Notice of Plan-Imposed Statute of Limitations for Filing Suit Must Be Included in Adverse Benefit Determination Letters

In Mirza v. Insurance Administrator of America, 800 F.3d 129 (3rd Cir. 2015), the court held that adverse benefit determination letters must include any plan-imposed time limits for seeking judicial review to be enforceable.

The Mirza case began when a physician sued the company charged with processing claims under the employer’s ERISA plan for unpaid benefits (the physician had performed a procedure for a herniated disc, and the patient had assigned to the physician all of her rights to payment under the Plan for the procedure). The defendant denied the claim twice, but neither denial mentioned that, under the terms of the plan, any legal action to recover benefits had to be taken within one year from the date of the plan administrator’s final denial of benefits.

When the physician filed suit, the district court dismissed the case, holding that the plan’s one-year deadline for seeking judicial review was enforceable because it was not unreasonable, and that the physician had missed that deadline. On appeal, however, the Third Circuit disagreed and vacated the district court’s decision.

The court focused on 29 CFR §2560.503-1(g), which states that the plan administrator shall provide a claimant with written notice of any adverse benefit determination that contains “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 §502(a)] following an adverse benefit determination.”

The court interpreted the regulation as requiring plan administrators to inform claimants of plan-imposed time limits for brining civil actions in their adverse benefit determinations letters. In the court’s view, simply including such language in plan document was not sufficient to satisfy the regulation. Accordingly, because the adverse benefit determination letter did not mention the one-year time limit to file suit, the court ignored the plan imposed deadline, applied the state-law statute of limitations, and ruled that the lawsuit was timely filed.

Given the court’s interpretation of Section 2560.503-1(g)(1)(iv), plan administrators should be sure to identify any plan-imposed time limits for seeking judicial review in adverse benefit determinations.