Heimeshoff v. Hartford Life & Accident Insurance Co., No. 12-729; U.S. Supreme Court; opinion by Thomas, J.; decided December 16, 2013. On certiorari to the U.S. Court of Appeals for the Second Circuit.

Respondent Hartford Life & Accident Insurance Co. is the administrator of Wal-Mart Stores Inc.’s Group Long Term Disability Plan, an employee benefit plan covered by the Employee Retirement Income Security Act of 1974 (ERISA). The plan’s insurance policy requires any suit to recover benefits pursuant to the judicial review provision in ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), to be filed within three years after “proof of loss” is due.

Petitioner Heimeshoff filed a claim for long-term disability benefits with Hartford. After petitioner exhausted the mandatory administrative review process, Hartford issued its final denial. Almost three years after that final denial but more than three years after proof of loss was due, Heimeshoff filed a claim for judicial review pursuant to ERISA § 502(a)(1)(B). Hartford and Wal-Mart moved to dismiss on the ground that the claim was untimely. The district court granted the motion, recognizing that while ERISA does not provide a statute of limitations, the contractual three-year limitations period was enforceable under applicable state law and circuit precedent. The Second Circuit affirmed.

Held: The plan’s limitations provision is enforceable. Pp. 4-16.

(a) The courts of appeals require participants in an employee benefit plan covered by ERISA to exhaust the plan’s administrative remedies before filing suit to recover benefits. A plan participant’s cause-of action under ERISA § 502(a)(1)(B) therefore does not accrue until the plan issues a final denial. But it does not follow that a plan and its participants cannot agree to commence the limitations period before that time. Pp. 4-8.

(1) The rule set forth in Order of United Commercial Travelers of America v. Wolfe, 331 U.S. 586, 608, provides that a contractual limitations provision is enforceable so long as the limitations period is of reasonable length and there is no controlling statute to the contrary. That is the appropriate framework for determining the enforceability of the plan’s limitations provision. The Wolfe approach necessarily allows parties to agree both to the length of a limitations period and to its commencement. Pp. 5-7.

(2) The principle that contractual limitation provisions should ordinarily be enforced as written is especially appropriate in the context of an ERISA plan. Heimeshoff’s cause of action is bound up with the written terms of the plan, and ERISA authorizes a participant to bring suit “to enforce his rights under the terms of the plan.” See § 1132(a)(1)(B). This court has thus recognized the particular importance of enforcing plan terms as written in § 502(a)(1)(B) claims, see, e.g., CIGNA Corp. v. Amara, 563 U.S. ___, ___, and will not presume from statutory silence that Congress intended a different approach here. Pp. 7-8.

(b) Unless the limitations period is unreasonably short or there is a “controlling statute to the contrary,” Wolfe, 331 U.S. at 608, the plan’s limitations provision must be given effect. Pp. 8-16.

(1) The plan’s period is not unreasonably short. Applicable regulations mean for mainstream claims to be resolved by plans in about one year. Here, the plan’s administrative review process (internal review) required more time than usual but still left Heimeshoff with approximately one year to file suit. Her reliance on Occidental Life Ins. Co. of Cal. v. EEOC, 432 U.S. 355, in which this Court declined to enforce a 12-month statute of limitations applied to Title VII employment discrimination actions where the Equal Employment Opportunity Commission faced an 18- to 24-month backlog, is unavailing in the absence of any evidence that similar obstacles exist to bringing a timely ERISA § 502(a)(1)(B) claim. Pp. 9-10.

(2) This court rejects the contentions of Heimeshoff and the United States that the limitations provision is unenforceable because it will undermine ERISA’s two-tiered remedial scheme. Pp. 10-15.

(i) Enforcement of the plan’s limitations provision is unlikely to cause participants to shortchange the internal review process. The record for judicial review generally has been limited to the administrative record, so participants who fail to develop evidence during internal review risk forfeiting the use of that evidence in district court. In addition, many plans vest discretion over benefit determinations in the plan administrator, and courts ordinarily review such determinations only for abuse of discretion. Pp. 11-12.

(ii) It is also unlikely that enforcing limitation periods that begin to run before the internal review process is exhausted will endanger judicial review. To the extent that administrators attempt to prevent judicial review by delaying the resolution of claims in bad faith, the penalty for failure to meet the regulatory deadlines is immediate access to judicial review for the participant. Evidence from 40 years of ERISA administration of this common contractual provision suggests that the good-faith administration of internal review will not diminish the availability of judicial review either. Heimeshoff identifies only a handful of cases in which ERISA § 502(a)(1)(B) plaintiffs have been time-barred as a result of the three-year limitations provision, and these cases suggest that the bar falls on participants who have not diligently pursued their rights. Moreover, courts are well-equipped to apply traditional doctrines, such as waiver or estoppel, see, e.g., Thompson v. Phenix Ins. Co., 136 U.S. 287, 298-99, and equitable tolling, see, e.g., Irwin v. Department of Veterans Affairs, 498 U.S. 89, 95, that nevertheless may allow participants to proceed. Finally, plans offering appeals or dispute resolution beyond what is contemplated in the internal review regulations must agree to toll the limitations provision during that time. 29 CFR § 2560.503-1(c)(3)(ii). Pp. 12-15.

(3) Heimeshoff’s additional arguments are unpersuasive. The limitations period need not be tolled as a matter of course during internal review because that would be inconsistent with the text of the limitations provision, which is enforceable. And federal courts need not inquire whether state law would toll the limitations period during internal review because the limitations period is set by contract, not borrowed from state law. Pp. 15-16.

496 Fed.Appx. 129, affirmed.