2003 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 5-28-2003 

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w . vi l l a no va . e du/thir dc ir c uit_2003/527NOT PRE CEDENT IAL UNITED STATES COURT OF APPEALS FO R T HE TH IRD CIR CU IT
No. 02-2337
THOMAS J . F ONTANA, Appellant

v. DI VE RS IFIE D G RO UP AD M IN IST RA TO RS , IN C.; PIT TSBURGH LOGIS TICS SYSTEMS, INC. EMPLOYE E HEALT H AND WELFA RE PL AN; PIT TS BU RG H L OG IST ICS SY ST EM S, IN C.;

P. G.T. TRUCKNG INC. App eal from th e Un ited States District Co urt for the We stern D istrict of P enns ylvania (D.C. Civi l No. 01-cv- 00967) Distri ct Court J udge: HonorableDonald E. Ziegl er Submitte d Under Third Circ uit LAR 34.1(a)

May 13, 2003 Be for e: R EN DE LL , SM ITH and AL DI SE RT , Circu it Judges .

(Fil ed May 28, 2003)
OPINI ON OF THE COURT
RE ND EL L, Circuit

Judge . Thomas Fontana sued Diver sifi ed Group Administr ators , Inc. (DGA), Pitt sburgh2

Logisti cs Sys tems, I nc. Employ ee Health and Welfare Plan (t he “Plan”) , Pittsburgh Logi stic s, In c. , a nd P. G.T. Tru cki ng, In c. (PGT ) u nde r the Em pl oy ee Re ti re ment In come Security Act ( ERISA) seeking revi ew of a denial of medi cal benefi ts. The matter was refe rred to a M agis trate Jud ge in acc ord anc e w ith 2 8 U .S.C . § 63 6(b )(1)( A) and (B) . Defendants then fil ed a Motion to Dismi ss/Motion f or Summary Judgment

assert ing that the sui t was barr ed by t he threeyear

stat ute of l imit ations present in the he alth pl an. The M agistrate Judg e reco mm ende d that th e M otion f or Su mm ary Judg men t be gra nted in favor of defend ants. On A pril 11, 2002 th e District Cou rt adopted the M agistrate Judge’s rep ort. T hom as F ont ana app eals . W e w ill aff irm. Thomas Fontana sued the defendants under 29 U.S.C. §1001 et. seq. The Dist rict Cou rt ex er ci se d f

ed er al que stio n j ur is di ctio n pu rs ua ntto 28 U .S .C . § 133 1 ( 200 1) , and w e
ex erci sej uri sd i cti on ov er t he Co urt ’ s f

i na l or de r pu r su an t t o 2 8 U . S. C. §1 29 1 ( 20 02 ) . We
re vi ew de novo the Dist rict Court’s gr ant of summaryjudgment. We will affi rm the Distric t Cou rt’s orde r if there is no g enuin e issue of m aterial fa ct and the m ovin g par ty is entit led to jud gm ent a s a m atter of la w. Mushalla v. Teamsters Local No. 863 Pension Fund , 300 F .3d 39 1, 395 (3d C ir. 2002 ). We review the fa cts in a lig ht mo st favo rable to the n on- mo vin g pa rty. Id. We also exercise p lenary review ov er the District Co urt’s cho ice o f the app licab le sta tute o f lim itatio ns. Syed v. Hercules , 214 F.3 d 15 5, 15 9 n.2 (3d Cir . 200 0). The facts are undisputed. During 1997, Fontana w as employed by PGT and w as a1 Appellant does dir ect this Court ’s attenti on to the f our y ear st atuteof limi tati ons app licab le to c ont ract a ction s in P enn sylvan ia. See 42 Pa . Co ns . St at . An n. §5 52 5( 8) . We find that the Magist

rate J udge properl y concluded that the correct st atuteof limi tati ons wa s the thre e year per iod con tract ually a gre ed to by the par ties in the h ealth plan . W e fur ther agr ee th at the thre e year statu te of limita tion s is re aso nab le. See Doe v. Blue 3 parti cipant

in their Health and Welfare Plan, which was administered byDGA . The Plan included a statute of limitations prov ision barring action s brough t more than three years from the date that

written proof of los s was required to be submit ted. On M ay 29, 1997, Fontana experienced a my ocardial infarcti on that resulted in vari ous hospit al and medical expe nses. F ontan a sub mitted a notic e of c laim to DG A a ttemp ting to re cove r his expenses. On October 6, 1997, DGA notifi ed Fontana that it was denyi ng his re quest for benefit s because hi s inj uries were the re sult of a pre-exi sti ng conditi on that was not covered bythe Plan. DGA also notifie d Fontana that if hedisagr eed with the dete rmin ation that h e sh oul d file a w ritten app eal w ithin 60 d ays. Fontana’s counsel fi led an appealwith DGA on D ecember 5, 1997. On M arch 10, 199 8, Fo ntana ’s cou nsel su pplem ented his pre viou s requ est for review of the denia l with additi onal proofs . The Plan admi nist rator s never r esponded to Font ana’s appea l. Over three y ears l ater, on May 29, 2001, Fontana fi led sui t agai nst Appell ees seeki ng to recove r for the d enia l of b ene fits. The Magistrate Judge found that Fontana’ s clai m was barred bythe three ye ar stat ute of l imit ations set forth in t he Health Pl an. Fontana does not challengethe reasonableness of the three y ear statute of limitati ons. 1 Inste ad, Fontana asserts that theCross & B lue Shield United of Wis. , 112 F.3d 869, 873-75 (7th Cir. 1997) (findi ng a

thirty n ine m ont h co ntra ctua l statu te of limita tion s pe riod reas ona ble) . 4 limitation s perio d sho uld h ave b een to lled in th is case beca use h e w as co ntinuo usly engaged in an appe al proce dure becausethe Health Plan admini strators f aile d to res pond to h is ap pea l. An action t o recover for denialof benefit s under ERISA accrues “when an applic ation f

or benefi ts i s formall y deni ed.” Salcedo v. John Hanco ck M utual Life Ins. Co l. , 38 F. Supp. 2d 37, 42 (D. Mass. 1998). At al l ti mes relevant to t his appeal , the regu lations g over ning ER ISA stated th at if a d ecision on re view is not f urnish ed w ithin th e ap pl ic abl e time perio d the c la im “ shallbe d eeme d de ni ed o n r evi ew. ” 29 C.F .R. §2560.503-1( h)(4) ( 2000). Typical ly , the“appli cable time peri od” is 60 day s, but if an extension is needed, a fiduciary may have up to 120 days. Given that

the regul ations clearlystate that a clai m is deemed denied when no decision ha s been ren dered w ithin the applicable time period, w e reject Fontan a’s argum ent that the statute of limitations w as tolled due to the plan adm inistrators’ failure to res pond to his appeal. We agree with theMagistrate Judge that Fontana’s appeal was deemed denied at the very latest on April 5, 1998, 120 days after it was filed. Because Fon tana d id no t file his c laim u ntil M ay 29, 20 01, ov er three years fro m the date h is claim
wa s de nied , it is tim e-b arre d. Fontana’s argument that sect ion 2560.503- 1(h)(4) is permissi ve rathe r than5

mandatory , and that thepower to deem the cl aim denied l ies wit h the claimant , is unavail ing. Font ana rel ies on M assac huse tts M utual L ife Ins . Co. v . Rus sell , 473 U. S. 134 (198 5), in w hich th e Su prem e Co urt held that “th e regu lations m erely state tha t a cl ai m may be treated as havi ng been denied after the 60- or 120–dayperiod has elapsed. ” Id. at 144 (emp hasis a dded ). We do n ot read the C ourt’s u sage of the wo rd “m ay” in Ru ssell to indicate that section 2 560.503 -1(h)(4) is perm issive. The regu lation is very clea r: it sta tes th at a c laim “sh all” b e de nied afte r the app licab le tim e pe riod has exp ired . In using t

he word “may, ” the Ru ssell Co urt m ean t that , afte r the app licab le tim e pe riod , a claim ant is aut

horized to bri ng an acti on to have the merit s of his application determined in th e sa me ma nne r as if ther e ha d be en a n ou trigh t den ial of ben efits . See Southe rn Farm Burea u Life Ins . Co. v. M oore , 993 F.2 d 98 , 101 (5th Cir . 199 3). We also reject Fo ntana ’s argu men t that Mason v. Aetna Life Ins . Co. , 901 F.2d 662 (8th Cir . 199 0), c om pels a dif fere nt re sult. In Mason the cl aimant received ac tual noticeof denialafter

the expi rati on of the 120 dayperiod and t he Court of Appeals for the Eig hth Cir cuit h eld th at the statu te of limita tion s ac cru ed f rom the d ate o f ac tual n otice . The court obse rved that the fact that Aetna gave actua l noti ce of denialafter the exp iratio n of the 1 20 d ay pe riod ind icate d th at the y did n ot d eem the a ppe al de nied . Id. at 664 fn. 3. The court di d not addres s when the st atuteof limi tati ons might have a ccrued abs ent a ctua l no tice. Becau se we a gree w ith the M agistrate Judge a nd the D istrict Court that Fontan a’s6

clai m was barred bythe three ye ar st atuteof limi tati ons, we willaffirm the Court’s grant of s um ma ry judg me nt.

_______________________________7

TO THE CLERK OF COU RT: Please fi le theforegoing not precedential opi nion.

/s/ M arjorie O . Ren dell Circuit Judge