Opinion ID: 39520
Heading Depth: 2
Heading Rank: 2

Heading: Whether Harris’s Claims Were Time-Barred

Text: Because Harris was properly assigned the benefits for the Crosson twins, we must also address whether Harris’s derivative claims are barred by the three-year limitations period included in the Plan. Under ERISA, a cause of action accrues after a claim for benefits has been made and formally denied. Hall v. Nat’l Gypsum 12 Co., 105 F.3d 225, 230 (5th Cir. 1997). Because ERISA provides no specific limitations period, we apply state law principles of limitation. See, e.g. Hogan v. Kraft Foods, 969 F.2d 142, 145 (5th Cir. 1992). Where a plan designates a reasonable, shorter time period, however, that lesser limitations schedule governs. Northlake Reg’l Med. Ctr. v. Waffle House Sys. Employee Benefit Plan, 160 F.3d 1301, 1303-04 (11th Cir. 1998); Doe v. Blue Cross & Blue Shield United of Wisconsin, 112 F.3d 869, 874-75 (7th Cir. 1997). This plan requires that any action to recover benefits be commenced within “three (3) years from the time written proof of loss is required to be given.” Additionally, “[w]ritten proof of loss covering the details of the loss” must be given “within ninety days after the date of such loss.” There is no dispute among the parties that three years is a reasonable time period. The dispute is over how to determine what constitutes a “loss” under the Plan, which contains no explicit definition of “loss.” This determination will be dispositive. If the Plan required Harris to submit claims for the twins’ expenses each day those expenses were incurred, on the theory that each day of hospitalization is a “loss,” then the limitations period estops Harris from obtaining reimbursement for all but two days’ worth of 13 claims.5 On the other hand, if the “loss” includes all the charges for the duration of the twins’ hospital stay, then the Plan required Harris to submit its claim only after they left the hospital, and the claim for the full award of nearly $700,000 is timely. Appellees point to the Plan’s specification that medical expenses are deemed incurred on “the actual date a service is rendered” and implies that the Plan obliged Harris to submit claims for expenses incurred by the twins on a daily basis. Later in their brief, however, Appellees acknowledge that the date of loss may alternatively run from the dates on which Harris submitted interim billings for services. Harris, by contrast, contends that a reasonable interpretation of the Plan allows recovery of all expenses incurred by the twins because the “loss” should include expenses for the entire hospitalization. According to Harris, the particular circumstances under which the loss occurred — Crosson’s giving birth to extremely premature twins and their continuous hospitalization throughout this period — demonstrate that it would have been reasonable for Harris to provide proof of loss to the Plan after the twins’ departure. As a result, application of the ninety-day proof of loss requirement, starting on April 1, 1998, 5 Harris filed the instant action on July 21, 2001. Three years and ninety days prior to the filing date is March 31, 1998. Thus, if Appellees’ view of the Plan controls, Harris can only recover expenses incurred on or after March 31, 1998, two days before the twins left the hospital. If Harris’s view prevails, the three-years-and-ninety-days limitations period did not commence until the twins left the hospital April 1, 1998, and thus none of the claim is time barred. 14 would lead to a suit-filing deadline in July 2001. Resolution of this dispute must stem from the background principle that SPDs must be read and interpreted from the perspective of a layperson. Lynd v. Reliance Standard Life Ins. Co., 94 F.3d 979, 983 (5th Cir. 1996). So viewed, Harris has the better of the argument. The ambiguity in Appellees’ interpretation of “loss” is telling.6 The term is ambiguous because proofs of “loss” must necessarily be filed based on the practicalities surrounding each treatment regime covered by the Plan. Thus, a single doctor visit could require a “proof of loss”; a series of physical therapy treatments for back problems could reasonably generate one or several proofs; a hospitalization may garner one or several proofs. The ninety-day limit (or if applicable, the oneyear limit) constitutes a periodic deadline for filing such claims, and such deadlines reasonably assure that claims will not be stale when filed. Appellees, of course, do not contend that Harris, following an interim billing regime, failed to meet the ninety-day cutoffs. It is these deadlines, not the term “loss,” that govern 6 Further bearing on the issue, the Plan contains the following language: Failure to furnish such proof within the time required will not invalidate nor reduce any claim if it can be shown that it was not reasonably possible to file proof within such time, provided such proof is furnished as soon as reasonably possible and in no event . . . later than twelve (12) months from the date on which the covered charges were incurred. The twelve-month extension is in tension with Appellees’ position that Harris needed to report complete charges on a daily basis to avoid running afoul of the limitations period. 15 the timeliness of claims. Sales Support tacitly acknowledges the absurdity of construing “loss” to mean each day’s services during the hospitalization, yet it seems equally arbitrary and unrealistic to tie the three-year limitations deadline, as Sales Support advocates, to the dates of each of the hospital’s interim bills. Doing so could require the hospital to have filed separate suits to recover for its separately billed charges. We conclude that the term “loss” must be practically construed and varies depending on the circumstances of medical care covered by the Plan; the hospitalization in this case constituted one event of “loss” for purposes of applying the Plan’s three-year deadline for filing suit; and that “loss” accrued on the date of the twins’ discharge. The hospital timely filed suit.