blood pressure, asthma and various other physical and mental conditions and stopped working. He received sick leave and then short-term disability benefits. After being out of work for five months, Mr. Santana-Díaz submitted his claim for long-term disability benefits and was eventually awarded LTD benefits.
About a year and a half after his long-term disability benefits were awarded, MetLife notified Mr. Santana-Díaz that his LTD benefits were limited to two years because his disability was the result of a mental or nervous disorder or disease. This notification letter explained to Mr. Santana-Díaz he could provide additional documentation to show his disability was not due to his major depression and therefore not limited to two years. Therefore, Mr. Santana-Díaz submitted additional medical records and information. Upon reviewing the new information, MetLife denied Mr. Santana-Díaz’s claim for further LTD benefits. Mr. Santana-Díaz then filed an administrative appeal to MetLife, which was also denied. Both the initial denial and final denial letters to Mr. Santana-Díaz notified him he could file a lawsuit for his benefits, but neither letter informed him that there was a time limit for doing so.
Mr. Santana-Díaz eventually hired an attorney who filed suit against MetLife on his behalf in the United States District Court for the District of Puerto Rico. MetLife argued Mr. Santana-Díaz filed his suit a year and a half after the time limit for doing so ran out. The district court agreed with MetLife and dismissed Mr. Santana-Díaz’s claim. The United States Court of Appeals for the First Circuit disagreed with the district court’s decision and reversed the decision for the following reasons.
Mr. Santana-Díaz’s long-term disability plan was a group plan issued through his employer; therefore, it is covered under the Employee Retirement Income Security Act (“ERISA”). ERISA does not define time limitations for a lawsuit such as Mr. Santana-Díaz’s, but does allow plan’s to define such time limitations as long as they are reasonable. The Department of Labor imposes many regulations on plans under ERISA, including, notice of plan-imposed time limitations for filing suit. Here, the First Circuit found that by failing to tell Mr. Santana-Díaz of the time limitation in either the initial denial or final denial letters, “MetLife was not in substantial compliance with the ERISA regulations, and that this rendered the limitations period altogether inapplicable.” The reasoning behind this finding was to allow Mr. Santana-Díaz to adequately prepare for his administrative appeal and to appeal to the court, ensuring for a fair opportunity for judicial review of MetLife’s decision. The court here explained the Department of Labor requires denial letters include certain specific information to allow for a fair opportunity for judicial review, and the court has determined the plan-imposed time limit is part of the required information.
Ultimately, the court found ERISA plan administrators are required in their denial letters to inform plan participants of their right to bring a civil suit and the time limits the plan imposes for doing so. If the administrator fails to do so, the time limit cannot be imposed and will revert to the most closely analogous statute of limitation in the participant’s state. Therefore, Mr. Santana-Díaz’s claim for improper denial of benefits was allowed to continue.