Russell v. Catholic Healthcare Partners Employee Long Term Disability Plan ( 2014 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 14a0632n.06
No. 13-4084
FILED
Aug 14, 2014
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
KAREN RUSSELL, )
) ON APPEAL FROM THE
Plaintiff-Appellant, ) UNITED STATES DISTRICT
) COURT FOR THE SOUTHERN
v. ) DISTRICT OF OHIO
)
CATHOLIC HEALTHCARE ) OPINION
PARTNERS EMPLOYEE LONG TERM )
DISABILITY PLAN; UNUM LIFE )
INSURANCE COMPANY OF
AMERICA,
Defendants-Appellees.
BEFORE: MOORE and KETHLEDGE, Circuit Judges; and TARNOW,
District Judge.*
ARTHUR J. TARNOW, District Judge. Plaintiff-Appellant appeals the
dismissal of her claim for long-term disability (“LTD”) benefits under her employee
compensation package. Plaintiff had worked as a registered nurse for about thirty
years when she applied for disability benefits in 2007. Defendant-Appellee Unum
granted Plaintiff twenty-four months of LTD benefits starting in 2007, then denied her
*
The Honorable Arthur J. Tarnow, United States Senior District Judge for the Eastern District
of Michigan, sitting by designation.
No. 13-4084, Russell v. Catholic Healthcare Partners Employee Long Term Disability Plan, et al.
any further benefits in 2009. The district court upheld the administrative
determination of Plaintiff’s claim, finding, inter alia, that Plaintiff’s case was
contractually time-barred. Because we also find that Plaintiff’s claims are
contractually limited, we AFFIRM the judgment of the district court.
Jurisdiction is not forfeitable or waivable, therefore, we must first address
Plaintiff’s jurisdictional arguments. In re Lindsey, 726 F.3d 857, 858 (6th Cir. 2013).
On appeal, we hold that we have subject-matter jurisdiction to hear this case. Next,
we hold that Plaintiff’s claims are contractually time-barred. We decline to address
Plaintiff’s substantive claim that Defendants’ denial of her LTD benefits was arbitrary
and capricious.
On May 12, 2007, Plaintiff became unable to perform her occupational duties
due to bilateral knee osteoarthritis, right ankle post-traumatic osteoarthritis, anxiety,
and depression. Plaintiff remained disabled until November 12, 2007, satisfying
Unum’s six-month elimination period and becoming eligible to receive disability
benefits. In a letter dated November 15, 2007, Unum informed Plaintiff that they had
approved her claim for disability benefits. Unum informed Plaintiff that they found
her eligible for twelve months of benefits at that time because she was “limited from
performing the material and substantial duties of [her] regular occupation due to [her]
-2-
No. 13-4084, Russell v. Catholic Healthcare Partners Employee Long Term Disability Plan, et al.
sickness or injury.” App. Rec. at 51 (emphasis supplied). In that same November
2007 letter, Unum informed Plaintiff “[a]fter 24 months of payments, you are disabled
when Unum determines that due to the same sickness or injury, you are unable to
perform the duties of any gainful occupation for which you are reasonably fitted by
education, training or experience.” Id. (emphasis supplied). The November 2007
letter also informed Plaintiff of Unum’s contractually reserved right to request proof
of continuing disability. In the fall of 2008, Unum approved Plaintiff’s eligibility for
disability benefits for an additional twelve months. Throughout the twenty-four
month period, Unum sent Plaintiff several written requests for proof of continuing
disability.
In the fall of 2009, Unum decided not to continue Plaintiff’s LTD benefits,
finding that Plaintiff’s medical records indicated that she could work as a Triage
Nurse or Nurse Case Manager. Plaintiff exhausted Unum’s internal administrative
appeal process on July 20, 2010, when Unum issued its final decision denying
Plaintiff’s LTD benefits.
On March 30, 2011, Plaintiff filed this action seeking a reversal of the plan
administrator’s decision denying her benefits. The parties filed dueling motions in the
district court—Plaintiff filed a Motion for Judgment Reversing Administrator’s
-3-
No. 13-4084, Russell v. Catholic Healthcare Partners Employee Long Term Disability Plan, et al.
Decision and Defendant filed a Motion to Uphold the Administrative Decision. Each
party responded and replied to both motions. The district court decided both motions
in a single Order, denying Plaintiff’s motion and granting Defendants’ motion. R. at
[39]. Plaintiff now appeals.
On appeal, Plaintiff disputes whether United States Courts have jurisdiction
over this case because the plan may not be an ERISA plan. Defendants argue that
whether the plan is an ERISA plan is a substantive element of Plaintiff’s ERISA
claim, not a jurisdictional issue. Defendants argue that Plaintiff forfeited the
substantive element by filing this action and prosecuting it to judgment. Questions
about subject-matter jurisdiction present legal issues, which this Court reviews de
novo. Musson Theatrical, Inc. v. Federal Express Corp., 89 F.3d 1244, 1248 (6th Cir.
1996).
In Daft v. Advest, Inc., 658 F.3d 583 (6th Cir. 2011), the Sixth Circuit analyzed
whether the presence of an ERISA plan is jurisdictional under the rubric in Arbaugh
v. Y&H Corp., 546 U.S. 500 (2006). We held that “the existence of an ERISA plan
is a nonjurisdictional element of Plaintiffs’ ERISA claim.” Advest, 658 F.3d at 587.
“[T]he existence of an ERISA plan must be considered an element of plaintiff’s claim
under [29 U.S.C. § 1132](a)(1)(B), not a prerequisite for federal jurisdiction.” Id. at
-4-
No. 13-4084, Russell v. Catholic Healthcare Partners Employee Long Term Disability Plan, et al.
590–91. There is no basis to find that the plan here is different from the plan in
Advest, and thus we consider the existence of an ERISA plan to be a substantive
element of the claim rather than jurisdictional in this case.
Plaintiff argues the underlying plan might be a “church plan” that is not an
ERISA plan. “[W]hen Congress does not rank a statutory limitation on coverage as
jurisdictional, courts should treat the restriction as nonjurisdictional in character.’” Id.
at 590 (quoting Arbaugh, 546 U.S. at 515–16). ERISA’s jurisdictional provision does
not predicate jurisdiction upon whether a plan meets the definition of a “church plan.”
29 U.S.C. § 1132(e)(1). Both the provision defining what qualifies as a “church
plan”—29 U.S.C. § 1002(33)—and the provision stating whether such a plan is
covered by ERISA—29 U.S.C. § 1003(b)(2)—are separate from ERISA’s
jurisdictional provision.
In Advest, this Court reasoned that fairness also weighed against treating the
existence of a plan as jurisdictional because the party arguing against jurisdiction on
appeal was the party that originally invoked federal jurisdiction. Id. at 593. The
interests of fairness also compel a nonjurisdictional conclusion here. It was Plaintiff
who invoked federal jurisdiction in the first place and then, over two years into the
litigation, after Defendants prevailed in trial court, raised the issue of jurisdiction.
-5-
No. 13-4084, Russell v. Catholic Healthcare Partners Employee Long Term Disability Plan, et al.
Whether Defendants’ plan is an ERISA plan is a substantive element that Plaintiff
forfeited, not a jurisdictional prerequisite.
Plaintiff next asserts two arguments supporting her position that her claims are
not contractually time-barred. First, Plaintiff asserts that each of Unum’s written
requests for proof of continuing disability reset the three-year contractual limitations
period. Second, Plaintiff argues that the different standard of disability Unum
employed after twenty-four months reset the contractual limitations period. For the
reasons that follow, neither of those arguments is persuasive.
The parties and district court do not specify on what standard the district court
dismissed Plaintiff’s case as contractually time-barred. The district court considered
the administrative record in its decision to dismiss Plaintiff’s claims. We conclude,
therefore, that the district court’s dismissal on limitations grounds was the functional
equivalent of a Rule 56 ruling because the district court considered material extrinsic
to the pleadings. See Engleson v. Unum Life Ins. Co. of America 723 F.3d 611, 616
(6th Cir. 2013) (converting a nominally Rule 12(b)(6) ruling into a functionally Rule
56 motion for appellate purposes where the district court considered matters outside
the pleadings).
-6-
No. 13-4084, Russell v. Catholic Healthcare Partners Employee Long Term Disability Plan, et al.
We review de novo a district court's grant of summary judgment in an ERISA
disability benefits action based on an administrative record. Glenn v. MetLife, 461
F.3d 660, 665 (6th Cir. 2006). “We also review de novo a district court's
determination that a complaint was filed outside of the statute of limitations.” Rice v.
Jefferson Pilot Fin. Ins. Co., 578 F.3d 450, 453–54 (6th Cir.2009) (internal citation
and punctuation omitted) (reviewing the application of an ERISA contractual
limitation term).
ERISA does not contain a statute of limitations for claims challenging a denial
of benefits. Rice, 578 F.3d at 454. The Defendants’ plan, however, sets a contractual
limitations period during which participants may seek judicial review of an adverse
benefits determination. The relevant terms state:
[Y]ou must send Unum written proof of your claim no later than
90 days after your elimination period. If it is not possible to give
proof within 90 days, it must be given no later than 1 year after
the time proof is otherwise required. . . .
You can start legal action regarding your claim 60 days after proof
of claim has been given and up to 3 years from the time proof of
claim is required, unless otherwise provided under federal law.
Once you are deemed to have exhausted your appeal rights under
the Plan, you have the right to seek court review under Section
502(a) of ERISA of any benefit determinations with which you
disagree.
-7-
No. 13-4084, Russell v. Catholic Healthcare Partners Employee Long Term Disability Plan, et al.
App. Rec. at 181, 22, 47. Contractual limitations on ERISA actions are enforceable
if they are reasonable. Med. Mut. of Ohio v. K. Amalia Enters., Inc., 548 F.3d 383,
390–91 (6th Cir. 2008). This Circuit has previously approved three-year limitations
periods in ERISA plans as reasonable. See Rice, 578 F.3d at 456; Med. Mut. of Ohio,
548 F.3d at 391; Morrison v. Marsh & McLennan Companies, Inc., 439 F.3d 295,
301–02 (6th Cir. 2006).
The Supreme Court recently held “a participant and a plan may agree by
contract to a particular limitations period, even one that starts to run before the cause
of action accrues, as long as the period is reasonable.” Heimeshoff v. Hartford Life
& Accident Ins. Co., 134 S. Ct. 604, 610 (2013). In Heimeshoff, an ERISA plan and
a participant “agreed by contract to a 3-year limitations period. The contract
specifie[d] that this period begins to run at the time proof of loss is due.” Id. The
facts of Heimeshoff are materially the same as the facts here, therefore, Heimeshoff
controls this case.
Plaintiff’s disability began on May 12, 2007. Plaintiff satisfied the Policy’s six-
month elimination period by remaining continuously disabled until November 12,
2007. Unum requires proof of disability no later than ninety days after the six-month
elimination period. According to the contract then, Defendants required proof of
-8-
No. 13-4084, Russell v. Catholic Healthcare Partners Employee Long Term Disability Plan, et al.
claim by February 8, 2008 and the contractual limitations period to bring legal action
expired three years later, on February 8, 2011. Plaintiff filed this action on March 30,
2011, missing the deadline by fifty days. Defendants’ internal appellate review of
Plaintiff’s claim concluded on July 20, 2010, leaving Plaintiff over six months to file
a legal action before the February 8, 2011 contractual limitations deadline.
Plaintiff argues that because Defendant used a different standard of disability
in denying her benefits after twenty-four months she is entitled to the one-year
extension where “it is not possible to give proof within 90 days.” This argument,
however, is unpersuasive. Plaintiff simply mischaracterizes the meaning of the one-
year extension allowance. The option in the contract for a one-year extension relates
to the impossibility of showing proof of claim at the time a claimant initially claims
disability, not at a subsequent time when Unum requires proof of continuing
disability. Further, Defendant did not suddenly or without warning use a different
standard for disability in 2009 after approving twenty-four months of benefits. In the
letter Plaintiff received on November 15, 2007, granting her first installment of
benefits, Unum states, “[a]fter 24 months of payments, you are disabled when Unum
determines that due to the same sickness or injury, you are unable to perform the
duties of any gainful occupation for which you are reasonably fitted by education,
-9-
No. 13-4084, Russell v. Catholic Healthcare Partners Employee Long Term Disability Plan, et al.
training or experience.” Plaintiff was on notice in November of 2007 that she would
have to satisfy the any-gainful-occupation standard to receive benefits in the fall of
2009. The plan’s use of the “any gainful occupation” standard did not reset the
contractual limitations period.
Plaintiff also argues that each of Unum’s written requests for proof of
continuing disability reset the three-year contractual limitations period. This argument
mischaracterizes Defendants’ requests for proof of continuing disability as requests
for proof of new claims. Defendants’ initial November 2007 letter granting Plaintiff
benefits informed Plaintiff of Unum’s contractually reserved right to request proof of
continuing disability. Each new request for proof of continuing disability pertained
to a single continuous claim of disability, not new individual claims of disability.
Unum’s written requests for proof of continuing disability did not reset the three-year
contractual limitations period.
Accordingly, we AFFIRM the judgment of the district court dismissing the
case on the grounds that it is contractually time-barred.
- 10 -