Opinion ID: 612382
Heading Depth: 3
Heading Rank: 2

Heading: limitations provision in policy

Text: The next inquiry is whether Withrow's action is contractually barred by the limitations provision in the policy. Withrow's policy provides that no legal action may be brought after the expiration of three years ... after the time written proof of loss is required to be furnished. The proof of loss provision of the policy states that this proof of loss must be furnished in case of claim for loss for which this Policy provides any periodic payment contingent upon continuing loss within 90 days after the termination of the period for which the company is liable. Both provisions are required by California law. See Cal. Ins. Code §§ 10350.7, 10350.11. A now-overruled decision of our circuit, Nikaido v. Centennial Life Ins. Co., 42 F.3d 557 (9th Cir.1994), held that an identical contract provision stated both the time that claims accrue and the statute of limitations for ERISA claims. Id. at 559-60. Wetzel overruled Nikaido and, as discussed above, held instead that (1) California's four-year statute of limitations for contract disputes applied to ERISA claims, and (2) under ERISA, claims accrue when the applicant knows her application has been denied. 222 F.3d. at 648-49. Wetzel also held, however, that applicants for long-term disability benefits must meet both ERISA and contractual limitations with regard to the length of the limitation period and the accrual date. Id. at 650. The Wetzel court did not decide how this contract provision should be interpreted and instead remanded that question to the district court. Id. at 650-51. Thus, contract limitations provisions in benefit policies still have force independent of ERISA in long-term disability benefit cases. Here, there is no dispute that the contract terms create a shorter limitations period (three years instead of four), but they also provide that claims accrue as a contractual matter within 90 days after the termination of the period for which the company is liable. We have found it difficult thus far to define termination of the period for which the company is liable. The Nikaido court, struggling to fit language and logic together, ultimately held that each month constitutes a period for which the company is liable. 42 F.3d at 560. Thus, under Nikaido, an applicant for disability benefits had to send in renewed proof of disability as proof of loss 90 days after each month in which she received a disability check. However, Nikaido has been overruled, and at present, the Ninth Circuit has not interpreted the phrase the period for which the company is liable. The Wetzel court offered some observations suggesting that Nikaido had misinterpreted the contract provision  specifically, it noted that the question of what disability benefits an applicant deserves in the first instance is different than the question whether a payment in a particular month was correct  but it did not suggest a plausible interpretation of the mandatory contract language. See 222 F.3d at 650. However, we need not reach the thorny issue of what the phrase the period for which the company is liable means with regard to disputes over whether or not an applicant is actually disabled or is entitled to benefits at all. At oral argument, counsel for Bache Halsey forthrightly conceded that the limitations provision in the policy here does not apply to disability cases in which the claimant contests the amount of benefits or claims the benefits have been miscalculated. Counsel acknowledged that the only time bar that applies in this case was that created by ERISA, the four-year California statute of limitations. We agree with counsel's concession that the language, of this provision, as mandated by California Insurance Code § 10350.7 and § 10350.11, is meaningless as applied to disputes over the proper calculation, of the amount of monthly disability benefits, as opposed to disputes over whether an applicant is entitled to benefits at all.