Dye v. Associates First Capital Corp. Long-Term DisabilIty Plan 504

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
June 14, 2007
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 06-41569
Summary Calendar
ALLYSON A DYE,
Plaintiff-Appellant,
v.
ASSOCIATES FIRST CAPITAL CORPORATION LONG-TERM DISABILITY
PLAN 504; ASSOCIATES FIRST CAPITAL CORPORATION CAFETERIA
PLAN 502,
Defendants-Appellees.
Appeal from the United States District Court for the
Eastern District of Texas, Marshall
2:03-CV-289
Before DAVIS, WIENER, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Allyson Dye challenges the termination of her short term
disability benefits and the denial of long term disability
benefits. The district court held that her claims were barred by
the Plan’s limitations period. We AFFIRM.
Dye was a project manager at Associates First Capital
*
Pursuant to 5th Cir. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5th Cir. R. 47.5.4.
Corporation (“Associates”) when she underwent surgery to replace
her right knee in June, 2000. She applied for and received
approval for short term disability benefits under the Associates
First Capital Corporation Cafeteria Plan 502 (“Plan 502"), which
ran from June 30, 2000, to September 25, 2000. On October 9, 2000,
the plan’s third-party administrator, Kemper National Services,
Inc. (“Kemper”), sent Dye a letter terminating her benefits after
exhausting only 12 of the 26 weeks of short term disability
coverage available. Dye subsequently applied for long term
disability benefits, but her claim was denied by letter dated March
28, 2001, on account of her failure to fully exhaust the short-term
benefits. On April 11, 2001, Kemper’s Appeal Review Committee
affirmed the denial of her short term benefits.
Approximately two years after the Appeal Review Committee
upheld the denial of benefits, Dye, through counsel, unsuccessfully
sought information concerning her claim, including the
administrative record, from Kemper. In August, 2003, she filed
suit seeking to recover benefits under the Employee Retirement
Income Security Act of 1974 (“ERISA”). The district court
dismissed this case as untimely given the contractual limitations
period of 120 days. Dye appeals. The validity of the contractual
limitations period is a question of law which we review de novo.
Harris Methodist Fort Worth v. Sales Support Servs. Inc. Employee
Health Care Plan, 426 F.3d 330, 333 (5th Cir. 2005).
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ERISA does not provide a statute of limitations for denial of
benefits lawsuits. In the absence of such a statute, courts apply
the most analogous state statute of limitations. Id. at 337; Hogan
v. Kraft Foods, 969 F.2d 142, 145 (5th Cir. 1996). In Texas, the
most analogous state statute of limitations is the four year
limitation governing suits on contracts. Tex. Civ. Prac. & Rem.
Code § 16.004(a). “Where a plan designates a reasonable, shorter
time period, however, that lesser limitations schedule governs.”
Harris, 426 F.3d at 337. Because the Plan in this case provides
that “no legal action may be commenced against an ERISA covered
plan more than 120 days after . . . receipt of the decision on
appeal,” the question is whether that shorter period is reasonable.
In approving the use of a “reasonable, shorter time period,”
we cited two decisions from sister circuits which enforced shorter
time periods. See Northlake Regional Medical Center v. Waffle
House, 160 F.3d 1301, 1303 (11th Cir. 1998) (enforcing as
reasonable a 90-day contractual limitations period, triggered by
plan’s decision on administrative appeal); Doe v. Blue Cross Blue
Shield of Wisconsin, 112 F.3d 869, 874-75 (7th Cir. 1997)(enforcing
as reasonable a 39-month contractual limitations period from first
date on services on which action based). In particular, the 90-day
limitations period upheld in Northlake was shorter than the 120-day
period now at issue. While this suggests that the 120-period is
not presumptively unreasonable, however, it does not automatically
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mean that it is reasonable. Rather, we must look to other factors
to determine whether the 120-day period was reasonable in this
particular case.
Dye argues that a period less than two years is unlawful and
unreasonable under section 16.070(a) of the Texas Civil Practice &
Remedies Code, which prohibits an agreement to shorten a statute of
limitation to less than two years. The only Texas court to address
this statute in the ERISA context, however, held that it was
inapplicable to an ERISA contract. Hand v. Stevens Trans., Inc.
Employee Benefit Plan, 83 S.W.3d 286, 290 (Tex. App. Dallas
2002)(“A state statute prohibiting the shortening of a statute of
limitations is not binding on ERISA claims.”).
In the alternative, Dye argues that the 120-day period is not
reasonable under federal common law for a long term disability
plan. She bases this argument on the fact that federal cases have
not previously enforced a 120-day limitation period in the context
of disability benefits, as opposed to health, death, or pension
benefits. Courts have enforced short contractual limitations
provisions in several analogous contexts, however. See, e.g.,
Northlake, 160 F.3d at 1302-03 (applying 90-day period in health
care context); Sheckley v. Lincoln Nat’l Corp., 366 F.Supp.2d 140(D.Me. 2005)(applying six-month period in retirement plan context);
Davidson v. Wal-Mart Associates Health and Welfare Plan, 305
F.Supp.2d 1059 (S.D. Iowa 2004)(applying 45-day period in health
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care context). Dye does not offer any federal cases in which a
court expressly refused to enforce such a limit in the disability
benefits context, and there is no apparent reason that a court
should treat a limitations period differently in this context.
The Plan gives notice, specifying the 120-day period. The
Plan also requires prompt notification to the employee of a
decision on appeal. Moreover, the period does not begin to run
until after the disposition of the internal appeal process. Given
these other factors, the 120-day period is reasonable in this
specific case.
For the foregoing reasons, we AFFIRM the district court.
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