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Court rules plans’ civil action filing deadlines not enforceable

Health and Benefits|Total Rewards
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By Maureen Gammon and Kathleen Rosenow | June 6, 2022

Following a recent court decision, a benefit plan’s civil action filing deadline should be included in a final adverse benefit determination.

In two separate cases, the United States District Court for the District of Utah ruled that if an ERISA welfare benefit plan sets a time limitation on when a claimant may file a civil action after receiving an adverse benefit determination, that time limitation must be stated in the final claim denial; otherwise, it will not be enforced in court.

Background

Every benefit plan governed by ERISA must have claims and appeals procedures that meet ERISA requirements and regulations. If those procedures are not followed, a claimant may immediately file a civil action in federal court. If the procedures are followed but a claimant does not agree with a final adverse benefit determination (where payment for a benefit is denied, reduced, terminated, or not provided or paid to the claimant), the claimant may also file a civil action in federal court.

ERISA does not set the deadline for filing a civil action after a final adverse benefit determination, so to avoid being subject to varied and lengthy state statutes of limitations, many plans set their own two- or three-year deadlines. For most plans, this deadline is included not only in the formal ERISA plan document but also in the claims and appeals section of the summary plan description (SPD).

Following the recent federal court’s decisions, the civil action filing deadline should also be included in the final adverse benefit determination (typically within an explanation of benefits or final denial letter).

Court rulings

The two recent ERISA cases ruled on by the U.S. District Court in Utah involved separate ERISA plans (one fully insured and one self-insured) sponsored by different employers. Both plans involved group health plan denials by the same entity — UnitedHealthcare — as insurer for the fully insured plan and claims administrator for the self-insured plan. In each case, the insurer/claims administrator asked the court to dismiss the lawsuit because it was not filed within the time limit specified by the plan.

Both plans contained a three-year limitations provision for filing a civil action after a final adverse benefit determination; however, because in both cases the final adverse benefit determination did not include a notice of the plan’s time limit for bringing legal action, the federal district court held that those limitations could not be enforced.

Going forward

Plan sponsors should review their ERISA plan documents, SPDs and claims denial communications, including those used by third-party administrators adjudicating claims on the plan’s behalf, to ensure that any deadline for filing a civil action on a final adverse benefit determination is clearly stated.

Authors

Senior Regulatory Advisor, Health and Benefits

Senior Regulatory Advisor, Health and Benefits

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