In a recent ERISA disability benefits case, the First Circuit answered the following questions involving a claim for the underpayment of monthly benefits: 1) when does the underpayment claim accrue?; and 2) does each new monthly underpayment give rise to a new claim?
In this case, the LTD claim was approved, but the insurer denied the claimant’s assertion that the benefits amount was inaccurate. Ordinarily, a cause of action for ERISA benefits accrues when a fiduciary denies a participant benefits. In this case, benefits were paid but the insurer denied the claimant’s assertion that the amount of benefits paid was inaccurate. This was not a complete repudiation or a formal denial of all LTD benefits. The court found that it was a clear repudiation of the insured’s assertion that he was entitled to higher benefits. The court concluded that this repudiation, of which the insured was aware, caused the insured’s cause of action to accrue, thereby triggering the statute of limitations to start running. The court therefore found the claims untimely.
The court then reviewed the issue with respect to the payments that should have been made within the 6-year limitations period, like under an installment contract and concluded that when the act complained of is a one-time miscalculation, the statute of limitations does not start separately for each payment. As such, the court ruled that the statute of limitations had run and that the suit was not timely filed.
For a copy of this decision, click here.