08-1611-cv
Burke v. PriceWaterHouseCoopers LLP


                          UNITED STATES COURT OF APPEALS

                                FOR THE SECOND CIRCUIT

                                      ________________

                                      August Term, 2008

(Argued: April 30, 2009                                                    Decided: July 9, 2009)

                                    Docket No. 08-1611-cv

                                     __________________

                                    PATRICIA A. BURKE,

                                                    Plaintiff-Appellant,

                                               v.

                           PRICEWATERHOUSECOOPERS LLP
                            LONG TERM DISABILITY PLAN,
                          THE HARTFORD LIFE AND ACCIDENT
                               INSURANCE COMPANY,

                                                    Defendants-Appellees.

                                     _________________

B e f o r e:

               B.D. PARKER, WESLEY, Circuit Judges, and MURTHA, District Judge.*

_________________________
        *
          The Honorable J. Garvan Murtha, United States District Judge, District of Vermont,
sitting by designation.




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                                   _____________________

       Appeal from the judgment of the United States District Court for the Southern District of
New York (Chin, J.) entered on March 6, 2008, dismissing plaintiff’s complaint brought pursuant
to 29 U.S.C. § 1132, finding the claim time-barred. Affirmed.


                                               STEPHANE M. MONTAS, DeHaan Busse, LLP,
                                               Hauppauge, N.Y., for Plaintiff-Appellant.

                                           MICHAEL H. BERNSTEIN (John T. Seybert, of
                                           counsel), Sedgwick Detert Moran & Arnold, LLP,
                                           New York, N.Y., for Defendants-Appellees.
                                   ______________________

PER CURIAM:

       Plaintiff-Appellant Patricia Burke appeals from a Judgment entered March 6, 2008 in the

United States District Court for the Southern District of New York (Chin, J.), dismissing with

prejudice her ERISA claim against PricewaterhouseCoopers LLP (“PwC”) Long Term Disability

Plan and the Hartford Life and Accident Insurance Company (“Hartford”) (collectively,

“Defendants”). For the reasons stated below, we affirm the district court’s dismissal of Burke’s

29 U.S.C. § 1132 claim because it is time-barred under the written terms of the plan.

       In June 2002, following knee surgery, Burke, a former PwC employee, applied for short-

term disability benefits under the PwC Health and Welfare Benefits Plan (the “Plan”). She was

granted and received benefits until they were exhausted. On September 17, 2002, Burke applied

for long-term disability (“LTD”) benefits which were approved to commence at the expiration of

her short-term benefits on October 20, 2002.

       On March 28, 2003, Hartford, the Plan administrator, requested Proof of Loss, including

an evaluation to be completed by her doctor. The Plan required Proof of Loss be provided within



                                                 2
thirty days of the request. Burke’s doctor submitted the evaluation on April 25, 2003. Hartford

requested further information be submitted by May 5, 2003, because it viewed the doctor’s

conclusions that Burke was permanently disabled, but that she could work for eight hours per day

as contradictory. When Hartford did not receive a response by May 12, 2003, it notified Burke

her LTD benefits were terminated as of April 30, 2003 because “the weight of medical evidence”

did not support continuing the benefits. On June 10, 2003, Burke appealed the termination and

submitted additional information. Hartford denied the appeal on October 1, 2003 and informed

Burke she could bring a civil action.

       On September 25, 2006, Burke filed a suit in federal court challenging the termination of

her LTD benefits. 29 U.S.C. § 1132(a)(1)(B) (creating a cause of action for a plan beneficiary to

recover benefits due under an employee benefit plan). The district court held a summary trial on

a stipulated administrative record. Judge Chin dismissed Burke’s claim as time-barred under the

Plan in a well-reasoned Memorandum Decision dated February 29, 2008. Burke v.

PricewaterhouseCoopers LLP, Long Term Disability Plan, 537 F. Supp. 2d 546 (S.D.N.Y. 2008).

       We review the district court’s judgment de novo because the sole issue on appeal is a

question of law; the facts are undisputed. Grace v. Corbis-Sygma, 487 F.3d 113, 118 (2d Cir.

2007) (stating that conclusions of law are reviewed de novo). Burke’s appeal hinges on whether

the applicable limitations period began to run before she could bring a § 1132 claim. If yes, her

appeal is untimely; if no, her appeal is timely.

       The starting point is the applicable limitations period. The Employee Retirement Income

Security Act of 1974 (ERISA), codified at 29 U.S.C. §§ 1001-1461, does not prescribe a

limitations period for 29 U.S.C. § 1132 actions, the section under which Burke brought her


                                                   3
claim. See Miles v. N.Y. State Teamsters Conference Pension & Ret. Fund Employee Pension

Benefit Plan, 698 F.2d 593, 598 (2d Cir. 1983). Therefore, the applicable limitations period is

“that specified in the most nearly analogous state limitations statute.” Id. Here, New York’s six-

year limitations period for contract actions, N.Y. C.P.L.R. 213, applies as it is most analogous to

§ 1132 actions. Miles, 698 F.2d at 598. New York permits contracting parties to shorten a

limitations period, however, if the agreement is memorialized in writing. N.Y. C.P.L.R. 201. In

this case, the three-year limitations period in the Plan controls, a conclusion the parties do not

dispute.1

       District courts in this Circuit have used two methods to determine when an ERISA

§ 1132 claim accrues when the policy contract contains a limitations provision2: (1) when

benefits are initially denied, Patterson-Priori v. Unum Life Ins. Co. of Am., 846 F. Supp. 1102,

1108 (E.D.N.Y. 1994), or (2) when administrative remedies have been exhausted, Mitchell v.

Shearson Lehman Bros., No. 97 CIV. 0526, 1997 WL 277381, at *3 (S.D.N.Y. May 27, 1997).

Under Patterson-Priori, Burke’s claim “accrued” on May 12, 2003. Since she filed this action on

September 25, 2006, her suit is untimely under this standard. If we were to apply the Mitchell


       1
         Significantly, this three-year limitations period is longer than the period provided under
N.Y. Ins. Law § 3221, which requires group health insurance policies to state “no action at law or
in equity shall be brought to recover on the policy prior to the expiration of sixty days after proof
of loss has been filed in accordance with the requirements of the policy and that no such action
shall be brought after the expiration of two years following the time such proof of loss is required
by the policy.” Id. § 3221(a)(14). The Plan’s limitations period is permitted because it is “more
favorable” than the statute requires. Id. § 3221(a).
       2
        The Miles Court addressed when an ERISA cause of action accrues but the policy
contract at issue did not contain a limitations period. See Miles, 698 F.2d at 598 (holding an
ERISA cause of action begins to accrue “when there has been a repudiation by the fiduciary
which is clear and made known to the beneficiar[y]”) (internal quotation marks and citation
omitted).

                                                  4
standard, by contrast, we would deem Burke’s claim to have “accrued” on October 1, 2003 --

when her appeal was denied -- and her suit would be timely. Judge Chin did not reach the issue

of the unresolved accrual date for § 1132 actions, Burke, 537 F. Supp. 2d at 549 n.2, and we have

previously declined to do so as well, see Veltri v. Bldg. Serv. 32B-J Pension Fund, 393 F.3d 318,

325 (2d Cir. 2004).

       Here, without reference to an accrual date, the Plan’s limitations period prohibits a

claimant from bringing legal action more than “three years after the time written Proof of Loss is

required to be furnished.” Burke, 537 F. Supp. 2d. at 547 (internal quotation marks omitted).

New York law permits the Plan to begin the limitations period before a plan beneficiary can

bring suit by permitting parties to alter “the time within which an action must be commenced.”

N.Y. C.P.L.R. 203(a). The rule further provides: “The time within which an action must be

commenced, except as otherwise expressly prescribed, shall be computed from the time the cause

of action accrued to the time the claim is interposed.” Id. (emphasis added).

       The Supreme Court has stated “it is theoretically possible for a statute to create a cause of

action that accrues at one time for the purpose of calculating when the statute of limitations

begins to run, but at another time for the purpose of bringing suit.” Reiter v. Cooper, 507 U.S.

258, 267 (1993). Though in that case the Court did not “infer such an odd result in the absence

of any such indication in the statute,” id., here, as allowed under New York law, the Plan

specifies the limitations period will begin to run at a different time than when a claimant could

bring a federal action. Therefore, there is reason to “infer the odd result” that the limitations

period began to run prior to the time Burke could file suit in federal court. Because an ERISA




                                                  5
action may not be brought in federal court until administrative remedies are exhausted,3

enforcing a policy-prescribed limitations period that runs from a time different than when the

cause of action accrued could result in a shortening of the effective limitations period.4

       Defendants assert that the Plan “expressly prescribes” the limitations period will

commence thirty days after proof of loss is due, thereby altering the general rule that a limitations

period runs from the date a cause of action accrues. Their assertion is in direct contradiction with

Mitchell, where the court held the limitations period did not begin to run until plaintiff’s final

appeal was denied despite a contract term identical to the one at issue here. Mitchell, 1997 WL

277381, at * 6. The Mitchell court was motivated by fairness concerns, noting that if a

limitations period began before a plaintiff had exhausted administrative remedies through the

plan, which consequently would prevent her from bringing an action in court, the “result would

be unfair because a plaintiff would be deprived of the full benefit of the limitations period.”

Id. at *5. More worrisome was the possibility that an “insurer [could] simply bury a denial of

coverage and wait for the statute of limitations to run.” Id. at *2 (internal quotation marks

omitted).

       Judge Chin distinguished Mitchell and declined to follow its holding because the

U.S. Department of Labor (DOL) enacted regulations applicable to benefit claims made under


       3
         ERISA does not contain an explicit exhaustion of remedies requirement, but this Circuit
has inferred such a requirement. See Kennedy v. Empire Blue Cross & Blue Shield, 989 F.2d
588, 594 (2d Cir. 1993).
       4
         Burke fails to counter the argument that “[a]bsent a finding of unconscionability . . . , it
would be anomalous . . . to allow [a] plaintiff to maintain an action to recover a benefit which
was created by and exists solely because of the [terms] of the Plan, while at the same time to
deny effect to the conditions those same [terms] place upon receipt of that benefit.” Patterson-
Priori, 846 F. Supp. at 1105.

                                                  6
ERISA plans after January 1, 2002, which include deadlines requiring plan administrators to

conclude appeals in a timely manner. Burke, 537 F. Supp. 2d at 550-51. The regulations require

a plan administrator to decide an initial claim within 45 days of receipt, with two 30-day

extensions allowed. 29 C.F.R. § 2560.503-1(f)(3). If the claim is denied, the claimant has

180 days to appeal. Id. § 2560.503-1(h)(3)(i). The plan administrator must decide the appeal

within 45 days, with one 45-day extension allowed. Id. § 2560.503-1(i)(3). Under the

DOL timeline, “a claimant would still have nearly two years to bring legal action under the

Plan’s limitations provision.” Burke, 537 F. Supp. 2d at 551. If the plan administrator misses

any of the deadlines, the claim is deemed denied with administrative remedies exhausted thereby

permitting a claimant to immediately bring an action in federal court. See Nichols v. Prudential

Ins. Co. of Am., 406 F.3d 98, 106-07 (2d Cir. 2005). Moreover, once a deemed denied claim is

in federal court, it is not subject to a deferential review, but rather to de novo review. Id. at 109.

Judge Chin found that, in light of these regulations, the fairness concerns raised in Mitchell were

no longer a factor. Burke, 537 F. Supp. 2d at 550-51.

       This Circuit has not addressed the implications of the DOL regulations on the

enforceability of a policy-prescribed limitations period that begins when proof of loss is due.

See Burke, 537 F. Supp. 2d at 551. Judge Chin reasoned this Circuit’s “strict adherence to the

DOL regulations thus attenuates the [Mitchell court’s] reasoning.” Id. We agree. The time

remaining after the administrative appeal process has run its course under the DOL regulations,

as well as the protections provided should the plan administrator be dilatory, support enforcing

the contractual limitations provision in this case.




                                                   7
       Finally, because we apply rules of contract law to ERISA plans, Lifson v. INA Life Ins.

Co. of N.Y., 333 F.3d 349, 353 (2d Cir. 2003), a court must not “rewrite, under the guise of

interpretation, a term of the contract when the term is clear and unambiguous,” Cruden v. Bank

of N.Y., 957 F.2d 961, 976 (2d Cir. 1992), as is the policy-prescribed limitations period at issue

here. The parties, specifically the plan administrator, can anticipate suit will be brought within

the limitations period -- an expectation based on a term in Burke’s plan.

       We join the Fifth, Sixth, Seventh, and Eighth Circuits in upholding written plan terms

including limitations periods which may begin to run before a claimant can bring legal action.

See Abena v. Metro. Life Ins. Co., 544 F.3d 880 (7th Cir. 2008); Harris Methodist Fort Worth v.

Sales Support Servs. Inc. Employee Health Care Plan, 426 F.3d 330 (5th Cir. 2005); Clark v.

NBD Bank, N.A., 3 F. App’x 500 (6th Cir. 2001); Blaske v. UNUM Life Ins. Co. of Am.,

131 F.3d 763 (8th Cir. 1997). Further, the vast majority of states, including New York, require

insurance contracts to include the proof of loss limitations language such as that at issue here.5


       5
         Recently, the Fourth Circuit refused to enforce a policy-prescribed limitations period that
would begin to run before a claimant may bring suit. White v. Sun Life Assurance Co. of Can.,
488 F.3d 240, 247 (4th Cir. 2007). The White court’s concern, as in Mitchell, was the possibility
a plan administrator would use the administrative process to “undermine[] and potentially
eliminate[] the ERISA civil right of action.” Id. The Fourth Circuit considered the DOL
regulations but concluded, depending on the plan limitations period, a plan administrator could
“eat up the entire limitations period.” Id. at 251. In light of a court’s authority to determine the
reasonableness of a policy-prescribed limitations period, however, and its authority to toll that
period should the facts of a given case require such a result, that possibility does not trouble us.
         The Fourth Circuit was convinced a “reasonableness” fact-dependant standard is
unworkable as it would “run counter to the values of certainty and predictability . . . of most
accrual and limitations rules,” and “be particularly incompatible with ERISA, given its written
plan requirement.” White, 488 F.3d at 250. Our holding enforces the written plan requirement
in its entirety. Contrary to the Fourth Circuit’s position, enforcing a policy-prescribed limitations
period as written, including the date upon which it will begin to run, will provide clear notice to
plan participants of the time in which they must bring suit: for example, in this case, three years
from the date Burke was required to provide Defendants with Proof of Loss.

                                                  8
See Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Ins. Program, 222 F.3d 643,

647 n.5 (9th Cir. 2000) (listing statutes).

       Burke had ample time within which to bring her claim: following exhaustion of her

administrative appeal, two years and five months of the limitations period remained. We hold

the district court was correct to enforce the policy-prescribed limitations period in its entirety,

including its prescribed start date, and to dismiss Burke’s claim as time-barred because it was

brought after the expiration of the limitations period. Under the terms of the Plan, Burke’s claim

was required to be filed by April 27, 2006 -- three years from the date proof of loss was due.

Accordingly, her filing on September 25, 2006 was late by almost five months.

       For the foregoing reasons, the judgment of the district court dismissing Burke’s 29 U.S.C.

§ 1132 claim is AFFIRMED.




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