Jordan Altura and Dawn Valentine recently secured an affirmation of a summary judgment decision from the Ninth Circuit Court. Mr. Altura and Ms. Valentine argued strenuously in favor of the enforceability of the contractual limitations provision, asserting that under federal law, an insurer does not waive the right to assert a contractual limitations provision by not including it in the denial letters and that, in any case, a limitation period that has already run cannot be waived. The Ninth Circuit agreed.
In Upadhyay v. Aetna Life Ins. Co., 2014 U.S. Dist. LEXIS 5982 (N.D. Cal. January 16, 2014), the plaintiff, Vandana Upadhyay, sought long term disability benefits under an ERISA group plan issued to the plaintiff's former employer and underwritten by Aetna.
In December 2010, over three years after Plaintiff allegedly became disabled, she submitted a claim for long term disability benefits. Aetna denied the claim as untimely and because the Plaintiff had not established that she was disabled.
Ms. Upadhyay filed suit and Aetna responded with a summary judgment motion based, in part, on its affirmative defense that the plaintiff's suit was barred as untimely under the long term disability plan's contractual limitations provision which required that any lawsuit be filed within three years of the deadline for filing claims. Ms. Upadhyay unsuccessfully argued, in part, that the insurer had waived its right to rely on the contractual limitation because it was not referenced in the letters denying her claim. The Court granted the insurer’s motion, holding that the contractual limitation provision applied to render the Plaintiff’s lawsuit untimely.
Ms. Upadhyay appealed and the Ninth Circuit affirmed the District Court’s judgment. The Circuit Court held that Ms. Upadhyay’s lawsuit was untimely under the Plan’s contractual limitations period and that the insurer had not waived its contractual limitations defense despite the fact that it had not referenced the provision in its denial letters. The Court found that the insurer could not have waived its contractual limitations defense because the limitations period had already run when the denial letters were sent.
The Ninth Circuit also confirmed that it was of no consequence that the Plan’s contractual limitations period ran before Ms. Upadhyay submitted her application for benefits.
The Ninth Circuit rejected Ms. Upadhyay’s suggestion that the insurer’s contractual limitations defense failed as an “impermissible attempt to circumvent” California’s notice-prejudice rule. The Court explained that Ms. Upadhyay had not cited any authority requiring prejudice in order to prevail on a limitations defense.
To read the full text of the Ninth Circuit's decision, please click here.