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Supreme Court to Hear Wal-Mart ERISA Case

Court to decide legality of statute of limitations in disability policy.

WASHINGTON — The Supreme Court is set to hear oral arguments Tuesday in a case involving a former Wal-Mart Stores Inc. employee whose long-term disability benefits claim was denied by the retailer’s insurance provider.

The legal question before the High Court is when the statute of limitations begins for a plaintiff to file a lawsuit against a denied long-term disability benefits claim under the Employment Retirement Income Security Act, or ERISA. The Supreme Court granted writ of certiorari in April to a petition filed by Julie Heimeshoff, a former senior public relations manager for the retailer, against Hartford Life & Accident Insurance Co. and Wal-Mart.

Heimeshoff, who worked for Wal-Mart from 1985 to 2005, applied for long-term disability benefits under Wal-Mart’s ERISA plan administered by Hartford in August 2005 after she fell ill with what she said was fibromyalgia, chronic pain and other conditions. But Hartford denied her claim that December and again on a subsequent appeal in 2007, arguing its own rheumatologist consultant determined that Heimeshoff was “able to perform the activities of her sedentary occupation,” according to court documents.

Heimeshoff sued Hartford and Wal-Mart in U.S. District Court in Connecticut in November 2010, but lost after the court granted Hartford’s motion to dismiss, holding that she did not sue in a timely matter, noting that Hartford’s policy “unambiguously disallows legal action more than three years after the time written proof of loss is required to be furnished,” court documents showed.

Heimeshoff argued on appeal that the limitations period did not begin until Hartford denied her administrative appeal in 2007, after she had exhausted her administrative remedies. The Second Circuit Court of Appeals disagreed and affirmed the lower court’s decision.

The case puts Wal-Mart back in front of the Supreme Court after the retail giant won a key ruling in one of the largest gender discrimination cases in U.S. history. In 2011, the court ruled in the company’s favor in the Wal-Mart Stores Inc. vs. Dukes case, reversing an appeals court decision, and said the case could not advance as a class action because the plaintiffs did not meet the critical legal standard of commonality. Since then, groups of current and former female Wal-Mart employees have filed separate gender discrimination cases with the Equal Employment Opportunity Commission, as well as several new district court cases seeking class-action status.

“The reason courts have struggled with accrual of ERISA plans’ statutes of limitation is that starting a limitations period before the plan finally denies a beneficiary’s claim contradicts ERISA’s well-established requirement that the beneficiary exhaust her administrative remedies before filing suit,” Heimeshoff’s attorneys argued in its petition to the Supreme Court.

Heimeshoff’s attorneys are arguing that a “bright-line rule” is necessary for the statute of limitations on when a plaintiff can sue for a denial of a disability claim.

In opposing the writ, attorneys for Hartford and Wal-Mart contended that it is “undisputed that petitioner filed her ERISA suit long after the deadline established by the policy’s contractual limitations provision.” It wasn’t until November 2010, nearly three years after Hartford denied her appeal and five years after her proof of loss was due, that Heimeshoff sued Hartford and Wal-Mart, they argued.

The Department of Labor, which has the authority to administer ERISA, and the Solicitor General filed an amicus brief in support of Heimeshoff, arguing, “An ERISA plan cannot lawfully provide that the limitation period commences on the date the participant must provide proof of loss — i.e., early in the plan review process, well before the participant may seek judicial review. Such a provision is inconsistent with ERISA’s two-tiered remedial scheme because it sets the two procedures for redress — internal claims processes and judicial review — against each other, thereby undermining the availability and efficacy of both.”

“In Ms. Heimeshoff’s case, her policy was offered by The Hartford, which would have made any decisions about eligibility or other specific situations related to her claim,” a Wal-Mart spokesman said in an e-mailed response.