Court Opinion

ID: 9492462
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:41:39.389388+00
Date Added: 2024-06-11T17:55:18.908491
License: Public Domain

GRABER, Circuit Judge,
dissenting:
The majority’s opinion creates ambiguity where none exists, ignores controlling precedent, conflicts with the precedent of all other circuits (as well as district courts) that have considered the issue, and essentially eliminates the statute of limitation for ERISA claims. Therefore, I respectfully dissent.
A. Nikaido/Williams
The majority purports to “navigate the shoals” of ambiguity resulting from this court’s decisions in Nikaido v. Centennial Life Ins. Co., 42 F.3d 557 (9th Cir.1994), and Williams v. UNUM Life Ins. Co. of Am., 113 F.3d 1108 (9th Cir.1997). See maj. op. at 1162-63. Resolving that perceived ambiguity, the majority holds that Nikaido, rather than Williams, governs this appeal. See id. at 1166-67. Every district court in our circuit to address this issue, however, including the district court here, has found those cases to be unambiguous and has interpreted them contrary to the majority’s opinion. See Densberger v. Sutter Home Winery Long Term Disability Benefits Plan, 1999 WL 592198, at *3 (N.D.Cal. Aug.2, 1999); Giles v. Reliance Standard Life Ins. Co., 1999 WL 92649, at *3-4 (N.D.Cal. Feb., 16, 1999); Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Ins. Program, CV 97-3461 LGB, at 22-24 (C.D.Cal. Aug. 27, 1997).
In Nikaido, 42 F.3d at 558, the plaintiff became disabled in 1980, and he began receiving long term disability (LTD) insurance benefits. Seven years later, the insurance company told the plaintiff that it would not continue to pay benefits, because it believed that he was no longer disabled. See id.
The LTD plan gave the plaintiff 60 days within which to submit a request for a review of that decision. See id. at 559. The plaintiff, however, did not request a review. See id. About five years later, the plaintiff brought an action against the insurance company. See id. The district court held that the action was time-barred, and the plaintiff appealed. See id.
ERISA does not provide a statute of limitations, so “federal courts look to the most closely analogous state statute of limitations.” Id. Applying that principle, the court in Nikaido first held that California Insurance Code § 10350.11 was the “most closely analogous state statute of limitations” provision. Id. Thus, the court ap*1173plied its three-year limitations period. See id.
Although state law determines the limitations period, federal law generally determines when an ERISA claim accrues. See id. The court in Nikaido, however, looked again to the California Insurance Code, because “the state statute that prescribes the limitation period defines that period by reference to a specific accrual date.” Id. Pursuant to California Insurance Code § 10350.11, a cause of action accrues at “the time written proof of loss is required to be furnished.” California Insurance Code § 10350.7 further defines that date:
Written proof of loss must be furnished to the Company, 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.
The court held that “the period for which the Company is liable” refers to each monthly disability payment. Nikaido, 42 F.3d at 560. Thus, each monthly payment has its own statute of limitations period:
Because the cause of action accrues when proof of loss is due, and proof of loss is due monthly for a continuing disability, the Plan creates a relationship akin to an installment contract. For each month that a claimant is disabled and the company fails to make payment, a separate cause of action accrues.
Id. That being so, the statute of limitations prevented the plaintiff from seeking payment only for the monthly claims that accrued more than three years before he filed the action. See id.
In this case, the district court did not rely on Nikaido. Instead, it relied on Williams. See Wetzel, CV 97-3461 LGB, at 23-24 (relying on Williams and holding that “the requirement of proof of loss accrual date discussed in Nikaido is not applicable in the instant case”) (internal quotation marks omitted).
In Williams, 113 F.3d at 1110, the plaintiff similarly became disabled and sought payments under his LTD plan. It was unclear from the record, however, whether the plaintiff had submitted proof of loss (or whether any such proof was adequate). See id. at 1110-14. This court highlighted the importance of that missing factual information:
If an insured files a claim under an ERISA plan, ERISA requires that the insurer provide adequate notice of denial in writing. UNUM’s policy required Williams to provide proof of disability to claim benefits. If such proof was provided, then UNUM was under a duty to provide notice of denial. The general federal rule would apply that an ERISA cause of action accrues either at the time benefits were actually denied or when the insured has reason to know that his claim had been denied. Alternatively, if Williams failed to provide proof of disability, then Nikaido applies and Williams’ cause of action accrued when proof of disability was due.
Id. at 1112 (emphasis added) (citations and footnote omitted). Williams thus plainly limits Nikaido to instances in which an insured fails to provide adequate proof of loss:
In Nikaido, the insured did not provide adequate proof of loss. Thus, we held that his claim accrued “after the time written proof of loss [was] required to be furnished.” Logically, this accrual provision applies only in cases where an insured failed to provide adequate proof of loss because in such cases the insurer is ordinarily under no duty to inform the insured whether his claim has been approved.
Id. (quoting Nikaido, 42 F.3d at 559) (alteration in original).
Because it was unclear in Williams whether adequate proof of loss had been provided, the court provided a two-step inquiry for the district court to employ on remand: (1) If the plaintiff had submitted adequate proof of loss, i.e., “proof that was adequate to put UNUM on notice of a claim,” then “his cause of action would be timely if filed within three years after he *1174kneiv or had reason to know UNUM had denied his claim.” Id. at 1112 (emphasis added). (2) If the plaintiff “failed to provide adequate proof of disability ..., his cause of action accrued when he was required to provide such proof,” i.e., Nikai-do ’s proof-of-loss rule would apply. Id. at 1113 (emphasis added). The policy at issue in Williams required proof of loss “within 30 days of the request for proof.” Id. Thus, proof-of-loss was required on a specific date. See id. The court, however, noted that California may require the terms of California Insurance Code § 10350.7 — the same provision at issue in Nikaido — to be read into the policy. See id. If it did, then Nikaido's continuing-loss rule would apply. See id. at 1113-14 (“If the proof of loss provision is read into the UNUM policy, Williams was required to submit proof of loss for his continuing disability within 90 days after the termination of each period for which UNUM was liable. Therefore, a new cause of action would accrue after each such period.”).1
B. The Majority’s Opinion
The majority apparently accepts the foregoing framework, including Williams ’ two-step inquiry. See maj. op. at 1165-66. Nevertheless, the majority holds that the “adequacy” of proof of loss under step one depends on when proof of loss is required. See maj. op. at 1166-67. Contrary to the majority’s opinion, the issue of when proof of loss is required arises solely under step two of Williams. See Williams, 113 F.3d at 1113 (“[I]f Williams failed to provide adequate proof of disability ..., his cause of action accrued when he was required to provide such proof.”) (emphasis added). The question under step one, however, is solely whether, substantively, adequate proof of loss was provided. See id. at 1112 (“If such proof was provided, then UNUM was under a duty to provide notice of denial.”). Moreover, “adequate proof of loss” under step one merely means “proof of disability that was adequate to put [the insurer] on notice of a claim.” Id. (emphasis added). “Adequacy” thus does not turn on when the policy requires the beneficiary to provide proof of loss, but solely on the type of information provided.2
The district court here correctly analyzed and applied the two-step inquiry from Williams:
The Ninth Circuit held [in Williams ] that there are two different potential accrual dates, depending on the facts of the case. The first potential accrual date may be termed the “reason to know of denial” accrual date. If an insured files a claim under an ERISA plan, ERISA requires the insurer provide ad*1175equate notice of denial in writing. Therefore, once an insured files a claim or provides proof of loss and there is a denial, the plan administrator is under a duty to provide notice of denial.
The second potential accrual date may be termed the “requirement of proof of loss” accrual date, and is the type of accrual date discussed in the Nikaido case. However, this type of accrual date applies only if the insured fails to file a claim or provide proof of disability.
Wetzel, CV 97-3461 LGB, at 23 (citations omitted) (emphasis added).
Neither party disputes the district court’s holding that “Plaintiff did in fact file a claim and provided proof of loss sufficient to put Defendants on notice” of his claim. Id. (emphasis added). Having determined that adequate proof of loss had been provided, the district court held that Williams’ denial-of-benefits rule applied, instead of Nikaido’s proof-of-loss rule. See id. at 23-24.
Defendants actually denied Plaintiffs claim on October 4, 1993. See id. at 23. In the circumstances, the limitations period began running from that date. Id. at 23-24. Plaintiff filed this action on May 6, 1997. See id. at 5. Pursuant to Williams, Plaintiffs action was barred by the three-year statute of limitations. See id. at 24.
Every other court has applied Williams similarly, without any hint of problem or ambiguity. For example, in Densberger, the plaintiff argued that, pursuant to Ni-kaido, “the statute of limitation for ERISA starts fresh each month that defendant denies him benefits.” 1999 WL 592198, at *3. The court summarily rejected the argument:
In Nikaido, the Ninth Circuit held that the three-year limitation period began anew each month that an insurer denied benefits to a claimant. Three years later in [Williams ] the Ninth Circuit limited the Nikaido holding to “cases where an insured failed to provide adequate proof of loss because in such cases the insurer is ordinarily under no duty to inform the insured whether his claim has been approved.” “If such proof was provided ... an ERISA cause of action accrues either at the time benefits were actually denied ... or when the insured has reason to know that his claim has been denied.”
Williams applies here. Plaintiff submitted proof of his claim by completing his application and referring defendant to the appropriate physicians. Thus, under Williams, the statute began running at least when plaintiff had reason to know that his benefits were denied.
Id. (citations omitted) (alterations in original); see also id. (“Plaintiff also argues that the documents ... never provided adequate proof of loss.... Defendant responds, correctly, that the question is whether plaintiff ‘provided proof of disability that was adequate to put [the insurer] on notice of a claim.’ Plaintiff submitted an application and referred defendant to his physicians, which would put defendant on notice that plaintiff had a claim for disability.... Thus, plaintiff has provided adequate proof of disability under Williams.”) (quoting Williams, 113 F.3d at 1112) (emphasis added) (alteration in original).
The court in Giles similarly applied Williams:
Plaintiff argues that a new cause of action accrued each month that RSL refused to pay her disability benefits, citing [Nikaido ].
The Nikaido court held that the date on which the three-year statutory period begins to run is the time written proof of loss is required to be furnished. It found that the plaintiffs plan required written proof of loss within ninety days after each monthly period of disability....
In Williams, however, the Ninth Circuit explicitly limited the holding of Ni-kaido to circumstances in which the insured failed to provide adequate proof of loss.... There, the Ninth Circuit held that if an insured provided proof that *1176was adequate to put the insurer on notice of a claim> the insured’s cause of action would be timely only if filed within three years after the insured knew or had reason to know the insurer had denied his claim ....
... [Pjlaintiff alleges that she provided proof of loss, and this Court must apply the general federal rule of accrual that plaintiffs cause of action accrued when she knew or had reason to know that RSL denied her claim for benefits.
Giles, 1999 WL 92649, at *3-4 (emphasis added).
In summary, Williams provides a clear path for courts to follow. The majority simply has declined to follow that path, apparently because it disagrees with Williams ’ limitation of Nikaido. See maj. op. at 1165 n.5 (“It is not clear that this is an accurate characterization’ of what occurred in Nikaido and was not the basis for the Nikaido court’s decision.”). Williams, however, is the law of this circuit, and a three-judge panel lacks the power to ignore or overrule a prior panel’s decision. See United States v. Gay, 967 F.2d 322, 327 (9th Cir.1992) (“As a general rule, one three-judge panel of this court cannot reconsider or overrule the decision of a prior panel.”); see also Duckor Spradling & Metzger v. Baum Trust (In re P.R.T.C., Inc.), 177 F.3d 774, 782 n. 8 (9th Cir.1999) (“A three-judge panel, however, lacks authority to overrule the decision of another panel.”).
C. Other Precedent
Contrary to the majority’s suggestion, Williams did not announce a new or revolutionary rule of law. The majority’s opinion not only conflicts with Williams, but also ignores other Ninth Circuit precedent, which has held consistently that a cause of action for recovery of benefits accrues, for statute of limitations purposes, when benefits are denied unequivocally. See Canseco v. Construction Laborers Pension Trust for S. Cal., 93 F.3d 600, 602 n. 1 (9th Cir.1996) (“We have held that a cause of action for recovery of benefits accrues at the time the benefits are denied.”); Bolton v. Construction Laborers’ Pension Trust for S. Cal., 56 F.3d 1055, 1058 (9th Cir.1995) (“Bolton’s cause of action arose in 1987 when she was denied benefits.”); Price v. Provident Life & Accident Ins. Co., 2 F.3d 986, 988 (9th Cir.1993) (“The statute of limitations was therefore not triggered until Price learned of Provident’s denial of benefits.”); Menhorn v. Firestone Tire & Rubber Co., 738 F.2d 1496, 1501 (9th Cir.1984) (“We accept the proposition that an ERISA cause of action based on a denial of benefits accrues at the time the benefits are denied.”).
The majority’s opinion also ignores a uniform body of precedent from other circuits applying the same rule: “Uniformly, courts recognize that an ERISA cause of action accrues when an application for benefits is denied.” Held v. Manufacturers Hanover Leasing Corp., 912 F.2d 1197, 1205 (10th Cir.1990) (citation and internal quotation marks omitted); see also Union Pac. R.R. Co. v. Beckham, 138 F.3d 325, 330 (8th Cir.) (“[Tjhe general rule in an ERISA action is that a cause of action accrues after a claim for benefits has been made and has been formally denied.”), cert. denied, — U.S. —, 119 S.Ct. 56, 142 L.Ed.2d 43 (1998); Cottrill v. Sparrow, Johnson & Ursillo, Inc., 100 F.3d 220, 223 (1st Cir.1996) (“Ordinarily, a cause of action under ERISA ... accrue[s] when a fiduciary denies a participant benefits.”); Stevens v. Employer-Teamsters Joint Council No. 84 Pension Fund, 979 F.2d 444, 451 (6th Cir.1992) (“An ERISA cause of action for benefits under ERISA does not arise until a claim for benefits has been made and formally denied.”); Rodriguez v. MEBA Pension Trust, 872 F.2d 69, 72 (4th Cir.1989) (“An ERISA cause of action does not accrue until a claim of benefits has been made and formally denied.”); Jenkins v. Local 705 Int’l Bhd. of Teamsters Pension Plan, 713 F.2d 247, 254 (7th Cir.1983) (“A cause of action under Section 502 of ERISA, 29 U.S.C. § 1132, arose when the trustees of the pension plan denied applicant’s benefit application.”); Paris v. Profit Sharing Plan *1177for Employees of Howard B. Wolf, Inc., 637 F.2d 357, 361 (5th Cir.1981) (“We hold that for purposes of ERISA a cause of action does not accrue until an application is denied”). I would follow this uniform body of precedent.3
D. Purpose of the Statute of Limitations
The majority’s opinion also undermines the purpose of the statute of limitations. “[Statutory limitation periods are designed to promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared.” American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 554, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974) (citation and internal quotation marks omitted). “The theory is that even if one has a just claim it is unjust not to put the adversary on notice to defend within the period of limitation and that the right to be free of stale claims in time comes to prevail over the right to prosecute them.” Id. (citation and internal quotation marks omitted); see also Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 352, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983) (stating a similar proposition).
Under the majority’s opinion, a plaintiff can file a claim 30 or more years after the defendant has formally denied the claim and the plaintiff knows of the denial. Even though “evidence [will have] been lost, memories [will have] faded, and witnesses [will have] disappeared,” the plaintiff can still pursue claims that accrued during the most recent three years. This result undermines the very purpose of having a statute of limitations and effectively eliminates such limitations for ERISA denial-of-benefit cases; I therefore DISSENT,

. The majority's opinion conflates Williams ' two separate limitations on Nikaido. First, Nikaido's proof-of-loss rule — that the statute of limitations accrues from the date on which proof of loss is required — applies only when the plaintiff fails to provide adequate proof of loss. Second, Nikaido's continuing-loss rule applies only when: (1) the plaintiff fails to provide adequate proof of loss and (2) the policy contains wording similar to Nikaido's policy (or if that wording must be incorporated by law). See Giles, 1999 WL 92649, at *4 n. 3 ("[P]laintiff ... argues that because RSL’s policy does not comply with California Insurance Code § 10350.7, Nikaido's rolling statute of limitations applies to this case. In Williams, the court indicated that where an insurer's policy violates California law, Nikai-do 's proof of loss requirement applies and the terms of California Insurance Code § 10350.7 must be read into the policy. As discussed earlier, however, the Nikaido holding only applies to cases where the insured fails to provide adequate proof of disability.”).

. The majority asserts that Cisneros v. UNUM Life Ins. Co. of America, 134 F.3d 939 (9th Cir.1998), is pertinent and that it supports the majority's reasoning. See maj. op. at 1169. However, that case turned on whether the insurer had suffered prejudice from the claimant's untimely submission of a proof of loss. See id. at 948. The court discussed Nikaido only in considering whether the claimant had in fact complied with the contractual time limits for filing a proof of loss. See id. at 943-44. Naturally, the wording of the contract is essential to answering such a question. But Cisneros does not pertain to the statute of limitations at all; accordingly, it does not advance the discussion.

. The majority cites only one circuit court case, Hofkin v. Provident Life & Accident Ins. Co., 81 F.3d 365 (3rd Cir.1996), that it contends is consistent with its approach. See maj. op. at 1171-72 n. 19. However, in Hofkin, the Third Circuit expressly rejected this court's reasoning in Nikaido, which is the very case on which the majority relies here. After discussing Nikaido and one other similar case from an intermediate appellate court in Kansas, the Third Circuit wrote: "We expressly reject and depart from this reasoning and analysis." Hofkin, 81 F.3d at 374. More importantly, however, the insurer in Hofkin never issued a final denial of benefits (which is the date that triggers the statute of limitations under the general federal rule). See id. at 368.