ERISA plan fiduciaries sometimes find themselves in litigation defending the interpretation or legality of plan terms that were applied years, if not decades, earlier to calculate a participant's benefits. How is it that a participant, who has been receiving his or her benefits for years, could one day simply decide to challenge the calculation of his benefits without any regard to the applicable statute of limitations or the fact that he or she sat on his or her rights for years? The answer lies in the fact that although it is well-established that courts apply the most analogous state statute of limitations to claims of this nature (generally the period applicable to breach of contract actions), there has been a lack of clarity as to when such claims accrue, i.e., when the statute of limitations is triggered. Although most courts have held that a participant's claim for benefits accrues under ERISA § 502(a)(1)(B)1 upon "a clear repudiation by the plan that is known, or should be known, to the plaintiff — regardless of whether the plaintiff has filed a formal application for benefits,"2 there has been a lack of clarity in the courts' rulings on how the statute of limitations may be triggered short of a formal benefit claim denial. The U.S. Court of Appeals for the Second Circuit has now gone a long way toward addressing this issue. In Novella v. Westchester County, the Second Circuit held that the statute of limitations for a claim under Section 502(a)(1)(B)3 of ERISA based on a miscalculation of benefits will start to run "when there is enough information available to the pensioner to assure that he knows or reasonably should know of the miscalculation."4 In so ruling, the Court observed that receipt of a lower pension payment was not in this instance enough to put a pensioner on notice of a miscalculation, but that actual notice to a pensioner of the method used to calculate his pension would put him on notice. The Court observed that this rule may require a claimant-by-claimant factual inquiry into each pensioner's accrual date and that the need for such inquiries very well may limit the availability of class actions in this type of litigation.
The District Court's Decisions
The Second Circuit's Decision
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