Court Opinion

ID: 9846318
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:39:11.159686+00
Date Added: 2024-06-11T09:19:27.148022
License: Public Domain

*909PREGERSON, Circuit Judge,
dissenting:
I respectfully dissent. I do not think that an average plan participant could successfully navigate through Raytheon’s labyrinthine Summary Plan Description. In my view, the Summary Plan Description bounces a reader between important provisions in the Disability and Administrative chapters in a way that makes it all too easy to miss the one-year deadline for filing a claim under ERISA in federal court. First, I believe that the Summary Plan Description at issue does not meet the statutory and regulatory requirements governing employee benefit plan disclosures. Those disclosures are required to be “written in a manner calculated, to be understood by the average plan participant.” 29 U.S.C. § 1022(a) (emphasis added). Second, even if those statutory and regulatory requirements were met, we have already applied the doctrine of reasonable expectations to self-funded ERISA plans, so I would hold that the one-year deadline here is unenforceable because it was not set forth in a clear, plain and conspicuous statement in the plan.1
I.
The majority opinion holds that the placement and display of the one-year deadline meets the statutory and regulatory requirements provided by ERISA and ERISA’s implementing regulations. I disagree.
A summary plan description must be “written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan.” 29 U.S.C. § 1022(a). Regulations also state that:
The format of the summary plan description must not have the effect [of] misleading, misinforming or failing to inform participants and beneficiaries. Any description of exception, limitations, reductions, and other restrictions of plan benefits shall not be minimized, rendered obscure or otherwise made to appear unimportant. Such exceptions, limitations, reductions, or restrictions of plan benefits shall be described or summarized in a manner not less prominent than the style, captions, printing type, and prominence used to describe or summarize plan benefits. The advantages and disadvantages of the plan shall be presented without either exaggerating the benefits or minimizing the limitations.
29 C.F.R. § 2520.102-2(b).
In concluding that the Summary Plan Description satisfies the statutory and regulatory requirements stated above, the majority opinion determines that a reasonable plan participant applying for disability benefits would be expected to read, in its entirety, the Disability chapter of the Summary Plan Description. Because the one-year deadline is placed within the Disability chapter and located at the end of that chapter, the majority opinion determines that notice of the one-year deadline was sufficient. The majority opinion also concludes that the one-year deadline is written in a manner calculated to be understood by the average plan participant. I cannot agree with the majority opinion’s conclusions.
If a reasonable participant were to read the entire Disability chapter of the Sum*910mary Plan Description, the “Claims Appeal Procedure” subsection of the Disability chapter would first notify her that “[t]he procedure to be followed to appeal a denied claim is explained in the Administrative section.” It is true that the next sentence in the Disability chapter’s “Claims Appeal Procedure” subsection states that “any action at law or in equity must be commenced within one year of the denial of the appeal from an initial claim denial, regardless of any state or federal statutes establishing provisions relating to limitations of actions.” Even assuming that the majority opinion is correct when it states that this sentence is written in a manner calculated to be understood by the average plan participant and not minimized,2 this sentence, which makes no mention of ERISA, is of limited use. For one thing, the reader would not yet know that she has a right under ERISA to file suit in state or federal court if her claim for benefits is denied, because that crucial piece of information can only be found in the Administrative chapter. In fact, the reader would not yet know the appeal procedure at all, because appeal procedures are explained later, in the Administrative chapter.
Once she found the Administrative chapter of the Summary Plan Description, there is a subsection titled ‘Your Right to Appeal a Denied Claim.” This subsection deals with internal, administrative claims procedures and would not alert the reader to her right to file an action in federal court if her appeal is denied.3
In sum, the Administrative chapter is the only place a plan participant would definitively learn that she has the right *911under ERISA to file suit in court if her claim for benefits is denied by the plan administrator. But the Disability section is the only place she would learn that there is a one-year statute of limitations on filing an “action at law or in equity.” The plan’s one-year limitation only becomes clear after a coordinated reading of the two passages, bouncing a lay reader back and forth in a way that obscures the importance of the one-year filing deadline. I would hold that this plan does not satisfy the statutory and regulatory requirements governing Summary Plan Descriptions because it is not “written in a manner calculated to be understood by the average plan participant.” 29 U.S.C. § 1022(a).
II.
The majority opinion also hesitates to apply the doctrine of reasonable expectations in this case, and finds crucial the distinction between a self-funded plan (the kind of plan at issue here) and an insured plan. It concludes that our case law is unclear as to whether the doctrine of reasonable expectations can be applied to a self-funded plan. Because we have already applied the doctrine of reasonable expectations to a self-funded plan in Winters v. Costco Wholesale Corp., 49 F.3d 550 (9th Cir.1995), I see no reason why we would not do so here.
In Saltarelli v. Bob Baker Group Medical Trust, 35 F.3d 382, 387 (9th Cir.1994), we “adopt[ed] the doctrine of reasonable expectations as a principle of the uniform federal common law informing interpretation of ERISA-governed insurance contracts.” In that case, the plan administrator “chose to bury one of the plan’s most significant provisions amidst definitions, rather than forthrightly stating the preexisting conditions exclusion in the operative clauses of the plan description.” Id. at 385. We held that the district court correctly found “that the lack of a clear, plain and conspicuous statement of the exclusion” rendered the exclusion provision unenforceable. Id. at 386.
Later, in Winters, we applied the reasonable expectations doctrine in a case involving a self-funded ERISA health benefits plan, such as the plan at issue in this case. 49 F.3d at 555. In Winters we applied the doctrine and determined in a reasoned and thoughtful discussion that the petitioner had no reasonable expectation of coverage. See id. at 554-55 (describing the exclusionary clauses in the summary plan description and observing that there was “no evidence in the record upon which a reasonable trier of fact could find an objective, reasonable expectation of coverage”).
Here, the plan administrators allotted Scharff one-quarter of the amount of time she would otherwise have had to file a complaint in federal court,4 but failed to announce this drastic change in a clear, plain and conspicuous statement. The one-year deadline was buried in the confusing Summary Plan Description. Even if this plan satisfied the statutory and regulatory disclosure requirements, I would hold that the doctrine of reasonable expectations, as articulated in Saltarelli and Winters, should apply to prevent Scharff s *912claim from being dismissed for failure to meet the one-year statute of limitations.
III.
If one thing is clear, it’s that this plan is confusing. ERISA declares that “owing to the lack of employee information and adequate safeguards concerning [the operation of employee benefit plans], it is desirable in the interests of employees and their beneficiaries ... that disclosure be made and safeguards be provided with respect to the establishment, operation, and administration of such plans[.]” 29 U.S.C. § 1001(a). Raytheon’s Summary Plan Description does not provide the required safeguards either under ERISA or under the doctrine of reasonable expectations. I respectfully dissent.

. We have never addressed whether a contractual provision may validly shorten the limitations period for bringing an ERISA claim, as was done here. Scharff does not object to the one-year statute of limitations on that ground, and I do not address that argument here.

. While Scharff has not argued that the language of the plan is unclear, U.S. District Court Judge David C. Bury of the District of Arizona, reviewing this same Raytheon Summary Plan Description, noted his own difficulty in locating the one-year limitation, and further observed that "it is dubious that a lay person would understand that her limited right to file any 'action at law or in equity’ referred to her right under ERISA to 'file suit in state or federal court.’ ” Solien v. Raytheon Long Term Disability Plan, No. CV 07-456, 2008 WL 2323915 at *7 (D.Ariz. 2008).

. In its Factual and Procedural History, the majority opinion describes the Summary Plan Description's Administrative chapter as including, on the same page as the "Your Right to Appeal a Denied Claim” section, a subsection with the large, bold heading "Special Rules for Disability and Health Claims.” This subsection states:
With respect to disability and health plans, including claims arising under the medical, prescription drug, vision, dental, health care reimbursement account, and employee assistance plans, time limits for deciding and appealing claims are significantly different from those for claims under RAYSIP [Raytheon Savings and Investment Plan] and the insurance plan.
The majority opinion suggests that this subsection "cautions” the reader that there are different time limitations on filing suit under ERISA in federal court from the denial of a disability claim. But even the Raytheon Plan defendants acknowledge in their briefing that this "Special Rules for Disability and Health Claims” subsection of the plan has nothing to do with time limits on filing claims in federal court. Instead, as explained by the defendants, this subsection describes "time limits for administrative review of health and disability claims, as opposed to other types of welfare benefit claims” (emphasis added). A person who reads the sentence at the beginning of the subsection warning that disability claimants face "significantly different” time limits for deciding and appealing claims would not learn anything about the one-year statute of limitations on filing an ERISA claim in federal court. Later in the Administrative chapter is a subsection titled "Your Rights under ERISA” and within that subsection, a smaller heading that states "Enforce Your Rights.” Under that smaller heading, the reader would learn that if she “ha[s] a claim of benefits that is denied or ignored in whole or in part, [she] may file suit in a state or federal court.”

. ERISA does not contain a statute of limitations for suits brought to recover benefits, so to determine the applicable statute of limitations, we "look to the most analogous state statute of limitations.” Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Ins. Program, 222 F.3d 643 (9th Cir.2000) (citing Flanagan v. Inland Empire Elec. Workers Pension Plan, 3 F.3d 1246, 1252 (9th Cir. 1993)). In California, looking to California Code of Civil Procedure § 337, the applicable statute of limitations is four years. Wetzel, 222 F.3d at 648. In this case, the plan administrators slashed that four-year-period to one year, and buried this pivotal change within the Summary Plan Description.