MetLife denies LTD disability benefits to multiple sclerosis woman alleging a 3 year Statue of Limitation in Washington

More than 8 years after her initial long term disability claim denial, Ms. Wise will finally have her ERISA disability case heard in a Washington Federal Court.

Statutes of limitation remain a challenge when dealing with disability insurance plans governed by the Employee Retirement Income Security Act. The reason for this stems from the fact that Congress did not attach a statute of limitations to ERISA when it wrote the law. Instead, Congress left this issue unaddressed.

A decision rendered in Seattle, Washington by the U.S. Court of Appeals, Ninth Circuit, highlights the confusion that can sometimes arise because Congress chose not to establish a Federal mandate regarding the length of time allowed before a claim becomes untimely.

Woman is wooed by verbal promises.

Nancy Wise had been an employee of GTE when she was diagnosed with multiple sclerosis. Qwest lured her into their employ and offered her an employee benefit plan that covered her MS. Two years later, GTE began actively recruiting Wise to return. She was reticent, because she feared her MS would disqualify her from a new disability insurance plan.

GTE promised that they would “bridge” her coverage back to her original employment date in 1995 if she would come back. Assured that her long-term disability benefits would be secure, Wise accepted GTE’s offer. When GTE merged with Verizon Communications (Verizon), the welfare benefit plan remained the same.

In 2000, Wise was diagnosed with breast cancer. Her multiple sclerosis caused complications. She applied for long-term disability benefits. Metropolitan Life Insurance Company (MetLife), who administered the Verizon Communications’ disability benefit plan, approved her claim. Then in 2001, after Wise’s MS specialist informed MetLife that her physical and mental symptoms were deteriorating and that she would not be able to return to work, MetLife terminated Wise’s disability benefits. The disability benefit plan administrator (Metlife) claimed that she was capable of performing the regular duties of her customary sales job.

When Wise appealed, MetLife informed her that the additional medical documentation she had provided failed to demonstrate her inability to work. The disability benefit plan administrator also informed Wise, that if she was unable to work because of her MS, MetLife considered this a pre-existing condition which was not covered by her long-term disability plan. MetLife upheld its decision to terminate her long-term disability benefits.

Wise appealed again. She received a letter dated March 14, 2002, informing her that the Verizon Claims Review Committee had reviewed her request. Like MetLife the committee had determined that her MS was a pre-existing condition which was not covered by the long-term disability plan. She was informed that the committee had determined that she could still work part-time in a sedentary position. She was told that the decision was final and that she could bring civil action under ERISA if she wished to contest the decision.

Woman files suit against disability benefit plan almost six years after denial.

Wise filed action in federal court on March 11, 2008, just five days under six years. In the state of Washington, this just met the deadline for filing a benefits recovery claim. The suit presented three claims against MetLife and the Verizon Claims Review Committee under ERISA – past and future disability benefits, removal of MetLife and Verizon as the plan fiduciaries, and additional equitable relief. The suit also presented a claim against Verizon Communications for misrepresentation and fraud in its conduct in recruiting her to leave her position with Qwest.

MetLife and Verizon filed a joint motion to dismiss all four claims, and the district court granted it. Ruling that Wise’s claim fell under a Washington three-year statute of limitations for partly oral contracts, rather than the broader six-year limitation, the Court found Wise’s claim time barred. The District Court also concluded that the claims for breach of fiduciary duty and for equitable relief duplicated the benefits-recovery claim. As such, these claims were also barred. Wise’s state law claims were preempted by ERISA, and even if they were not, they were barred by the Washington statute of limitations for fraud, misrepresentation, and negligence that the Court chose to apply.

Wise’s disability attorney did not waste any time. Her appeal of this decision was filed on time.

Court of Appeals considers statute of limitations issue.

The Court of Appeals considered this issue very carefully. First, the Court considered how many statutes of limitations could be applied to a benefits-recovery claim at one time. Because Congress has regularly created federal laws that do not include explicit statute of limitations, federal courts have commonly adopted the local time limitation as long as it has not been inconsistent with a federal law to do so. In Wilson v. Garcia, the Supreme Court established the principle that only one statute of limitations could apply to a civil rights action. The Supreme Court chose the designation of personal injury tort action for damages.

Owens v. Okure which followed four years later, found the Supreme Court settling whether applying intentional-tort statute of limitations or state residual limitations periods for tort. The Court chose the state residual limitations as the only statute of limitation to apply to § 1983 claims. This practice advanced the federal goal to render predictable decisions.

In Nikaido v. Centennial Life Ins. Co., the Court had initially determined that long-term disability plans fell under insurance code, and thus under a disability claim statute of limitations. This was reversed in Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Insurance Program, when the Court reexamined California state law. The applicable statute of limitations fell more correctly under the laws governing written contracts. Only one of these statutes could apply to long-term disability plans, not both.

The Court of Appeals applied this principle to Wise’s ERISA claim. In Flanagan v. Inland Empire Electrical Workers Pension Plan & Trust, the Court had applied Washington’s six-year statute of limitations for written contract claims. This case had also involved an ERISA benefits claim. This case had required the Court to find evidence outside of the plan documents proving that the claimant actually was a beneficiary of the plan. The case was very similar to Wise’s.

Once the court had determined that the correct statute of limitations was six years, the Court had to establish when the clock started ticking. In Wise’s case, only one of the denial letters made it clear that she had no further recourse by the Courts – the final letter sent to her on March 14, 2002. Her disability attorney filed her lawsuit on March 11, 2008 three days before the six years expired. Her suit was timely. The Court of Appeals reversed the decision of the District Court on her first claim.

The Court of Appeals did affirm the correctness of the District Court’s decision to dismiss the motion alleging that the Plan had breached its fiduciary duties. Because ERISA only allows plan participants to bring civil action against a fiduciary if it will remedy injuries to the ERISA plan, not its individual participants, Wise’s motion could not be pursued.

Wise’s third claim for equitable relief was also found to duplicate the remedies available to her under her first claim. She was also unable to pursue her fourth claim against Verizon Communications because the state laws her disability attorney pointed to were pre-empted by ERISA. If her breach of contract claim had fallen under state law, it would have been barred by Washington statutes of limitations for breach of contract.

Court of Appeals issues its decision.

Despite the fact that three out of four of the claims dismissed by the District Court were validated by the Court of Appeals, the one decision that really mattered – her ERISA benefits claim dismissal – was reversed. The Court of Appeals remanded the case for further proceedings, making it clear that each side would have to pay its own expenses for pursuing the appeal. We will hear more about this case in the future.