By Cyril Tuohy
A federal appeals court in Atlanta has ruled that terminated disability benefits amounted to repudiation of a claim and that a later “courtesy review” of the claim by the insurance carrier did not restart the statutory clock.
At first blush, Don L. Witt v. Metropolitan Life Insurance Co. and Shell Oil Long Term Disability Trust Plan would appear to be a routine settling of the start of the statute of limitations surrounding an Employee Retirement Income Security Act (ERISA) cause of action.
But in this case, there’s a twist: the defendant insurance carrier insists it issued a formal benefits-denial letter, the plaintiff maintains he never received a notice, and the benefits were never paid for as long as 12 years — a fact undisputed by both sides — before the plaintiff renewed his interest in the claim.
“This court has not addressed this situation before,” wrote U.S. Circuit Judge Frank M. Hull of the 11th U.S. Circuit Court of Appeals in Atlanta.
In Witt v. MetLife and Shell, on appeal from the U.S. District Court for the Northern District of Alabama, Witt sought to revive his benefit claim 12 years after MetLife suspended disability payments of $514 a month on May 1, 1997.
MetLife paid Witt, a former operations manager who retired from Shell in 1994, disability benefits from Dec. 29, 1995, to April 30, 1997, after Witt complained of neck, shoulder and back pain, dizziness and headaches.
But the carrier stopped further payments after Witt could not provide medical evidence for asbestosis, artery disease and high blood pressure, MetLife said in court documents.
In his suit against MetLife, Witt said the limitations period began May 4, 2012, when the company issued a “final, conclusive, and written decision denying him benefits.”
MetLife argued that the limitations period began when the company stopped making payments to Witt, effective May 1, 1997, when, the company said, Witt “knew or should have known that his claim had been denied,” the court found.
Witt, through his lawyer, said he never received the carrier’s 1997 letter terminating benefits, and that the limitations period did not start in 1997.
In a 25-page decision, Judge Hull wrote that Witt’s complaint “was untimely under the applicable statute of limitation, which began to run when he had reason to know that MetLife clearly repudiated his benefits claim.”
MetLife’s “subsequent courtesy review did not restart the statutory clock,” Judge Hull wrote.
“In order to decide this case, we simply hold that, after the 12 years of nonpayment under the facts of this case, Witt could not have reasonably believed but that his claim had been denied,” the three-judge appeals panel found.
Because Congress never specified a limitations period for a benefits claim under ERISA, the court “must apply the forum state’s statute of limitation for the most closely analogous action,” the appeals panel ruled.
In Alabama, the statute of limitations is six years. When a federal court borrows a limitations period from state law for use in implementing a federal law such as ERISA, “federal law determines the date on which that period begins,” the court said.
After notifying Witt that his benefits would end in May 1997, MetLife heard from Witt 12 years later, May 29, 2009, requesting a status update on the claim for which he had received approval but hadn’t received payment.
Over the 12-year period, Witt never challenged the termination of benefits nor did he ask MetLife about the claim, according to court documents. MetLife considered this a simple case of reviving an old claim.
When MetLife asked for supporting medical documents to substantiate illness, Witt submitted doctors’ notes from 1995, 1998, 2002, 2005, 2006 and 2010, more than a year after the insurance carrier asked for documentation.
Following a courtesy review, MetLife stuck by its decision to terminate the claim as the former Shell operations manager, despite some limitation, “has not demonstrated that beyond April 30, 1997, and thereafter, [he] was unable to perform his own job or any job due to illness or injury,” the company said.
Witt sued MetLife in June 2012 seeking “past, present, and future benefits due; attorney fees; and costs.” The court ruled in favor of the carrier and Witt appealed.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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