Third Circuit Requires Insurers to Expressly State the Plan Limitation Period for Bringing Suit

In Mirza v. Insurance Administrator of America, Inc., 800 F.3d 129 (3d Cir. 2015), the Court of Appeals for the Third Circuit followed the First and Sixth Circuits in requiring benefit denial letters to include a notification of a plan limitation period for bringing suit.  See Ortega Candelaria v. Orthobiologics LLC, 661 F.3d 675 (1^st Cir. 2011); Moyer v. Metro Life Ins. Co., 762 F3d 503 (6^th Cir. 2014).

Mirza concerns the denial of benefits, which were assigned to Dr. Neville Mirza by a patient upon whom he had performed surgery.  The patient was a participant in her employer’s ERISA-governed welfare benefits plan, which was administered by Insurance Administrator of America.  Insurance Administrator of America denied Dr. Mirza’s claim alleging that the procedure performed was “investigational.”  Dr. Mirza filed a timely appeal, which was likewise denied by Insurance Administrators of America.  In its decision letter, Insurance Administrator of America advised Dr. Mirza of his right to bring suit under ERISA § 502(a)(1)(B).  Approximately 19 months after the letter denying his appeal, Dr. Mirza filed suit.

The District Court of New Jersey granted summary judgment on behalf Insurance Administrator of America on the grounds that Dr. Mirza filed suit beyond the one-year statute of limitations contained in the plan.  On appeal, the Third Circuit vacated the lower court’s order finding that the failure to include the judicial review time limits in the adverse benefit determination letter renders the letter not in substantial compliance with ERISA regulation governing claims procedures. Subsection (g) of the applicable ERISA regulations, state that the plan administrator shall provide a claimant with written notification of any adverse benefit determination and in those written notifications, the administrator shall set forth a “description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under section 502(a) of the Act following an adverse benefit determination.” 29 C.F.R. § 2560.503–1(g)(1)(iv). The Third Circuit determined that if the description of the review procedures must “includ[e]” a statement concerning civil actions, then civil actions are logically one of the review procedures envisioned by the Department of Labor and as with any other review procedure, the administrator must disclose the plan’s applicable time limits.  The Third Circuit abrogated the plan’s one-year limitation and applied the most analogous state law limitation period, which was the New Jersey six-year breach of contract limitation period.  See N.J. Stat. Ann. § 2A:14–1.