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Internal Limitations Period Unenforceable If Not In SPD - E.D. Mich.

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  • Internal Limitations Period Unenforceable If Not In SPD - E.D. Mich.

    Attached is an interesting decision in Brown v. Walgreens Income Protection Plan for Store Managers, et. al. Plaintiff seeks benefits under an ERISA governed plan. The actual plan document had an internal three year limitations period. Defendant argued that the plaintiff’s claim for benefits was time barred in light of the internal limitations period. Plaintiff argued that Michigan’s six year state statute for contract actions should apply in default. Plaintiff argued that the internal limitations period was not contained in the SPD that was handed out to employees so that employees could not have notice of the three year limitation. The court holds that generally internal limitation periods can be enforceable.

    Defendants argue that Plaintiff’s claims are barred by a contractual statute of limitations. A participant or beneficiary of an ERISA regulated plan may bring an action “to recover benefits due to him under the terms of his plan…” 29 U.S.C. § 1132(a)(1)(B). ERISA does not provide a statute of limitations for bringing such claims. When the plan does not contain any language describing a statute of limitations, the court must apply the most analogous state law statute of limitations. Meade v. Pension Appeals & Review Committee, 966 F.2d 190, 195 (6th Cir. 1992) When a plan does provide a statute of limitations, the court must give effect to the provision as long as it is reasonable. Morrison v. Marsh & McLennan Co., 439 F.3d 295, 301-02 (6th Cir. 2006); see also Med. Mut. of Ohio v. k. Amalia Enters., 548 F.3d 383, 390 (6th Cir. 2008) (“choosing which statute to borrow is unnecessary when the parties have contractually agreed on a limitations period and that limitations period is reasonable”); Doe v. Blue Cross & Blue Shield United, 112 F.3d 869, 875 (7th Cir. 1997) (holding that contractual “limitations if reasonable are enforceable in suits under ERISA, regardless of state law”). The Sixth Circuit has upheld a three year contractual limitation period as reasonable. See Morrison, 439 F.3d 295. Not only is a three year contractual limitations period reasonable, but a Plan may also determine when a claim accrues. See Rice v. Jefferson Pilot Fin. Ins. Co., 578 F.3d 450, 455-56 (6th Cir. 2009).


    However, the court rejects the defendant’s argument that the limitations period was not required to be contained in the SPD under the statute. The court finds that the statute requires that an SPD contain notice of grounds that may result in “disqualification, ineligibility, or denial or loss of benefits” citing 29 U.S.C. § 1022(B). The court finds that the limitations period was required to be included in the SPD based upon the foregoing.

    Here, the SPD does not contain the applicable contractual limitations period. If terms in the SPD conflict with those in the Plan documents, the SPD terms control. Edwards v. State Farm Mut. Auto. Ins. Co., 851 F.2d 134, 136 (6th Cir. 1988) (“It is of no effect to publish and distribute a plan summary booklet designed to simplify and explain a voluminous and complex document and then proclaim that any inconsistencies will be governed by the plan. Unfairness will flow to the employee for reasonably relying on the summary booklet”) (quoting McKnight v. S. Life and Health Ins. Co., 758 F.2d 1566, 1570 (11th Cir.1985)); see also Helwig v. Kelsey-Hayes Co., 93 F.3d 243, 247 (6th Cir. 1996) (noting that “it is the employer’s duty to put the employees on notice of their rights under the plan, and if they fail to adequately do so, they will be precluded from enforcing plan language which conflicts with summary description language to the detriment of their employees.”) Edwards requires more than a mere inconsistency; the SPD and the Plan must directly conflict. Valeck v. Watson Wyatt & Co., 92 Fed.Appx. 270, 272 (6th Cir. 2004). “The summary will trump the actual plan when employees could reasonably rely on the summary to their detriment, and the employer is estopped from stating rights in the summary and not honoring that statement.” Coleman v. Aegon Ins. Group, 71 F.Supp.2d 714, 718 (W.D. Ky. 1999). “An omission from the summary plan description does not, by negative implication, alter the terms of the plan itself.” Sprague v. General Motors Corp., 133 F.3d 388, 401 (6th Cir. 1998). A SPD, by its very nature, cannot include very detail of the plan which it summarizes. Id.

    However, where the SPD fails to include information that it is required to include, it appears that the SPD’s silence would directly conflict with the plan language. See Helwig, 93 F.3d at 249-50 (reasoning that “employers may not construct [summary plan descriptions] in such a manner that they mislead employees into thinking they have a right to benefits when other documents obliquely negate those rights”). ERISA provides that a SPD must, in relevant part, include “a description of the provisions providing for nonforfeitable pension benefits; circumstances which may result in disqualification, ineligibility, or denial or loss of benefits…” 29 U.S.C. § 1022(b). ERISA regulations also provide that the SPD must describe “[t]he procedures governing clams for benefits…[including] applicable time limits.” 29 C.F.R. § 2520.102-3(s).

    Defendants argue that ERISA does not require contractual limitation periods to be included in the SPD, but requires Defendants to include a procedure for participants to obtain documents, which Defendants have done. Defendants rely on Clark v. NBD Bank, NA, 3 Fed.Appx. 500 (6th Cir. 2001), for the proposition that it is not required to include its contractual limitations period in the SPD. The Court finds Defendant’s reliance on Clarkmisplaced. In Clark, the issue before the Sixth Circuit was whether equitable tolling applied. In determining that equitable tolling did not apply, the court reasoned that the plaintiff had constructive notice of the filing deadlines because the SPD explained how to request plan documents. 3 Fed.Appx. at 504-05. The court did not decide whether a SPD should include any applicable contractual limitation. The court also emphasized that the plaintiff waited almost three years after learning about the contractual limitation to file suit. Id.at 505. Here, the SPD provided to Plaintiff included different information regarding where to request the Plan documents. Plaintiff is not imputed with constructive notice when he was in possession of two separate SPDs.

    The Court finds that the SPD and the Plan language conflict. Defendant must include the contractual limitations period in its SPD because the application of such limitation “may result in disqualification, ineligibility, or denial or loss of benefits.” 29 U.S.C. § 1022(b). The contractual limitation is an integral part of the Plan and Plaintiff’s failure to comply would result in possible loss of benefits; it is reasonable that Plaintiff would rely on the SPD’s silence in determining when he could file a cause of action. The contractual limitation is an essential part of the Plan and must be included in the SPD. Given that the language in the SPD and Plan conflict, the SPD language controls. The SPD does not include a contractual limitation period so the most analogous state statute of limitations would apply.


    A copy of the decision is attached.
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