District Court Rejects Installment Theory Of Claim Accrual in Action for LTD Benefits

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Sept. 16 --A long-term disability benefit plan participant failed to convince the U.S. District Court for the District of Massachusetts Sept. 11 that his action for underpaid benefits against Metropolitan Life Insurance Co. was timely under an “installment contract” theory of claim accrual (Riley v. Metro. Life Ins. Co., 2013 BL 242316, D. Mass., No. 1:12-cv-10531-DPW, 9/11/13).

The participant alleged that MetLife erred in calculating his long-term disability benefits and owed him back benefits that had been underpaid. Although MetLife made this calculation in 2005, the participant argued that his 2012 lawsuit was timely under Massachusetts' six-year limitations period, because each underpayment of benefits constituted a separate violation with a separate limitations period.

Judge Douglas P. Woodlock rejected this theory and awarded summary judgment to MetLife. Woodlock said that although the U.S. Court of Appeals for the First Circuit hadn't squarely addressed this issue, “federal circuit courts have uniformly moved away from an 'installment contract' approach to accrual” in actions for unpaid benefits under Section 502(a) of the Employee Retirement Income Security Act.

Litigation History

Robert Riley worked for MetLife until his depression and chronic pain caused him to stop working in February 2000. After intermittently working and receiving short-term disability benefits for a few years, he began receiving long-term disability benefits in March 2005.

Riley disputed MetLife's calculation of his long-term disability benefits and filed a lawsuit in Massachusetts state court in February 2007. That action was moved to federal court and ultimately dismissed as preempted by ERISA. A second action was dismissed in January 2012, and Riley filed the instant action in March 2012, bringing malpractice claims against his former attorneys and again seeking unpaid disability benefits from MetLife.

MetLife moved for summary judgment, arguing that Riley's claim for benefits was time-barred by Massachusetts' six-year statute of limitations for contractual breaches. Riley argued that his claim “was akin to one for breach of an installment contract, whereby each underpayment is an independent breach giving rise to a new cause of action and subject to a new statute of limitations.”

Installment Theory Rejected

According to the district court, the U.S. Court of Appeals for the First Circuit “has not provided complete guidance as to the propriety of using an 'installment contract' approach in actions to recover underpayments on an ERISA benefits plan.” MetLife pointed to Edes v. Verizon Commc'ns Inc., 417 F.3d 133, 35 EBC 1577 (1st Cir. 2005) (149 PBD, 8/4/05; 32 BPR 1724, 8/9/05), but the court said that that case was of “limited relevance,” because it involved a claim of benefit interference under ERISA Section 510 rather than a claim for benefits under ERISA Section 502(a)(1)(B).

Finding no binding First Circuit authority, the district court looked to other federal circuit courts, which the district court said “have uniformly moved away from an 'installment contract' approach to accrual where the plaintiff seeks to correct a miscalculation and recover unpaid benefits under an ERISA plan.”

Given this, the court declined to adopt Riley's installment contract approach and instead concluded that Riley “had a single cause of action that accrued in 2005, when he should have known that MetLife had clearly repudiated his entitlement to a greater amount of long-term disability benefits.” According to the court, “the repudiation by miscalculation, rather than the series of resulting underpayments, better captures the wrong that Riley seeks to redress.” Further, the court said, allowing an installment method of claim accrual would create a limitations period that's “indefinite” with respect to “the passage of time between the decision setting the amount of underpayments and the commencement of litigation to challenge that decision.”

The court granted MetLife's motion for summary judgment, agreeing that Riley's claim was time-barred. In so concluding, the court rejected Riley's request for equitable tolling of the limitations period, saying that “Riley's allegations about the behavior of his prior counsel are troubling, but do not present the extraordinary circumstances that might justify equitable tolling against MetLife.”

Riley was represented by Valeriano Diviacchi of Diviacchi Law Office, Boston. MetLife was represented by James F. Kavanaugh Jr. and Johanna L. Matloff of Conn, Kavanaugh, Rosenthal, Peisch & Ford, Boston.


The full text of the opinion is at http://www.bloomberglaw.com/public/document/Riley_v_Metropolitan_Life_Ins_Co_et_al_Docket_No_112cv10531_D_Mas.