The U.S. Court of Appeals for the Third Circuit has joined two federal appeals courts in ruling that a denial of benefits from an employee benefit plan administrator must include notice of any contractual limitations period for seeking judicial review (Mirza v. Ins. Adm'r of Am., Inc., 3rd Cir., No. 13-3535, 8/26/15).
In an Aug. 26 opinion, the court said the appropriate remedy for an administrator's failure to explicitly spell out the statute of limitations in a benefit denial letter is to apply the relevant state statute of limitations. In this case, that meant ignoring the plan's one-year contractual limitations period and instead using a six-year statute of limitations used in New Jersey for ERISA benefit denial cases.
Writing for the court, Judge Julio M. Fuentes vacated and remanded the decision by the U.S. District Court for the District of New Jersey, which had dismissed claims brought by a doctor seeking reimbursement under a health plan that included a one-year contractual limitations period on seeking judicial review under ERISA.
Violation of DOL Regulations
Dr. Neville Mirza, operating under an assignment of benefits from one of his patients, sought payment for a back surgery that he performed on a plan participant in a health plan administered by Insurance Administrator of America Inc.
On the final denial of benefits, IAA informed Mirza of his right to seek judicial review, but failed to alert him to the fact that the plan included a one-year limitations period for claim denial actions.
Mirza brought his claim 19 months after receiving the denial letter and the district court dismissed his claims as untimely.
The appellate court reversed, finding that IAA's failure to include notice of the limitations period voided the application of the period to Mirza's claims and instead substituted the New Jersey six-year contract limitations period.
According to the court, 29 C.F.R. § 2560.503-1(g)(1), the Department of Labor's claims regulation for adverse benefit determinations, requires that the statement of a claimant's right to judicial review include notification of any contractual limitations period in the plan.
Excerpted from a story that ran in Pension & Benefits Daily (08/26/2015).
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