Title Syed v. Hercules, Inc.
Date 2000
By Alito
Subject Misc
Contents
Page 1
100 of 238 DOCUMENTS
SAJID L. SYED, Appellant v. HERCULES INC., a Delaware corporation; HERCULES INCORPORATED INCOME PROTECTION PLAN, an employee welfare benefit plan; HERCULES INCORPORATED, Plan Administrator of Disability Plan
No. 99-5472
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
214 F.3d 155; 2000 U.S. App. LEXIS 11984; 24 Employee Benefits Cas. (BNA) 2031
January 11, 2000, Argued
May 30, 2000, Filed
SUBSEQUENT HISTORY: **1 Certiorari Denied February 20, 2001, Reported at: 2001 U.S. LEXIS 1172. Motion denied by Syed v. Hercules Inc., 2001 U.S. Dist. LEXIS 25581 (D. Del., Jan. 19, 2001)
Writ of certiorari denied Syed v. Hercules Inc., 531 U.S.
1148, 148 L. Ed. 2d 963, 121 S. Ct. 1088, 2001 U.S. LEXIS 1172 (2001)
PRIOR HISTORY: ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE. (Dist. Court No. 96-62). District Court Judge: Joseph J. Farnan, Jr., C.J.
DISPOSITION: Affirmed the District Court's grant of summary judgment as to Syed's claim under ERISA §
503, 29 U.S.C. § 1133.
CASE SUMMARY:
PROCEDURAL POSTURE: Appellant challenged the decision of the United States District Court for the District of Delaware which granted appellee summary judgment on his claims that, under ERISA, 29 U.S.C.S.
§ 1132(a)(1)(B), he was denied disability benefits, sanc- tions should have been imposed against appellee for fail- ure to provide him with the plan document, and appellee failed to give him adequate written notice of reasons for denial.
OVERVIEW: Appellant injured his back while em- ployed by appellee. After he was discharged he began receiving disability benefits. After a medical examination determined appellant could perform sedentary to light work, appellant was notified his benefits would be ter- minated. Appellant sued under ERISA alleging appellee denied disability owed him. He had requested the imposi- tion of sanctions for failure to provide him with the plan document. He also sought redress for appellee's failure to
give him adequate written notice of the reasons for the denial as required by ERISA. The district court granted summary judgment to appellee. On appeal, the court af- firmed because appellant's claim was barred under Del. Code Ann. tit. 10, § 8111 because the plan at issue was a benefit arising from work, labor, or services performed within the meaning of the statute because eligibility for the plan accrued from tenure on the job and was not an or- dinary contract claim with a longer limitations period. The district properly refused to impose sanctions and appellee complied with the statutory and regulatory requirements for notice under § 1133.
OUTCOME: Summary judgment affirmed because ap- pellant's claim was barred, as the plan at issue was a benefit arising from work, labor, or services performed; eligibility accrued from tenure on the job and thus was not an ordinary contract claim with a longer limitations period. The district properly refused to impose sanctions and appellee complied with the statutory and regulatory requirements for notice.
LexisNexis(R) Headnotes
Labor & Employment Law > Employee Retirement
Income Security Act (ERISA) > Procedures
HN1 29 U.S.C.S. § 1132(c) provides that an adminis- trator must comply with a request for information by a plan participant and imposes personal liability for failure to do so.
Governments > Legislation > Statutes of Limitations > Statutes of Limitations Generally
Labor & Employment Law > Employee Retirement
Income Security Act (ERISA) > Procedures
HN2 The Employee Retirement Income Security Act does not provide a statute of limitations for suits brought under 29 U.S.C.S. § 1132(a)(1)(B) to recover benefits.
214 F.3d 155, *; 2000 U.S. App. LEXIS 11984, **1;
24 Employee Benefits Cas. (BNA) 2031
Page 2
Governments > Legislation > Statutes of Limitations > Statutes of Limitations Generally
HN3 An appellate court exercises plenary review over a district court's choice of the applicable statute of limi- tations.
Governments > Legislation > Statutes of Limitations > Statutes of Limitations Generally
HN4 Del. Code Ann. tit. 10, § 8106 establishes a three- year statute of limitations for general actions on a promise. Governments > Legislation > Statutes of Limitations > Statutes of Limitations Generally
HN5 See Del. Code Ann. tit. 10, § 8106.
Governments > Legislation > Statutes of Limitations > Statutes of Limitations Generally
HN6 See Del. Code Ann. tit. 10, § 8111.
Governments > Legislation > Statutes of Limitations > Statutes of Limitations Generally
HN7 The selection of an appropriate statute of limita- tions is a question of federal law.
Governments > Legislation > Statutes of Limitations > Statutes of Limitations Generally
HN8 There is no reason to reject a state statute of lim- itations unless a court finds it inconsistent with national labor policy.
Labor & Employment Law > Disability & Unemployment Insurance > Disability Insurance Benefits > Coverage & Definitions
HN9 See Del. Code Ann. tit. 19, § 1109(b).
Labor & Employment Law > Employee Retirement
Income Security Act (ERISA) > Failures to Respond
HN10 29 U.S.C.S. § 1132(c) provides that a plan ad- ministrator must comply with a request for information from a plan participant within 30 days or face personal liability, at a court's discretion, of $100 a day from the date of the refusal.
Labor & Employment Law > Employee Retirement
Income Security Act (ERISA) > Reporting, Disclosure
& Notice
HN11 See 29 U.S.C.S. § 1133(1).
Labor & Employment Law > Employee Retirement
Income Security Act (ERISA) > Reporting, Disclosure
& Notice
HN12 See 29 C.F.R. § 2560.503-1(f).
Labor & Employment Law > Employee Retirement
Income Security Act (ERISA) > Reporting, Disclosure
& Notice
HN13 Where a termination letter does not comply with the statutory and regulatory requirements, the time lim- its for bringing an administrative appeal are not enforced
against a claimant. Thus, the remedy for a violation of 29
U.S.C.S. § 1133 is to remand to the plan administrator so the claimant gets the benefit of a full and fair review.
COUNSEL: John M. Stull, Esq., (Argued), Wilmington, DE, Counsel for Appellant.
Kevin R. Shannon, (Argued), Potter, Anderson & Corroon, LLP, Wilmington, DE, Counsel for Appellee.
JUDGES: Before: BECKER, Chief Judge, and ALITO and BARRY, Circuit Judges. BARRY, Circuit Judge, con- curring and dissenting.
OPINIONBY: ALITO
OPINION:
*157 OPINION OF THE COURT
ALITO, Circuit Judge:
Sajid Syed ("Syed") injured his back in January 1992, while working as a chemical operator for Hercules, Inc.
("Hercules"). Syed brought this action under ERISA §
502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), alleging that Hercules denied him disability benefits owed under the company's employee benefits plan. In addition to dam- ages, Syed requested the imposition of sanctions against Hercules for failure to provide him with the plan docu- ment pursuant to a written request, as required by **2 ERISA § 502(c), 29 U.S.C. § 1132(c). He also sought re- dress for Hercules's failure to give him adequate written notice of the reasons for the denial of his claim, as re- quired by ERISA § 503, 29 U.S.C. § 1133. Syed appeals the District Court's grant of summary judgment in favor of Hercules on all counts. We affirm.
Hercules discharged Syed on March 4, 1992, effective March 31, 1992, as part of a reduction in force. Following his termination, Syed submitted a claim for long-term dis- ability benefits under the Hercules Incorporated Income Protection Plan (the "Plan"). His claim was approved on June 18, 1993, and Syed began receiving benefits retroac- tive to April 1, 1992.
Benefits are payable under the Plan when a worker becomes totally disabled and remains disabled for six consecutive months. n1 See App. at B21. Because Syed was under 62 when he started receiving benefits, he was eligible to receive benefits for as long as he remained totally disabled, up to age 65. See id. at B22. The Plan provides two definitions of total disability, one that ap- plies for the first 24 months after the "elimination period" and another that applies thereafter. **3 The Plan states:
214 F.3d 155, *157; 2000 U.S. App. LEXIS 11984, **3;
24 Employee Benefits Cas. (BNA) 2031
Page 3
During the elimination period, normally 6 months, and the first 24 months of bene- fit payments, you are considered totally dis- abled if you are not able to perform your job. You must not engage in any work for wages or profit during this time.
After receiving 24 monthly payments, you are considered totally disabled for as long as you are not able to engage in any employ- ment for wage or profit for which you are reasonably qualified by training, education, or experience.
App. at B24.
n1 This six-month period, known as the "elim- ination period," was apparently not imposed by Provident in Syed's case. He began receiving ben- efits less than three months after his workplace ac- cident.
After paying benefits to Syed for almost two years, Provident Life and Accident Insurance Co. ("Provident"), the Claims Fiduciary under the Plan, asked Syed to un- dergo an independent medical evaluation in February
1994 to determine if he was totally disabled under the latter definition. Dr. Joson, who **4 performed the ex- amination in March 1994, reported that Syed could not do heavy work, but that he could do "sedentary to light" work. App. at A4. Because Syed would no longer qualify for benefits after the 24-month period lapsed, Provident notified Syed that his benefits would be terminated as of March 31, 1994. See id. at A6-7.
Syed appealed the decision to terminate his disabil- ity benefits to Provident's ERISA Committee, which up- held its previous decision. See App. at A19-20. Syed renewed his appeal to the ERISA Committee on July 27 and October 28, 1994, each time including updated med- ical reports. The ERISA Committee sent its final denial of benefits to Syed by letter dated November 9, 1994. On February 24, 1995, Syed requested a copy of the plan doc- ument that was effective as of the date he began receiving benefits. Hercules sent *158 him a document entitled
"Summary Plan Description" (SPD). App. at B15-32. Syed filed suit on February 6, 1996 -- one year
and eleven months after the initial denial of benefits on March 31, 1994, and one year and three months after the final letter from Provident dated November 9, 1994. Shortly thereafter, he filed a motion for summary judg- ment seeking **5 recovery of benefits under ERISA §
502(a)(1)(B), sanctions under § 502(c) for failure to pro-
duce the Plan document in response to a written request, and a remedy under § 503 for failure to provide written notice of the reasons for termination of benefits. Hercules made a cross-motion for summary judgment, claiming that Syed owed money for overpayments made under the Plan.
The District Court denied Syed's motion. As the Plan gave the Claims Fiduciary the exclusive discretion to deny claims for benefits, the District Court reviewed Syed's §
502(a)(1)(B) claim under the abuse of discretion stan- dard in accordance with Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989); see also Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 45 (3d Cir. 1993). After reviewing the medical evidence, the District Court found that there was a genuine issue as to whether Provident acted arbitrarily and capriciously in terminating Syed's medical benefits. Nonetheless, after borrowing Delaware's one-year statute of limitations applicable to claims for "other benefits aris- ing from . . . work, labor or personal services performed,"
10 **6 Del. C. § 8111, the Court granted summary judgment for Hercules on this claim.
Next, the Court dismissed Syed's § 502(c) claim.
HN1 ERISA § 502(c) provides that an administrator must comply with a request for information by a plan participant and imposes personal liability for failure to do so. Syed contended that Hercules improperly sent him the SPD, rather than the Insurance Policy, see App. at B60, in response to his request. However, the Court held that the SPD was the operative plan document for the relevant time period and therefore granted summary judgment in favor of Hercules on this count. Likewise, the Court re- fused to remand Syed's case to the plan administrator for an out-of--time administrative appeal for the alleged vi- olation of ERISA § 503, because Hercules's March 31 letter adequately set forth the reasons for denying Syed's benefits.
Syed makes four arguments on appeal. First, he con- tends that his ERISA claim for employee benefits should be governed by Delaware's three-year statute of lim- itations for contract actions, not the one-year statute for claims arising out of work, labor, or personal ser- vices performed. Second, he maintains that Hercules, as Plan Administrator, **7 should be subject to sanctions for failing to provide proper disclosure as required by ERISA § 502(c). Third, Syed argues that Hercules vi- olated ERISA § 503 both by failing to provide specific reasons for the denial of his claim and by neglecting to name any additional material or information that would have helped him perfect his claim. Finally, Syed asserts that the District Court should have exercised plenary re- view over the Claims Fiduciary's decision to deny his
214 F.3d 155, *158; 2000 U.S. App. LEXIS 11984, **7;
24 Employee Benefits Cas. (BNA) 2031
Page 4
benefits, rather than reviewing for an abuse of discre- tion, as the Plan did not grant discretion to the Claims Fiduciary to make a disability determination. Because we hold that Delaware's one-year statute of limitations gov- erns this action, we affirm the District Court's grant of summary judgment on Syed's § 502(a)(1)(B) claim with- out deciding whether Provident's decision to deny Syed's benefits was arbitrary and capricious. We likewise af- firm the District Court's dismissal of Syed's claims under ERISA §§ 502(c) and 503.
ERISA § 502(a)(1)(B): Statute of Limitations
The chief issue in this appeal concerns the statute of limitations that is applicable to Syed's claim for ben- efits under *159 ERISA § 502(a)(1)(B). n2 **8 Unfortunately, HN2 ERISA does not provide a statute of limitations for suits brought under § 502(a)(1)(B) to re- cover benefits, and the new, general federal statute of lim- itations set out in 28 U.S.C. § 1658 does not apply in this situation. n3 Under these circumstances, courts generally turn to the most analogous state statute of limitations. See DelCostello v. International Bhd. of Teamsters, 462 U.S.
151, 158-60, 76 L. Ed. 2d 476, 103 S. Ct. 2281 (1983). Although this Circuit has not decided which state statute of limitations is applicable to ERISA § 502(a)(1)(B), n4 every other circuit to address the issue has applied the statute of limitations for a state contract action. See Harrison v. Digital Health Plan, 183 F.3d 1235, 1239-40
(11th Cir. 1999); Daill v. Sheet Metal Workers' Local 73
Pension Fund, 100 F.3d 62, 65 (7th Cir. 1996); Adamson v. Armco, 44 F.3d 650, 652 (8th Cir. 1995); Hogan v. Kraft Foods, 969 F.2d 142, 145 (5th Cir. 1992); Meade v. Pension Appeals & Review Comm., 966 F.2d 190, 195
(6th Cir. 1992); Held v. Manufacturers Hanover Leasing Corp., 912 F.2d 1197, 1207 (10th Cir. 1990); **9 Pierce County Hotel Employees & Restaurant Employees Health Trust v. Elks Lodge, 827 F.2d 1324, 1328 (9th Cir. 1987); Dameron v. Sinai Hosp., 815 F.2d 975, 981 (4th Cir. 1987). Because Delaware, in essence, has two statutes of limi- tation for contract disputes, however, we must determine which is more appropriate.
n2 HN3 We exercise plenary review over the District Court's choice of the applicable statute of limitations. See Nelson v. County of Allegheny, 60
F.3d 1010, 1013 (3d Cir. 1995).
n3 This provision, which prescribes a four-year limitations period, applies only to claims arising under acts of Congress enacted after December 1,
1990. ERISA was enacted much earlier.
n4 We have previously suggested in dicta that the New Jersey state statute of limitations for a con- tract action would apply to claims under ERISA §
502(a)(1)(B), but we have never squarely decided the issue. See Connell v. Trustees of the Pension Fund of the Ironworkers Dist. Council of N. New Jersey, 118 F.3d 154, 156 n.4 (3d Cir. 1997).
**10 HN4
Delaware Code § 8106 establishes a three-year statute of limitations for general actions on a promise. See Goldman v. Braunstein's, Inc., 240 A.2d 577, 578 (Del.
1968). Section 8106 provides:
No action to recover damages for trespass, no action to regain possession of personal chattels, . . . no action based on a promise, .
. . shall be brought after the expiration of 3 years from the accruing of the cause of such action.
HN5 Del. Code Ann. tit. 10, § 8106 (emphasis added). Delaware also has a more specific statute of limitations covering employment disputes, § 8111, which provides:
No action for recovery upon a claim of wages, salary, or overtime for work, labor or personal services performed, . . . or for any other benefits arising from such work, labor or personal services performed . . . shall be brought after the expiration of one year from the accruing of the cause of action on which such action is based.
HN6
Del. Code Ann. tit. 10, § 8111 (emphasis added). In this case, the District Court applied § 8111, relying on Mitchell v. E.I. DuPont de Nemours & Co., 310 A.2d 641, 642 (Del.
1973).
In Mitchell, the Delaware Supreme **11 Court ap- plied § 8110 (now § 8111) to a claim challenging the de- nial of benefits under a disability wage plan. See Mitchell,
310 A.2d at 642. The Court reasoned that the plan at is- sue was a "benefit" arising from work, labor, or services performed within the meaning of the statute because eli- gibility for the plan accrued from tenure on the job. See id. Although the District Court in the present case mis- takenly referred to Mitchell as an ERISA case (Mitchell was decided in 1973 and ERISA was not effective until
1974), the application of § 8111's predecessor in the pre- ERISA context is strong evidence of its close relation- ship to the ERISA claim *160 that Syed asserts. See also Sorensen v. Overland Corp., 142 F. Supp. 354, 360
(D. Del. 1956) ("The one year statute has a comprehen-
214 F.3d 155, *160; 2000 U.S. App. LEXIS 11984, **11;
24 Employee Benefits Cas. (BNA) 2031
Page 5
sive sweep. It was intended to bar all claims arising out of the employer-employee relationship. The Act bars claims for 'wages', 'salary', and it likewise applies to 'overtime' and to any other 'benefits' arising from the corporate- officer employment relationship. The word 'benefits' is embracing and covers all advantages growing out of the employment.").
The Eighth Circuit dealt with **12 a similar issue in Adamson v. Armco, 44 F.3d 650 (8th Cir. 1995). There, the Court had to choose between Minnesota's six-year statute of limitations governing general contract disputes and the state's two-year statute of limitations for wage claims. The Court reasoned that the wage-claim statute of limitations was the most analogous to the appellant's § 502(a)(1)(b) claim because Minnesota courts had uniformly applied that statute broadly to cover all damages arising out of the employment relationship. See Adamson, 44 F.3d at 652. In support of its conclusion, the Court noted that pre- ERISA case law in Minnesota had applied the two-year statute of limitations to cases of unpaid benefits. See id.
(citing Kohout v. Shakopee Foundry Co., 281 Minn. 401,
162 N.W.2d 237 (Minn. 1968)).
Syed relies primarily on two cases to bolster his argu- ment for application of § 8106: Rich v. Zeneca, Inc., 845 F. Supp. 162 (D. Del. 1994) and Shaw v. Aetna Life Insurance Co., 395 A.2d 384 (Del. Super. Ct. 1978). Rich held that
§ 8106 should apply to a claim under ERISA § 510, 29
U.S.C. § 1140, for wrongful termination **13 based on a pension-defeating motive. See Rich, 845 F. Supp. at
166 (citing Goldman v. Braunstein, Inc., 240 A.2d 577
(Del. 1968)). The Rich Court chose § 8106 rather than
§ 8111 because the latter applies to claims for breach of a promise to pay something already earned, whereas the former applies to claims for breach of a promise to pay what would have been earned had employment contin- ued. See id. Since Syed's disability benefits were already
"earned" through his period of employment at Hercules, Rich does not support the argument that § 8106 should apply here.
In Shaw, the Delaware Superior Court refused to ap- ply § 8111 where an employee brought an action under the employer's voluntary group accident insurance pol- icy. Shaw, 395 A.2d at 385. The employee was injured in a workplace injury which resulted in his permanent and total disability. The employer argued that § 8111 should apply to the claim because coverage under the policy arose out of the employment relationship. See id. at 387 (relying on Mitchell). The Court dismissed defendant's argument summarily. See id. ("That contention of the defendant is without merit."). **14 Instead, the Court applied Delaware's two-year statute of limitations for personal injury claims. Del. Code § 8119. It is not immediately
clear how Shaw is distinguishable from Syed's case, and Hercules has not pointed out any meaningful distinction. Nonetheless, because the Shaw Court failed to explain why § 8111 should not apply, we find Mitchell to be more persuasive.
Although Syed's § 502(a)(1)(B) claim comes within Delaware's more specific statute of limitations for claims arising out of the employer-employee relationship, that does not conclusively resolve the issue. After all, HN7 the selection of an appropriate statute of limitations is a question of federal law. See United Auto Workers v. Hoosier, 383 U.S. 696, 706, 86 S. Ct. 1107, 16 L. Ed. 2d
192 (1966).
Generally, we presume that Congress intended courts to apply the most closely analogous state statute of limi- tations. See DelCostello, 462 U.S. at 158. This principle rests on the assumption that "Congress would likely in- tend that courts follow their previous practice of borrow- ing state statutes." Id. at 158-59 n.12. We remain mindful of the Supreme Court's warning not to apply *161 state statutes of limitation mechanically **15 since "state legislatures do not devise their limitations periods with national interests in mind, and it is the duty of the federal courts to assure that the importation of state law will not frustrate or interfere with the implementation of national policies." Occidental Life Ins. Co. v. EEOC, 432 U.S. 355,
367, 53 L. Ed. 2d 402, 97 S. Ct. 2447 (1977). Nonetheless,
HN8 there is no reason to reject the state statute unless we find it "inconsistent with national labor policy." Auto Workers, 383 U.S. at 706.
In this case, we recognize that the one-year statute of limitations of § 8111 is short, but we cannot say that it is inconsistent with the policy of ERISA. We therefore agree with the District Court that Syed's claim was governed by
§ 8111 and was thus barred.
We are not persuaded by the arguments advanced by the dissent in support of its position that Syed's claim for disability benefits is more analogous to an ordinary con- tract claim, subject to § 8106, than to a claim for "other benefits arising from . . . work, labor or personal services," subject to § 8111. Noting that the Mitchell court described the plan at issue there as providing a "fringe **16 ben- efit," the dissent argues that "Syed's claim . . . has little or nothing to do with work or services performed or fringe benefits . . . .," Dissent at 15, but this is simply not true. First, Syed's claim was squarely based on his prior em- ployment. In order to qualify under the long term disabil- ity plan, he had to be "a regular, full-time non-represented employee of the Company . . . ." Appendix to Answering Brief at B20 (Summary Plan Desciption). Second, ERISA benefits are often termed "fringe benefits." See, e.g., Bricklayers and Allied Craftsmen Int'l Union Local 33
214 F.3d 155, *161; 2000 U.S. App. LEXIS 11984, **16;
24 Employee Benefits Cas. (BNA) 2031
Page 6
Benefit Funds v. America's Marble Source, Inc., 950 F.2d
114, 118 (3d Cir. 1991). n5 We are inclined to agree with the dissent that the one-year limitations period of §
8111 is not optimal, and we also believe that a uniform, national statute of limitations for claims such as Syed's would be beneficial. But forced to identify the most anal- ogous Delaware statute of limitations, we agree with the District Court that § 8111 is the best fit. n6
n5 We also note that Delaware's Wage Payment and Collection Act (WPCA), Del. Code Ann. tit. 19,
§§ 1101-1115, defines "benefits" as "compensation for employment other than wages, including, but not limited to, reimbursement for expenses, health, welfare or retirement benefits . . . ." HN9 Del. Code Ann. tit. 19, § 1109(b). Although the WPCA does not provide a statutory remedy for the denial of benefits, its definition quite clearly encompasses the disability benefits Syed has sued to recover here.
**17
n6 In view of the dissent's reference (Dissent footnote 3) to the Pennsylvania Wage Payment and Collection Law, 43 P.S. § 260.1 et seq., which has a three-year statute, see 43 Pa. Cons. Stat. Ann. §
260.9a(g), we wish to make it clear that we express no view regarding the statute of limitations that would apply if a claim such as Syed's were brought in Pennsylvania. We note, however, that we have held that some ERISA claims are governed by the WCPL's statute of limitations and others are not. See Gluck v. Unisys Corp., 960 F.2d 1168, 1180-
81 (3d Cir. 1992).
ERISA § 502(c)
Syed urges the Court to impose sanctions on Hercules for failing to provide the Plan document pursuant to a written request. HN10 ERISA § 502(c) provides that a plan administrator must comply with a request for in- formation from a plan participant within 30 days or face personal liability, at the Court's discretion, of $100 a day from the date of the refusal. 29 U.S.C. § 1132(c). The District Court did not abuse its discretion in refusing to order sanctions against Hercules, and we affirm **18 the grant of summary judgment on this issue.
Hercules sent Syed the SPD on March 22, 1995, in response to his February 24, 1995, written request for
"a complete copy of LTD Plan document effective as of March 4, 1992." App. at A28. Syed contends that a differ- ent document was in *162 effect at the time he was in- jured and at the time his benefits were denied. Specifically,
he points to the insurance policy used to fund Hercules's long-term disability plan (LTD). App. at B35-72.
A comparison of the SPD and LTD reveals no mate- rial differences between the two documents. Syed com- plains that he was not able to verify "whether the def- inition of disability is based on official plan language, SPD language, or some internal policy, written or unwrit- ten." Appellant's Br. at 20. This argument lacks merit. For example, the March 31, 1994, letter denying Syed's benefits, see App. at A6, quotes the definition of total disability found at page 8 of the SPD, see App. at B24. This definition is exactly the same as the definition of total disability found on page 3 of the LTD, see App. at B43, thus belying Syed's assertion that the two-tier defini- tion of disability did not exist in the SPD, see Appellant's
**19 Br. at 22. The affidavit of Douglas Hill, Director of Employee Benefits for Hercules, makes clear that the document Hercules allegedly refused to send to Syed pur- suant to his March 1995 request was, in fact, not executed until October 1995 (although it was effective retroactively to July 1990). Because the SPD and the LTD are identical in all respects material to this dispute, the District Court properly refused to impose sanctions against Hercules under ERISA § 502(c), 29 U.S.C. § 1132(c).
ERISA § 503
ERISA § 503 provides, in pertinent part, that every employee benefit plan shall:
provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, set- ting forth the specific reasons for such denial, written in a manner calculated to be under- stood by the participant.
HN11 29 U.S.C. § 1133(1). Pursuant to this section, the Secretary of Labor has established that written notice of denial of a claim must:
provide to every claimant who has been de- nied a claim for benefits written notice setting forth in a manner calculated to be understood by the claimant: **20
(1) The specific reason or reasons for the de- nial;
(2) Specific reference to pertinent plan pro- visions on which the denial is based;
(3) A description of any additional material or information necessary for the claimant to
214 F.3d 155, *162; 2000 U.S. App. LEXIS 11984, **20;
24 Employee Benefits Cas. (BNA) 2031
Page 7
perfect the claim and an explanation of why such material or information is necessary; and
(4) Appropriate information as to the steps to be taken if the participant or beneficiary wishes to submit his or her claim for review.
HN12 29 C.F.R. § 2560.503-1(f).
We have previously held that § 503 sets forth only the disclosure obligations of "the Plan" and that it does not es- tablish that those obligations are enforceable through the sanctions of § 502(c). See Groves v. Modified Retirement Plan, 803 F.2d 109, 118 (3d Cir. 1986). HN13 Where a termination letter does not comply with the statutory and regulatory requirements, the time limits for bring- ing an administrative appeal are not enforced against the claimant. See Epright v. Environmental Resources Management, Inc. Health and Welfare Plan, 81 F.3d 335,
342 (3d Cir. 1996). Thus, the remedy for a violation of §
503 is to remand to the plan administrator so the claimant
**21 gets the benefit of a full and fair review. See
Weaver v. Phoenix Home Life Mut. Ins. Co., 990 F.2d
154, 159 (4th Cir. 1993).
The March 31, 1994, letter from Provident to Syed began with a quotation from the Plan's definition of total disability. See App. at A6. Next, the letter explained that Syed's benefits were being terminated because the results of Dr. Joson's independent medical evaluation demon- strated that Syed was no longer totally *163 disabled as the term was defined in the Plan. See App. at A6-7. The letter went on to identify several jobs for which Syed would be qualified given his present physical condition. See App. at A7. Provident stated that Syed could submit a request for reconsideration of the decision, accompanied by documents from Syed's physician. See id. Lastly, the letter noted that any information to be considered in con- nection with an appeal would have to be received within
60 days of Syed's receipt of the letter. See id. In short, Provident fully complied with the statutory and regula- tory requirements for notice under ERISA § 503, and Syed has not raised any genuine issue of material fact to the contrary. Accordingly, we affirm the District Court's
**22 grant of summary judgment as to Syed's claim under ERISA § 503, 29 U.S.C. § 1133.
CONCURBY: BARRY
DISSENTBY: BARRY
DISSENT: BARRY, Circuit Judge, concurring and dis- senting.
While I agree with much of the majority's opinion, I cannot agree with the conclusion that the most analogous state statute of limitations for a § 502(a)(1)(B) claim is found in Delaware's § 8111. It is on that issue, and that issue alone, that I dissent.
First, it is clear, as the majority notes, that every cir- cuit which has addressed this issue has applied the statute of limitations for a state contract action as most analogous to an ERISA claim for the denial of benefits. As the ma- jority also notes, we, too, have suggested, albeit in dicta, that the state statute of limitations for a contract action would apply to claims under § 502(a)(1)(B). See Connell v. Trustees of the Pension Fund of the Ironworkers Dist. Council of Northern New Jersey, 118 F.3d 154, 156 n.4
(3d Cir. 1997). Moreover, district courts too numerous to mention have also concluded that a state contract statute of limitations is most analogous to a § 502(a)(1)(B) claim. This is, indeed, a resounding chorus. **23
The rub here, however, is this. The majority concludes that "Delaware, in essence, has two statutes of limitations for contract disputes," specifically § 8106 and § 8111, and one, of course, must be selected. The majority then se- lects § 8111, which relates to claims "for wages, salary, or overtime for work, labor or personal services performed .
. . or for any other benefits arising from such work, labor or personal services" as being "more specific" and, thus, most analogous to a claim for denied disability benefits under ERISA than § 8106, the statute traditionally used in Delaware for breach of contract, or breach of promise, actions. While I agree that § 8111 is "more specific," it simply does not apply to a claim that ERISA benefits were wrongly denied.
Delaware courts restrict § 8111 and its one-year statute to work or services which have already been per- formed and apply § 8106 to a promise of compensation for work or services to be performed. The § 8111 ac- tion, in other words, is based on the services performed rather than on the original promise while the § 8106 ac- tion is based on the underlying promise with respect to services not yet completed. See Goldman v. Braunstein's, Inc., 240 A.2d 577, 578 (Del. 1968); **24 Brown v. Colonial Chevrolet Co., 249 A.2d 439, 441 (Del. Super. Ct. 1968). n1 Moreover, benefits for work or services which have been performed have been described in the case on which the majority primarily relies as "fringe" benefits. Mitchell v. E.I. duPont deNemours & Co., 310
A.2d 641, 642 (Del. 1973). Claims for fringe benefits are typically *164 governed by § 8111. See e.g., Compass v. American Mirrex Co., 72 F. Supp. 2d 462, 467-68 (D. Del. 1999)(claim for unpaid bonus governed by § 8111); SCOA Industries, Inc. v. Bracken, 374 A.2d 263, 264
(Del. 1977)(claim for year-end bonus was equivalent of
214 F.3d 155, *164; 2000 U.S. App. LEXIS 11984, **24;
24 Employee Benefits Cas. (BNA) 2031
Page 8
"wages" and governed by § 8111).
n1 As the majority acknowledges, selecting the appropriate statute of limitations is a matter of fed- eral, not state, law, and thus our task is not to predict which statute of limitations the Delaware Supreme Court might select for an ERISA claim. Rather, "in borrowing the state statute of limitations to impose a time limitation on the federal cause of action, the federal court is 'closing the gap' left by Congress in order to fashion a body of federal common law to supplement the federal statutory cause of action." Harrison v. Digital Health Plan, 183 F.3d 1235,
1238-39 (11th Cir. 1999).
**25
In Mitchell, a pre-ERISA case, the Supreme Court of Delaware determined that Mitchell's action under Delaware's Disability Wage Plan was governed by § 8111. The Disability Wage Plan, however, had one and only one requirement for eligibility -- "at least one year of contin- uous service." The Plan was a "fringe benefit," said the Court, which accrued to Mitchell simply because she had worked for the one year -- her "work" had been "per- formed." Mitchell, 310 A.2d at 642.
Syed's claim, however, has little or nothing to do with work or services performed or fringe benefits and has everything to do with benefits for disability based on an interpretation and analysis of the Plan documents, akin to the analysis required in a traditional breach of contract claim:
The claimant has brought this action to re- cover benefits allegedly due him under the terms of the employee pension benefit plan and to enforce and/or clarify his rights under the terms of that Plan. The employee pen- sion benefit plan and its predecessor . . . are in written form. Each of the Plans contain extensive and detailed terms and conditions governing the rights and duties of all partici- pants in the **26 fund.
Jenkins v. Local 705 Int'l Bd. of Teamsters Pension Plan,
713 F.2d 247, 252-53 (7th Cir. 1983); see also Hogan v. Kraft Foods, 969 F.2d 142, 145 (5th Cir. 1992)(" The claim involves the interpretation of the annuity con- tract . "); Meade v. Pension Appeals and Review Comm.,
966 F.2d 190, 195 (6th Cir. 1992)("The Plan at issue in this case constitutes a written contract for disability ben- efits ."); Johnson v. State Mut. Life Assur. Co. of America,
942 F.2d 1260, 1264 (8th Cir. 1991)(noting that life in-
surance policy governed by ERISA "is a written promise to pay money if a specified condition, accidental death, occurs in the future").
Here, as in Jenkins, it is the Plan which will dictate the outcome of Syed's claim for unpaid disability benefits. n2 There is simply no reasoned basis for concluding that fringe benefits given by the employer to the employee, i.e. "benefits arising from . . . work, labor or personal services performed," should be stretched to include the very different pension and health benefits governed by an ERISA plan that is subject to contract interpretation. n3 The majority's two-fold rejoinder **27 to this is not persuasive. The majority misses the point by stat- ing the hardly startling proposition that "Syed's claim was squarely based on his prior employment," "hardly startling" because Syed, of course, had to have been an employee to have brought an ERISA claim. Beyond that, the majority's citation to one case -- a preemption case which emanated from New Jersey, not Delaware -- for the proposition that ERISA benefits are "often" termed fringe benefits is somewhat disingenuous. The category *165 of funds to which the New Jersey Construction Workers' Fringe Benefit Security Act at issue in that case applied consisted "largely if not entirely of employee benefit plans governed by ERISA." Bricklayers and Allied Craftsmen Int'l Union Local 33 Benefit Funds v. America's Marble Source Inc., 950 F.2d 114, 118 (3d Cir. 1991).
n2 It also bears mention that ERISA plans in- volve parties outside the employment relationship such as family members, the insurance company, and the plan administrator, and for that reason as well a § 502(a)(1)(B) claim does not fit squarely within § 8111. See Harrison, 183 F.3d at 1241-42
(noting that ERISA claims may involve non-work related injuries or illnesses and, thus, concluding that state breach of contract statute was more anal- ogous to § 502(a)(1)(B) claims than workers com- pensation statute).
**28
n3 Pennsylvania has a similar statute, the Wage Payment and Collection Law, 43 P.S. § 260.1 et seq. See Ferguson v. Greyhound Retirement and Disability Trust, 613 F. Supp. 323, 324 (W.D. Pa.
1985)(rejecting use of wage statute -- and other statutes of limitations--as most analogous and stat- ing "this is an action for recovery of benefits due under the terms of an employee pension benefit plan . We believe that the claim is most analogous to contract law.").
214 F.3d 155, *165; 2000 U.S. App. LEXIS 11984, **28;
24 Employee Benefits Cas. (BNA) 2031
Page 9
Mitchell aside, the majority also invokes a 1956
District of Delaware case which states that § 8111 is meant to encompass all disputes arising from the employ- ment relationship. See Sorensen v. Overland Corp., 142
F. Supp. 354 (D. Del. 1956), aff'd, 242 F.2d 70 (3d Cir.
1959). Separate and apart from the fact that this sweep- ing language emanates from a case decided long before ERISA was even a twinkle in Congress's eye, the state- ment which the majority quotes has been qualified in at least two post- ERISA District of Delaware cases. In Rich v. Zeneca, Inc., 845 F. Supp. 162 (D. Del. 1994), **29 relied on by Syed, the District Court found Mitchell and the "fairly broad" statement in Sorenson inapplicable to Rich's claim under ERISA that his employer wrongfully interfered with his attainment of pension and employment benefits:
§ 8111 and its one year statute of limitations for wage, salary and benefit claims should not be read as being so comprehensive as to bar all claims arising out of the employer- employee relationship. Rather S 8111 is di- rected to claims alleging a breach of a duty to pay wages, salary or overtime for work performed. Where, as here, a plaintiff alleges that a defendant has breached a different duty arising out of the employer-employee rela- tionship, another statute of limitations may apply to the plaintiff 's claim.
Rich, 845 F. Supp. at 165. The Court concluded that Rich's claims were most analogous to the breach of con- tract and breach of promise claims asserted in Goldman and Brown and, thus, subject to the § 8106 three-year statute of limitations. See id. at 165-66. Parenthetically, the majority's effort to distinguish Rich by shoe-horning Syed's case into "work performed" because his benefits have been **30 "earned" makes no sense both on its face and because those contracted-for benefits can only be "earned" when certain criteria -- criteria stated in the Plan--are met, a finding which cannot now be made. n4
n4 The majority rejects a second case relied on by Syed primarily because the Court in that case did not explain why it found § 8111 inapplicable to a claim brought under a group accident insurance policy for personal injuries resulting in disability. See Shaw v. Aetna Life Ins. Co., 395 A.2d 384 (Del. Super. Ct. 1978). It is very clear, however, why the Shaw Court found as it did: the very specific
166 two-year statute of limitations for personal in- jury claims was the perfect fit. I note, for what it is worth, that by virtue of subsequent amendments
to the personal injury protection ("PIP") provisions of Delaware's No Fault Insurance Statute, actions for PIP benefits are now statutory causes of action, subject to the three-year statute of limitations of §
8106. See Harper v. State Farm Mut. Auto. Ins. Co.,
703 A.2d 136 (Del. 1997).
**31
In the second post-ERISA District of Delaware case, the Court, referencing what it called the "broad interpre- tation" of § 8111 in Sorensen, found that the bonus at issue -- a clear "fringe" benefit -- was subject to § 8111's one-year statute of limitations. The Court summarized the distinction between § 8106 and § 8111:
If a plaintiff alleges a breach of a duty to provide benefits or to pay wages for work al- ready performed, then the one year statute of limitations in section 8111 governs. On the other hand, if plaintiff alleges that his em- ployer breached a different duty arising out of the employment agreement, then the three year statute of limitations in section 8106 ap- plies.
Compass, 72 F. Supp. 2d at 467. Just such a "different duty" has been alleged here. See also DeWitt v. Penn-Del Directory Corp., 872 F. Supp. 126, 134-35 (D. Del. 1994)
(§ 8106 is the most analogous statute of limitations for
ERISA § 510 claim).
Finally, the majority cites a 1995 Eighth Circuit case which applied Minnesota's *166 two-year statute of limitations for wage claims as more analogous to a §
502(a)(1)(B) claim than the six-year statute of limita- tions **32 governing contract disputes. See Adamson v. Armco, Inc., 44 F.3d 650 (8th Cir.), cert. denied, 516 U.S.
823, 133 L. Ed. 2d 42, 116 S. Ct. 85 (1995). Conceding that Minnesota courts have not had occasion to determine whether claims for employee benefits under an ERISA plan are wage claims, the Adamson Court found the is- sue "hardly in doubt," but cited in support of its "hardly in doubt" conclusion only pre-ERISA cases involving claims not for disability benefits but for unpaid vacation benefits, salary increases and "adjustment of all fringe benefits." 44 F.3d at 653. Hardly ringing support.
It is, thus, clear, at least to me, that § 8106's statute of limitations for contract actions is more analogous to an ERISA claim for the denial of benefits than that found in §
8111. n5 Moreover, in our search for the most analogous statute, we are not necessarily limited to reviewing the two presented to us. It might well be appropriate, therefore, to
214 F.3d 155, *166; 2000 U.S. App. LEXIS 11984, **32;
24 Employee Benefits Cas. (BNA) 2031
Page 10
consider Delaware's three-year statute of limitations for claims alleging breach of insurance policies, 19 Del. C.
§ 3315. Other circuits have concluded that similar state statutes are the most analogous **33 to § 502(a)(1)(B) claims and supply the appropriate statute of limitations. See, e.g., Lang v. Aetna Life Ins. Co., 196 F.3d 1102,
1104 (10th Cir. 1999) ("Our duty . . . is to choose the most analogous state statute of limitation. While plaintiff
's ERISA claim is based upon a contract, it is more pre- cisely based upon a contract of insurance. Therefore, we hold that the three-year statute of limitations applies to plaintiff 's claim."); Nikaido v. Centennial Life Ins. Co.,
42 F.3d 557, 559 (9th Cir. 1994)(using California's "lim- itations statute specifically for disability policies" rather than general breach of contract statute where ERISA Plan contained provision similar to that of California's insur- ance code); Duchek v. Blue Cross and Blue Shield of Nebraska, 153 F.3d 648, 649-50 (8th Cir. 1998)(applying Nebraska Insurance Statute to action for benefits under ERISA). As the Duchek Court put it:
It would be anomalous to characterize this suit as a contract action and then borrow Nebraska's generic contract statute of limi- tations rather than the specific section of the Nebraska insurance laws permitting the con- tractual limitation in question. **34
153 F.3d at 649-50.
The majority, after concluding that Syed's claim comes within § 8111's statute of limitations, recognizes that that does not conclusively resolve the issue because the selected statute of limitations must not be "inconsis- tent with national labor policy." It is, indeed, quite clear that a state's statute of limitations for ERISA claims will only be borrowed "so long as application of state statute's time period would not impede effectuation of federal policy." Pierce County Hotel Employees and Restaurant Employees Health Trust v. Elks Lodge, 827 F.2d 1324,
1328 (9th Cir. 1987); see also Jenkins, 713 F.2d at 251
("In *167 determining the most appropriate state statute of limitations, the court must be cognizant of and examine the underlying nature of the federal claim as well as the federal policies involved."). The majority, while finding
§ 8111's one-year statute of limitations to be "short," and while choosing not to discuss the policy behind ERISA, simply concludes that it "cannot say" the one-year statute of limitations is inconsistent with that policy. That con- clusion is not so clear to me.
In enacting ERISA, **35 "Congress sought to protect the interests of participants in employee bene-
fits plans by regulating the administration of such plans and by providing participants and beneficiaries with a va- riety of remedies to assure compliance with the statutory framework." Harrison, 183 F.3d at 1239; see also Held v. Manufacturers Hanover Leasing Corp., 912 F.2d 1197,
1202 (10th Cir. 1990)("The principal purpose of ERISA is to protect employees' rights to benefits under a cov- ered plan."). While I cannot say that applying § 8111's one-year statute of limitations (which, it must be remem- bered, bars Syed's claim) is so unreasonable as to impede the effectuation of federal policy, I surely cannot say that we are furthering Congress's clearly stated goal by con- cluding that Delaware's employees have a much shorter period of time within which to file claims for the wrong- ful denial of benefits than employees in virtually every other state. n6 Perhaps the Delaware Legislature will feel obliged to consider this unfortunate result. See Johnson,
942 F.2d at 1266 ("Either Congress, by amending ERISA, or the Missouri Legislature is free to modify the statute of limitations. **36 Until such legislative action, we are required to hold, consistent with Missouri law, that plaintiff 's claim to enforce defendant's written promise for the payment of money is governed by the ten-year statute of limitations.").
n6 See e.g., Carey v. Int'l Broth. of Elec. Workers Local 363 Pension Plan, 201 F.3d 44, 46-47 (2d Cir. 1999)(applying New York's six-year limita- tions period); Lang, 196 F.3d at 1104 (applying Utah's three-year limitations period); Harrison,
183 F.3d at 1239-40 (applying Georgia's six-year limitations period); Duchek, 153 F.3d at 649-
50 (applying Nebraska's three-year limitations pe- riod); Blue Cross & Blue Shield of Alabama v. Sanders, 138 F.3d 1347, 1357 (11th Cir. 1998)(ap- plying Alabama's six-year limitations); Daill, 100
F.3d 62 at 65 (applying Illinois' ten-year limita- tions period); Nikaido, 42 F.3d at 559 (applying California's three-year limitations period); Hogan,
969 F.2d at 145 (applying Texas' four-year limita- tions period); Johnson, 942 F.2d at 1263 (apply- ing Missouri's ten-year limitations period); Meade
966 F.2d at 193, 195 (applying Ohio's fifteen- year limitations period); Wright v. Southwestern Bell Telephone Co., 925 F.2d 1288, 1291 (10th Cir. 1991)(applying Oklahoma's five-year limita- tions period); Pierce, 827 F.2d at 1328 (applying Washington's six-year limitations period); Hawaii Carpenters Trust Funds v. Waiola Carpenter Shop, Inc., 823 F.2d 289, 297-98 (9th Cir. 1987)(applying Hawaii's six-year limitations period); Dameron v. Sinai Hosp. of Baltimore, Inc., 815 F.2d 975, 981-
82 (4th Cir. 1987)(applying Maryland's three-year limitations period); Trustees for Alaska Laborers-
214 F.3d 155, *167; 2000 U.S. App. LEXIS 11984, **36;
24 Employee Benefits Cas. (BNA) 2031
Page 11
Constr. Indus. Health and Sec. Fund v. Ferrell, 812
F.2d 512, 517 (9th Cir. 1987)(applying Alaska's six-year limitations period).
**37
One final note. The Supreme Court of Delaware has instructed that when a Delaware court is in doubt as to which of two statutes of limitations control, it should choose the longer. See Sonne v. Sacks, 314 A.2d 194,
196 (Del. 1973). Indeed, we, ourselves, have recognized
this principle in a diversity case dealing with an § 8106 and § 8111 dispute. See Lindsey v. M.A. Zeccola & Sons, Inc., 26 F.3d 1236, 1245 (3d Cir. 1994). Although we, of course, are not bound to follow that sensible instruction, choosing the concededly applicable longer statute of lim- itations period would not only further the federal policy behind ERISA but would bring Delaware into line with all of the other states in which substantially longer statutes of limitations are applied than the one-year period deemed applicable here. I respectfully dissent.
Contents
Prev
Next
Last
