:: Ninth Circuit Rejects Application Of “Reasonable Expectations” Doctrine To Self Funded ERISA Plans
. . . we hold that the placement and display of the one-year statute of limitations met the statutory and regulatory requirements. Turning, then, to the final issue concerning the wording of the SPD, we hold that the placement and display of the one-year statute of limitations sufficed to meet plan participants’ reasonable expectations, assuming that the doctrine applies.
Scharf v. Raytheon (9th Cir.) No. 07-55951 (September 9, 2009)
This Ninth Circuit decision is in line with the other courts of appeal that have faced the question of “contractual” limitations periods. The Raytheon disability plans provided for a one-year statute of limitations. Having filed her claim outside this period, the plaintiff sought refuge in the doctrine of “reasonable expectations” and argument that California regulatory requirements should be incorporated into the federal common law.
The Ninth Circuit rejected both arguments, stating:
We hold that even if the doctrine of “reasonable expectations” applied here, the one-year statute of limitations met its requirements and also met the statutory and regulatory standards for disclosure. We decline to import into federal common law a California regulation requiring insurers to inform claimants expressly of statutes of limitations that may bar their claims.
The first issue was closer than it might first appear.
For one thing, the Ninth Circuit has incorporated the doctrine into the federal common law in the case of insured plans:
Plaintiff is correct in asserting that we have incorporated the reasonable expectations doctrine into ERISA federal common law when we have interpreted insured plans. In Saltarelli v. Bob Baker Group Medical Trust, 35 F.3d 382, 387 (9th Cir. 1994), we “adopt[ed] the doctrine of reasonable expectations as a principle of the uniform federal common law informing interpretation of ERISA-governed insurance contracts.”
. . .
We noted that the application of the reasonable expectations doctrine to ERISA insurance contract law was, at the time, an issue of first impression for our circuit. Id. at 386. We gave two reasons for adopting the doctrine into the federal common law: (1) “protecting the reasonable expectations of
insureds appropriately serves the federal policies underlying ERISA,” and (2) “at least thirty states ha[d] explicitly incorporated . . . the reasonable expectations doctrine into their own law, . . . demonstrat[ing] its widespread acceptance and vitality.” Id. at 386-87.
And a previous panel had assumed, in dictum, application of the doctrine in the instance of self funded plans.
After Saltarelli, we assumed, in dictum, that the reasonable expectations doctrine applied to a self-funded benefit plan. In Winters v. Costco Wholesale Corp., 49 F.3d 550 (9th Cir. 1995), the plaintiff sought reimbursement from a self-funded benefit plan for a procedure similar to in vitro fertilization. . . . We then concluded—even though the plaintiff had not argued that the reasonable expectations doctrine applied to her case—that she had “no objectively reasonable expectation of coverage” for her procedure because the SPD conspicuously exempted those types of procedures. Id. at 555.
In the case at bar, the Court escaped the horns of the dilemma by finding that the reasonable expectations doctrine did not apply, and even if it did, the plaintiff would not prevail.
What we have, then, are two opinions that are seemingly in tension with one another: Winters, which applied the reasonable expectations doctrine to a self-funded plan, at least in dictum, and Estate of Shockley, which prohibits us from expanding the doctrine beyond insured plans. As a three judge panel, we cannot overrule either decision. Ross Island Sand & Gravel Co. v. Matson (In re Complaint of Ross Island Sand & Gravel), 226 F.3d 1015, 1018 (9th Cir. 2000) (per curiam).
But we need not call for en banc consideration, nor try to harmonize the apparent conflict in our precedents. Assuming, without deciding, that the reasonable expectations doctrine applies, the SPD here met plan participants’ reasonable expectations, in addition to fulfilling the statutory and regulatory requirements.
Note - The reasonable expectations doctrine is another wrinkle in the law surrounding limitations periods in ERISA cases. The claimant, faced with requirements that administrative remedies be exhausted, must not file suit too soon. On the other hand, foreshortened limitations periods will be enforced where the plan so provides.
More On Saltarelli - At issue in Saltarelli was a pre-existing conditions exclusion that appeared in the SPD.
We noted that the plan administrator “chose to bury one of the plan’s most significant provisions amidst definitions, rather than forthrightly stating the pre-existing conditions exclusion in the operative clauses of the plan description.” We therefore held that the exclusion for pre-existing conditions “was not clear, plain, and conspicuous enough to negate layman Saltarelli’s objectively reasonable expectations of coverage.”
Statutory & Regulatory Requirements - The Raytheon opinion specifies the requirements imposed on disclosure as follows:
Our task is to determine whether the deadline was “written in a manner calculated to be understood by the average plan participant” and whether it was “sufficiently accurate and comprehensive to reasonably apprise” participants of their rights and obligations under the plan. 29 U.S.C. § 1022(a). We must also ensure that the deadline was not minimized or otherwise obscured and that the limitations provision was placed near the benefits provisions. 29 C.F.R. § 2520.102-2(b).
Duty To Inform – The second argument fell flat for reasons of uniformity in ERISA plan administration as explained in this excerpt:
To require plan administrators within the Ninth Circuit to inform participants separately of time limits already contained in the SPD, when other circuits have rejected a similar rule, would place the Ninth Circuit out of line with current federal common law and would inject a lack of uniformity into ERISA law. Moreover, large multistate employers often issue the same welfare benefit plan to cover all their employees, regardless of their locations. For these employers, a lack of uniformity among the circuits would be detrimental. In short, we decline to impose on plan administrators the additional requirements of California Code of Regulations title 10, section 2695.4(a), by adopting that rule into ERISA federal common law.
See also - :: How Long Before It Is Too Late? – ERISA Claims & Limitation of Actions By Contract; :: Court Holds Contractual Language Does Not Bar Plaintiff’s Disability Claims; :: Contractual Limitation Period Defeats Indemnification Provision Claim; :: ERISA Section 510 Claims Time Barred Under Tolle Rule; :: Fourth Circuit Holds Contractual Accrual Provision Unenforceable ; :: Health Care Provider’s 5-Year Old Claim Avoids Statute Of Limitations Defense
