The 9th Circuit Court of Appeals has ruled that former employees who believe they are missing out on ERISA-protected benefits have four years to sue for those benefits after their request is formally denied.
ERISA is the Employee Retirement Income Security Act, the federal law that sets minimum standards for private-sector pension plans.
Recent case: Valerie Withrow became permanently disabled in 1986. She applied for long-term disability payments under her employer’s insurance plan and was approved for benefits. At the time, she believed she was being underpaid based on the insurer’s calculation of her pre-disability wage.
Many years passed. Periodically, Withrow would call or write the insurer asking it to look into how her monthly benefit was calculated. Sometimes, she got no response. Other times, the insurer asked her to submit more information. Finally, the insurer said its calculations were correct, but she could appeal. Her appeal was unsuccessful.
That’s when she filed suit, alleging she had been denied benefits due to her under ERISA.
The insurer said she had waited far too long. But the court said she had four years after the insurer’s final denial to file her claim, using California’s four-year statute of limitations for contract disputes. The case will now go to trial. (Withrow v. Bache Halsey Stuart, No. 09-55024, 9th Cir., 2011)