Court Opinion

ID: 8410528
Source: CourtListenerOpinion
Date Created: 2022-11-02 18:06:52.853268+00
Date Added: 2024-06-11T16:47:46.977641
License: Public Domain

WILKINS, Chief Judge,
dissenting:
The plan states that “[n]o legal action may start ... more than 3 years after the time Proof of Claim is required,” which equated here to August 9, 2003. J.A. 636. Despite an uneventful administrative claim process, White failed to meet this deadline. Sun Life first denied White’s claim on August 15, 2000 and then denied her appeal of that decision by letter dated March 28, 2001. At that point, White, who was represented by counsel, had no further administrative remedies to exhaust and was left with more than 28 months to decide whether to file a civil action. Yet, she did not bring the present action until March 26, 2004 — more than seven months too late.
Having failed to bring suit within the generous period that the plan allowed, *257White now attempts to avoid the clear application of the plan language. The majority allows White to do just that, refusing to enforce the plan terms and holding that the plan drafters were not authorized to require that civil actions be filed within three years of the date that a claimant’s Proof of Claim was due. Because I believe the majority’s refusal to enforce the plan as written is plainly unjustified, I respectfully dissent.
I.
A.
ERISA requires that any employee benefit plan be “established and maintained pursuant to a written instrument.” 29 U.S.C.A. § 1102(a)(1) (West 1999). It also mandates that plan terms be enforced, expressly providing causes of action to compel enforcement of plan terms and to remedy failures to enforce plan terms. See 29 U.S.C.A. § 1104(a)(1)(D) (West 1999) (requiring plan fiduciaries to discharge their duties “in accordance with the documents and instruments governing the plan”); 29 U.S.C.A. § 1132(a)(1)(B) (West 1999) (allowing participants to pursue a civil action “to enforce [their] rights under the terms of the plan”); 29 U.S.C.A. § 1132(a)(3) (West 1999) (providing cause of action “to enjoin any act or practice which violates ... the terms of the plan” or to obtain other equitable relief “to enforce ... the terms of the plan”). Indeed, “one of the primary functions of ERISA is to ensure the integrity of written, bargained-for benefit plans.” United McGill Corp. v. Stinnett, 154 F.3d 168, 172 (4th Cir.1998). For this reason, “the plain language of an ERISA plan must be enforced in accordance with its literal and natural meaning.” Id. (internal quotation marks omitted).
Congress intended for courts to develop federal common law regarding ERISA to supplement its statutory provisions. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987). However, this authority is limited to circumstances in which it is “necessary to fill in interstitially or otherwise effectuate the ERISA statutory pattern enacted in the large by Congress.” United McGill Corp., 154 F.3d at 171 (internal quotation marks & alteration omitted). Thus, “resort to federal common law generally is inappropriate when its application would conflict with the statutory provisions of ERISA ... or threaten to override the explicit terms of an established ERISA benefit plan.” Id. (internal quotation marks & alteration omitted). The majority’s resort to federal common law here is clearly inappropriate for both reasons.
White’s suit seeks benefits under an employee benefit plan pursuant to ERISA, see 29 U.S.C.A. § 1132(a)(1)(B). ERISA does not contain an express limitations period applicable to causes of action under this section. Thus, for default rules, courts have looked to state law regarding the length of limitations periods, see Wilson v. Garcia, 471 U.S. 261, 266-67, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985), while holding that federal law governs the date when the limitations period commences, see Rawlings v. Ray, 312 U.S. 96, 98, 61 S.Ct. 473, 85 L.Ed. 605 (1941). Notwithstanding the existence of these default rules,
it is well established that, in the absence of a controlling statute to the contrary, a provision in a contract may validly limit, between the parties, the time for bringing an action on such contract to a period less than that prescribed in the general statute of limitations, provided that the shorter period itself shall be a reasonable period.
*258Order of United Commercial Travelers v. Wolfe, 331 U.S. 586, 608, 67 S.Ct. 1355, 91 L.Ed. 1687 (1947).
The Wolfe rule clearly applies to an ERISA plan, which, after all, “is nothing more than a contract, in which parties as a general rule are free to include whatever limitations they desire.” Northlake Reg’l Med. Ctr. v. Waffle House Sys. Employee Benefit Plan, 160 F.3d 1301, 1303 (11th Cir.1998). Although such contracts are not negotiated individually with employees, employee benefits comprise part of an employee’s compensation package, and companies that erect unreasonable barriers to their employees’ receipt of benefits can hurt themselves in competing for employees.1 See Doe v. Blue Cross & Blue Shield United of Wis., 112 F.3d 869, 874 (7th Cir.1997).
The plan here states in no uncertain terms that “[n]o legal action may start ... more than 3 years after the time Proof of Claim is required.” J.A. 636. The plan provides that Proof of Claim was required “no later than 90 days after the end of the Elimination Period.” Id. at 638. The “Elimination Period” is defined as “a period of continuous days of Total or Partial Disability for which no LTD Benefit is payable.” Id. at 612. Under the plan terms, the “Elimination Period” was 90 days and “beg[an] on the first day of Total or Partial Disability.” Id. at 605, 612. White alleged in her complaint that her first day of “Total Disability” was February 11, 2000. Thus, her Elimination Period expired on May 11, 2000, and her Proof of Claim was due on August 9, 2000.2 The terms of the plan therefore required that any suit based on the facts before us be filed on or before August 9, 2003. On that basis, the limitations period contained in the plan must be enforced unless controlling law prohibits modification of the default rule or the period provided in the plan is unreasonable. Neither of these circumstances pertains here.
First, no controlling law prohibits adoption of the limitations period specified in the plan. As the majority observes, under the general federal rule, a cause of action under § 1132(a)(1)(B) accrues when a plan administrator formally denies a claim, see Rodriguez v. MEBA Pension Trust, 872 F.2d 69, 72 (4th Cir.1989).3 See ante, at *259246. But, a federal rule concerning when a limitations period begins in the absence of an agreement to adopt a shorter period certainly is not a rule prohibiting adoption of a shorter period. See Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Ins. Program, 222 F.3d 643, 650 (9th Cir.2000) (en banc) (holding that even though federal law provided accrual date for § 1132(a)(1)(B) cause of action, whether separate limitations period provided in the plan barred plaintiffs action presented a separate question); cf. Harbor Ct. Assocs. v. Leo A. Daly Co., 179 F.3d 147, 150-51 (4th Cir.1999) (affirming enforcement of provision contracting around Maryland’s default rule setting the date on which the limitations period would commence “[i]n light of [Maryland’s] established judicial commitment to protecting individuals’ efforts to structure their own affairs through contract”). Indeed, the Wolfe rule presumes that a default limitations period exists and provides that the parties can agree to a shorter period as long as it is reasonable.
Second, this limitations period was eminently reasonable. Nowhere in the record is there any suggestion that the limitations period was “a subterfuge to prevent lawsuits.” Northlake Reg’l Med. Ctr., 160 F.3d at 1304. Indeed, the limitations period was the very one that North Carolina and the vast majority of other states require be included in insurance policies like the one at issue here, see N.C. Gen.Stat. § 58 — 51—15(a)(ll) (2005); Wetzel, 222 F.3d at 647 n. 5 (listing states). It is one that at least two circuits have held to be reasonable. See Doe, 112 F.3d at 874-75 (holding on facts essentially identical to those of the present case that plan limitations period was reasonable); Blaske v. UNUM Life Ins. Co. of Am., 131 F.3d 763, 764 (8th Cir.1997) (holding that limitations period identical to that at issue here was reasonable). Tying the limitations period to the date on which proof of claim is due serves the important function of ensuring that a civil action is not too remote in time from the events giving rise to the plaintiffs claim. See Mo., Kan. & Tex. Ry. Co. v. Harriman Bros., 227 U.S. 657, 672, 33 S.Ct. 397, 57 L.Ed. 690 (1913) (explaining that the purpose of a limitations period is to avoid a loss of evidence as the result of the passage of time); ante, at 250 (“Plans may legitimately wish to avoid extended limitations periods, because the disability status of a particular plaintiff may shift significantly over time, and because both the interests of claimants and a plan’s own accounting mechanisms may be served by prompt resolution of claims.”).
Although the period here could commence before a claim was formally denied, the three-year period was easily sufficient to preserve the claimant’s rights considering the nature of a § 1132(a)(1)(B) suit:
A suit under ERISA, following as it does upon the completion of an ERISA-re-quired internal appeals process, is the equivalent of a suit to set aside an administrative decision, and ordinarily no more than 30 or 60 days is allowed within which to file such a suit. Like a suit to challenge an administrative decision, a suit under ERISA is a review proceeding, not an evidentiary proceeding. It is like an appeal, which in the federal courts must be filed within 10, 30, or 60 days of the judgment appealed from, depending on the nature of the litigation, rather than like an original lawsuit.
Doe, 112 F.3d at 875 (citations omitted); see also Northlake Reg’l Med. Ctr., 160 F.3d at 1304 (enforcing limitations period of 90 days from denial of claim). The *260Department of Labor regulations applicable to the plan here require that a plan administrator notify a claimant of a denial of benefits within a reasonable period not to exceed 45 days after receipt of the claim. See 29 C.F.R. § 2560.503-1(0(3) (2006). In certain circumstances, this period may be extended up to 60 additional days. See id. And, if the plan administrator determines that additional information is needed to resolve the claim, the time the claimant takes to produce the information is not counted toward the administrator’s time limitations. See 29 C.F.R. § 2560-503-1(0(4) (2006). If a claimant seeks internal review of the plan administrator’s decision, the plan must notify a claimant of its determination within a reasonable time period not to exceed 45 days, with the possibility of an extension of up to 45 additional days. See 29 C.F.R. § 2560.503-1(0(3) (2006). If the plan fails to make a decision within these deadlines, administrative remedies will be considered to be exhausted, and a claimant is entitled to file suit. See 29 C.F.R. § 2560.503-1(i) (2006). These time limitations ensure that even if a plan had obtained all possible extensions, it could take only 195 days of the three-year (1,095-day) limitations period. Thus, even under this extreme scenario, if a claimant spent six months responding to requests for additional information and another six months preparing an administrative appeal, she would still have almost a year and a half to decide whether to initiate a civil action. This is far more than the 30 or 60 days that would be sufficient for such a decision. See Doe, 112 F.3d at 875. Accordingly, the three-year time period is not only more than sufficient to eliminate any significant possibility that a claimant could be disadvantaged; it likely leaves claimants with much more than 30 or 60 days after the claim is denied in which to bring suit.4 Thus, the period was clearly reasonable.
B.
The majority concludes that although parties may agree to modify the length of a limitations period, they may not reject the federal default rule that the period begins when the claim is denied. See ante, at 247 (holding that the plan drafters may not provide that the limitations period can commence before administrative remedies have been exhausted because they “cannot write over the constraints established by federal law”). This is plainly incorrect. Wolfe allows parties to a contract to limit “the time for bringing an action” so long as the agreed upon period is reasonable. Wolfe, 331 U.S. at 608, 67 S.Ct. 1355. Shortening the length of the default limitations period is only one way to limit the time for bringing an action. Setting a date earlier than the default date for commencement of the period is another. See, e.g., Harbor Ct. Assocs., 179 F.3d at 150-51. Moreover, as noted above, tying the limitations period to the date that Proof of Claim was due — as opposed to beginning the period only when a claim is denied— has the perfectly rational purpose of ensuring that no suit is too remote in time from the events giving rise to the claim. See Harriman Bros., 227 U.S. at 672, 33 S.Ct. 397. The Wolfe rule and the freedom-of-contract principles underlying it clearly allow such a shortening of the limitations period to achieve this goal.
The majority also concludes that federal common law prohibits the adoption of the *261limitation period included in the plan because it would undercut the right to bring a § 1132(a)(1)(B) action. See ante, at 247 (holding that the “interlocking remedial structure [between administrative and judicial review] does not permit an ERISA plan to start the clock ticking on civil claims while the plan is still considering internal appeals”). The majority notes that with the limitations period in the plan, the clock can begin running before a claimant is entitled to file suit, thereby either reducing the time she has to bring suit or eliminating it altogether. See id. at 247-48. The majority also submits that such periods give plan administrators a motive to delay denying claims so as to reduce the time that plaintiffs have to bring suit. See id.
I believe the majority’s concerns and its invocation of federal common law are without basis and certainly do not justify a refusal to enforce the plan terms. As I have explained, the three-year period is well-designed to leave a claimant with ample time to decide whether to file a civil action. Further, the fact that the regulations allow a plan administrator to spend no more than 195 days deciding a claim and administrative appeal eliminates any significant possibility that a devious plan administrator could believe he could run out the three-year clock on a claimant before the claimant could sue. The presence of the clearly stated period serves to notify the parties from the very beginning of the process of the date by which a civil suit must be initiated. There is simply no reason to believe that diligent claimants under this plan would have any trouble protecting their rights, and the majority does not contend otherwise.
Regardless of whether we might identify policy reasons why the default period would be preferable, it is for the plan drafter, not this court, to determine the plan terms. See Black & Decker Disability Plan v. Nord, 538 U.S. 822, 833, 123 S.Ct. 1965, 155 L.Ed.2d 1034 (2003) (“[E]mployers have large leeway to design ... plans as they see fit.”); Gayle v. UPS, 401 F.3d 222, 228 (4th Cir.2005) (noting “the well-established principle that plans can craft their governing principles as they think best”); cf. Kress v. Food Employers Labor Relations Ass’n, 391 F.3d 563, 570 (4th Cir.2004) (rejecting argument that plan term requiring attorneys’ fees to be subrogated to plan reimbursement should not be enforced because it would discourage litigation). Despite the majority’s statement that it “reaffirm[s]” that principle, ante, at 246, I believe its decision clearly undermines it.
The majority concludes that its resort to federal common law to defeat the plain language of the plan is justified because enforcement of the limitations period would “immerse[ ] federal courts in a federal common law enterprise that would undermine the ERISA framework.” Id. at 249. The “enterprise” that the majority refers to is determining whether the amount of time a claimant actually has after a denial to file a civil action is “reasonable,” so that the plan period may be enforced under Wolfe. See id. The majority similarly concludes that refusing to enforce the limitations period plainly provided for in the plan is necessary to eliminate the uncertainty that could exist regarding whether the time a claimant has left to file after a claim is denied is reasonable. See id. at 249-51. But, with all due respect to the majority, it is only the majority’s departure from the plain language of the plan that immerses the court in federal common law and creates uncertainty regarding plan terms.
The majority recognizes that despite the uncertainty regarding what limitations period length will be held to be reasonable *262under Wolfe, “ERISA generally affords plans the flexibility to set limitations periods.” Id. at 262. The majority concludes, though, that the uncertainty rises to an unacceptable level when limitations periods run from the date of the claim because determination of whether the period is reasonable depends “in each case upon the amount of time needed to resolve a claim internally” and thus “could not be determined at the outset from plan documents.” Id. at 262; see id. at 248-51. However, the majority never explains why it believes that the reasonableness or unreasonableness of a plan term could be altered by such subsequent events, and I certainly do not believe that it could. We should judge the reasonableness of a limitations period that runs from the date proof of claim is due as we judge any other limitations period, by determining the reasonableness of the term as written. While there would be, of course, some uncertainty regarding what we would hold to be the shortest reasonable period, that uncertainty would be no different than that which exists regarding periods running from the date that a claim is denied. In contrast, the vague “tension” that the majority relies on here to defeat the plain terms of the plan surely will give rise to much future litigation concerning what other plan terms are in “tension” with ERISA policies such that they may not be enforced, necessitating the development of much more extensive federal common law on the subject. Id. at 248.
Similarly, it is only the majority’s refusal to enforce the clear plan terms that fails to promote proper notice to the parties. See United McGill Corp., 154 F.3d at 172 (explaining that “the plain language of an ERISA plan must be enforced” and that “one of the primary functions of ERISA is to ensure the integrity of written, bargained-for benefit plans”). From the time that White filed her administrative claim here, the date by which she was required to file a civil action was set at August 9, 2003. With all the majority’s discussion of “providing potential plaintiffs with meaningful notice of the timeliness of their actions and providing potential defendants an equally clear sense of when the time on possible claims has run,” ante, at 251, it is the majority that pulls the rug out from under the parties at this late stage of the litigation by refusing to enforce the plan as written. By refusing to enforce the limitations period clearly provided in the plan when that period is well designed to serve the interests underlying statutes of limitations, the majority will also leave future claimants and plan administrators under a variety of plans wondering which plan provisions this court will refuse to apply next.
C.
It bears noting that the Seventh Circuit, in a thorough and well-reasoned opinion by then-Chief Judge Posner, enforced the very limitations period at issue here. See Doe, 112 F.3d at 872-73, 875. The majority brushes Doe aside, stating that while it “enforced a contractual accrual date, the focus ... was on plans’ freedom to set limitations periods, not accrual dates.” Ante, at 250. This characterization is simply incorrect. In applying the Wolfe reasonableness rule, Doe considered the appropriateness of the “limitations period,” Doe, 112 F.3d at 873 (emphasis in original), which it correctly understood to include the event that commences the period as well as the length of the period. In this regard, Doe clearly considered the fact that the limitations period commenced when proof of claim is due and that the resulting period could theoretically be compressed or eliminated if the plan’s resolution of the claim took a very long time. See id. Even considering that the length of the period would vary depending upon *263the time the plan takes to deny the claim, Noe found the period to be “reasonable in general and in th[at] case” in light of the fact that “a suit under ERISA is a review proceeding, not an evidentiary proceeding,” and thus, “is like an appeal, which in the federal courts must be filed within 10, 30, or 60 days of the judgment appealed from.” Id. at 875; accord Blaske, 131 F.3d at 764 (holding an identical limitations period to be reasonable).
On the other hand, the two contrary decisions cited by the majority are wholly unpersuasive. See ante, at 250. In refusing to enforce plan terms regarding when the applicable limitations period begins, both decisions simply rely on the federal default rule that ERISA claims accrue when a claim for benefits has been denied, without so much as discussing whether the Wolfe rule would allow the plan to adopt a reasonable shorter period. See Miller v. Fortis Benefits Ins. Co., 475 F.3d 516, 520-21 (3d Cir.2007); Price v. Provident Life & Accident Ins. Co., 2 F.3d 986, 988 (9th Cir.1993). It is therefore not surprising that the majority makes only cursory mention of these decisions. See ante, at 250.
II.
In sum, the ERISA plan before us plainly requires that any civil action be brought within three years of the date White’s Proof of Claim was due. Because no law prevents the plan from adopting a limitations period shorter than the default period, Supreme Court precedent requires that the plan period be enforced so long as it is reasonable. The period here was eminently reasonable — generous even— and well constructed to prevent a suit too temporally removed from the events underlying it. That the majority refuses to enforce it is troubling and will no doubt leave plan administrators and participants in this circuit guessing which plan term this court will next refuse to enforce on the basis that it “creates tension” with ERISA policies. Id. at 248.
I would reverse the judgment to White and remand for entry of judgment in favor of Sun Life. I respectfully dissent from the majority’s contrary decision.

. Additionally, Congress’ decision not to include a limitations period in the applicable statute specifically demonstrates a willingness to accept reasonable agreed-upon limitations periods. See Taylor v. W. & S. Life Ins. Co., 966 F.2d 1188, 1205 (7th Cir.1992).

. White argues that Proof of Claim was actually due one year and 90 days from the end of the Elimination Period. That is incorrect. The plan states that for long term disability,
proof of claim must be given to Sun Life no later than 90 days after the end of the Elimination Period.
If it is not possible to give proof within these time limits, it must be given as soon as reasonably possible. Proof of claim may not be given later than one year after the time proof is otherwise required unless the individual is legally incompetent.
Id. at 638. Here, it clearly was possible for White to give Proof of Claim within the 90 days after the end of the Elimination Period, as she in fact did so.
White also argues that her suit was timely filed because North Carolina General Statutes § 58-51-15(a)(7) (2005) provides that a proof of loss is not due until "180 days after the termination of the period for which the insurer is liable.” That statutory provision is plainly inapplicable here as it concerns claims for which the insurer has determined there is a qualifying disability that would entitle the claimant to "periodic payment[s] contingent upon continuing loss.” N.C. Gen.Stat. § 58-51-15(a)(7).

.While Rodriguez dictates when the cause of action arises, the Supreme Court has recognized that the event that gives a party the right to bring suit need not be the same as the event that commences the running of a limitations period. See Reiter v. Cooper, 507 U.S. *259258, 267, 113 S.Ct. 1213, 122 L.Ed.2d 604 (1993).

. In fact, that was the case with White. Sun Life first denied White's claim on August 15, 2000. It then denied her appeal of that decision by letter dated March 28, 2001, leaving White with no further administrative remedies to exhaust. White, who was represented by counsel, then had more than 28 months within which to file an action in district court.