G. v. United Healthcare et al

Filing 30

MEMORANDUM DECISION AND ORDER denying 5 Motion to Dismiss for Failure to State a Claim. Signed by Judge David Nuffer on 6/2/17 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, NORTHERN DIVISION
WILLIAM G.,
Plaintiff,

MEMORANDUM DECISION AND
ORDER DENYING DEFENDANTS’
MOTION TO DISMISS

v.
UNITED HEALTHCARE, UNITED
BEHAVIORAL HEALTH, and the
MORGAN STANLEY MEDICAL PLAN,

Case No. 1:16-cv-00144-DN
District Judge David Nuffer

Defendants.

Defendants United Healthcare (“UHC”), United Behavioral Health (“UBH”), and the
Morgan Stanley Medical Plan (“Plan”), collectively “Defendants,” filed a Motion for Partial
Dismissal 1 (the “Motion to Dismiss”) in response to Plaintiff William G.’s (“Bill”) Complaint. 2
The motion argues that a portion of the relief Bill seeks is barred by the Plan’s limitations period
for seeking judicial review. Bill responded 3 that the Plan’s limitations period is unenforceable
because Defendants violated the Employee Retirement Income Security Act of 1974’s
(“ERISA”) claim procedure regulations by not disclosing the limitations period in their denial
letters for his claims. And Defendants replied. 4
Because ERISA’s claim procedure regulations require plan administrators to disclose
plan limitations periods in denial letters, and Defendants failed to do so in their denial letters for

1

Docket no. 5, filed Feb. 2, 2017.

2

Complaint, docket no. 2, filed Sep. 30, 2016.

3

Memorandum in Opposition to Defendants’ Motion for Partial Dismissal (“Opposition”), docket no. 17, filed
Mar. 24, 2017.
4

Reply Memorandum in Support of Defendants’ Motion for Partial Dismissal (“Reply”), docket no. 24, filed
Apr. 21, 2017.

Bill’s claims, the Plan’s limitations period is unenforceable against Bill. Therefore, Bill timely
filed his Complaint within the applicable state six-year statute of limitations and Defendants’
Motion to Dismiss is DENIED.

FACTUAL BACKGROUND ......................................................................................................... 2
Second Nature Treatment ................................................................................................... 3
Waypoint Treatment ........................................................................................................... 3
Elevations Treatment .......................................................................................................... 4
DISCUSSION ................................................................................................................................. 5
ERISA’s claim procedure regulations require denial letters to disclose a plan’s limitations
period for seeking judicial review........................................................................... 7
The plain language of Subsection (g)(1)(iv) requires all denial letters to disclose a
plan’s limitations period for seeking judicial review.................................. 9
Policy considerations support a reading of Subsection (g)(1)(iv) that requires
disclosure of a plan limitations periods in denial letters ........................... 16
Defendant’s failure to disclose the Plan’s limitations period in the denial letters is
prejudicial and renders the limitations period unenforceable against Bill ............ 18
ORDER ......................................................................................................................................... 20

FACTUAL BACKGROUND
Bill is an employee of Morgan Stanley and a participant in the Plan. 5 The Plan is a “selffunded employee welfare benefit plan” established under ERISA. 6 Beginning in 2013, Bill’s son,
W.G., received medical treatment for mental health conditions at three treatment centers: Second
Nature Uintahs (“Second Nature”), Waypoint Academy (“Waypoint”), and Elevations
Residential Treatment Center (“Elevations”). 7
Because the dates of the insurance claims arising from these three treatment centers are
critical to the analysis that follows, a brief history of W.G.’s connection to each center is
provided.

5

Complaint ¶ 2.

6

Id. ¶ 3.

7

Id. ¶¶ 7, 18.

2

Second Nature Treatment
W.G. was admitted to Second Nature, a licensed therapeutic wilderness program for
adolescents with mental health conditions, on October 14, 2013. 8 After approximately three
months of treatment, W.G. was discharged from Second Nature on January 9, 2014, “with a
strong recommendation for placement” at another treatment facility. 9 Sometime after W.G.’s
discharge from Second Nature, Bill submitted an insurance claim to UBH, an agent for the Plan,
for W.G.’s treatment at Second Nature. 10 UBH denied coverage for the treatment in a letter on
October 15, 2014. 11 Bill appealed the denial on December 12, 2014. 12 And UBH maintained its
denial of coverage on January 13, 2015. 13
Waypoint Treatment
After being discharged from Second Nature, W.G. was transferred directly to Waypoint
and was admitted on January 9, 2014. 14 W.G. spent almost 19 months at Waypoint before being
discharged on July 22, 2015. 15 Bill submitted an insurance claim for W.G.’s treatment at
Waypoint sometime after W.G.’s admission to the facility, and UBH denied coverage because it
had not been “preauthorized by UBH.” 16 Bill appealed the denial on December 12, 2014. 17 UBH
responded on December 23, 2014, and again on January 9, 2015, denying the insurance claim. 18

8

Id. ¶¶ 18-19.

9

Id. ¶ 21.

10

Id. ¶ 38.

11

Id. ¶ 39.

12

Id. ¶ 40.

13

Id. ¶ 49.

14

Id. ¶¶ 21-22.

15

Id. ¶ 28.

16

Id. ¶¶ 51-52.

17

Id. ¶ 53

18

Id. ¶ 54, 56.

3

On June 18, 2015, Bill appealed a second time and his claim was denied on July 17, 2015. 19
After both of Bill’s appeals were denied, he requested an external review of the denial on
February 2, 2016. 20 The reviewing entity, AllMed, upheld UBH’s July 17, 2015 denial. 21
Elevations Treatment
W.G. transferred directly from Waypoint to Elevations on July 22, 2015. 22 W.G. was
treated at Elevations for almost one year and was discharged on June 2, 2016, because he turned
18 years old and Elevations does not offer treatment programs for adults. 23 At some time after
W.G.’s admission to Elevations, Bill submitted an insurance claim for W.G.’s medical
expenses. 24 UBH denied the insurance claim on July 28, 2015. 25 Bill appealed the denial on
January 20, 2016, and UBH denied the appeal on February 19, 2016. 26 Bill appealed again on
June 14, 2016, which UBH denied as untimely on June 20, 2016. 27
Following UBH’s June 20, 2016 denial, Bill initiated this case against Defendants on
September 30, 2016. 28 Bill alleges a single cause of action for benefits under ERISA and asks for
review of UBH’s denials of coverage for W.G.’s treatment at Second Nature, Waypoint, and
Elevations. 29 Defendants challenge the timeliness of Bill’s Complaint regarding W.G.’s

19

Id. ¶¶ 57, 63.

20

Id. ¶ 64.

21

Id.

22

Id. ¶ 28.

23

Id. ¶ 36.

24

Id. ¶ 67.

25

Id.

26

Id. ¶¶ 68-69.

27

Id. ¶¶ 71, 74.

28

Id.

29

Id. ¶¶ 78-85.

4

treatment at Second Nature and Waypoint, but do not challenge the Complaint with regard to
W.G.’s treatment at Elevations. 30
DISCUSSION
Defendants seek partial dismissal of Bill's Complaint pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure based on the Plan’s contractual limitations period. 31 Defendants
are entitled to dismissal under Rule 12(b)(6) when the complaint, standing alone, is legally
insufficient to state a claim on which relief may be granted. 32 When considering a motion to
dismiss for failure to state a claim, the thrust of all well-pleaded facts is presumed, but
conclusory allegations need not be considered. 33 And the complaint’s legal conclusions and
opinions are not accepted, whether or not they are couched as facts. 34
When ruling on a motion to dismiss in an ERISA claim under Rule 12(b)(6), documents,
such as Summary Plan Descriptions (“SPDs”) and denial letters, may be considered if they are
“referred to in the complaint” and are “central to the plaintiff's claim.” 35 Consideration of these
documents will not convert the motion into one for summary judgment. 36
“ERISA does not contain a [statutory] limitations provision for private enforcement
actions under 29 U.S.C. § 1132.” 37 “Thus, [courts] generally apply the most closely analogous

30

Motion to Dismiss at 2.

31

Id.

32

Sutton v. Utah State Sch. For the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999).

33

Cory v. Allstate Ins., 583 F.3d 1240, 1244 (10th Cir. 2009).

34

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see also Brown v.
Zavaras, 63 F.3d 967, 972 (10th Cir. 1995).

35

GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997).

36

Id.; see also Michael C.D. v. United Healthcare, case no. 2:15-cv-00306-DAK, 2016 WL 2888984, at *2 (D. Utah
May 17, 2016).
37

Salisbury v. Hartford Life and Acc. Co., 583 F.3d 1245, 1247 (10th Cir. 2009).

5

statute of limitations under state law.” 38 In Utah, “when dealing with a self-funded ERISA
benefit plan, the most analogous statute of limitations is six years[.]” 39 However, when the
parties have contractually agreed to a limitations period, “[c]hoosing which state statute to
borrow is unnecessary[.]” 40 Rather, the limitations period found in the ERISA plan is
enforceable and applied to the claim, so long as it is reasonable. 41
Here, the Plan provides:
You may not bring a lawsuit to recover benefits under a benefit plan until you
have exhausted the plan’s administrative process described in this SPD. If your
appeal is denied, you have the right to file a lawsuit under ERISA, if it is within
the earliest of:
•

Six months following the date your appeal is denied[;]

•

Three years following the date the services you are appealing are performed[;]
or

•

The end of any other applicable statutory limitation period[.] 42

The allegations in Bill’s Complaint demonstrate that he did not file the Complaint within
six months of the final denial letters relating to W.G.’s treatment at Second Nature and
Waypoint. 43 Yet Bill does not challenge the reasonableness of the Plan’s six-month limitations
period. Rather, to avoid the partial dismissal of his ERISA claim, Bill argues that Utah’s six-year
statute of limitations applies to the claim because Defendants failed to provide specific notice of
the Plan’s limitations period for seeking judicial review in their final denial letters—in violation
of ERISA’s claim procedure regulations—thus rendering the Plan’s limitations period

38

Id.

39

Michael C.D., 2016 WL 2888984, at *2 (citing Utah Code Ann. § 78B-2-309(2)).

40

Salisbury, 583 F.3d at 1247.

41

Id. at 1247-48.

42

Motion to Dismiss at Ex. A at 151, docket no. 5-1, Ex. B at 161, docket no. 5-2, Ex. C at 162, docket no. 5-3, filed
Feb. 2, 2017 (emphasis in originals).
43

Complaint ¶¶ 49, 64.

6

unenforceable. 44 A review of the denial letters 45 shows that they do not disclose the Plan’s
limitations period for seeking judicial review. Therefore, the resolution of Defendants’ Motion to
Dismiss turns on whether ERISA’s claim procedure regulations required the denial letters to
disclose the Plan’s limitations period for seeking judicial review.
ERISA’s claim procedure regulations require denial letters
to disclose a plan’s limitations period for seeking judicial review
“Congress enacted ERISA to ‘protect … the interests of participants in employee benefit
plans and their beneficiaries’ by setting out substantive regulatory requirements for employee
benefit plans and to ‘provid[e] for appropriate remedies, sanctions, and ready access to the
Federal courts.’” 46 Therefore, ERISA provides that:
[E]very employee benefit plan shall—
(1) provide adequate notice in writing to any participant or beneficiary whose
claim for benefits under the plan has been denied, setting forth the specific
reasons for such denial, written in a manner calculated to be understood by the
participant, and
(2) afford a reasonable opportunity to any participant whose claim for benefits
have been denied for a full and fair review by the appropriate named fiduciary of
the decision denying the claim. 47

44

Opposition at 10-20. Bill also argues that Defendants agreed to consolidate his three separate insurance claims
under the Plan, thus delaying the start of the limitations period after the Second Nature and Waypoint denials. Id. at
5-10. No facts describing this alleged agreement are included in Bill’s Complaint. Rather, Bill raises these facts in
his Opposition. Id. at 2-3; see also Declaration of William G., docket no. 18, filed Mar. 24, 2017. Defendants argue
that these new factual allegations should not be considered because a motion to dismiss is limited to the facts alleged
in the complaint. Reply at 2, 6. Because Defendant’s Motion to Dismiss is decided on other grounds, these
arguments are not addressed.
45

Declaration of Ngoc Han Nguyen at Ex. 1, Ex. 2, docket no. 24-1, filed Apr. 21, 2017.

46

Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) (quoting 29
U.S.C. § 1001(b)).

47

29 U.S.C. § 1133.

7

“The purpose of the[se] requirements … is to ‘enable the claimant to prepare adequately for any
further administrative review, as well as appeal to the federal courts.’” 48
ERISA also grants the Department of Labor authority to promulgate regulations to
govern the ERISA claims procedure process. 49 Two regulatory provisions are relevant to the
parties’ arguments on Defendants’ Motion to Dismiss—29 C.F.R. §§ 2560.503-1(g)(1)
and 2560.503-1(j)(4)(i). These regulations require plan administrators to provide information
about review procedures in adverse benefit determination letters. 50 Subsection (g)(1)(iv) applies
to “any adverse benefit determination” and specifically requires “[a] description of the plan’s
review procedures and the time limits applicable to such procedures, including a statement of the
claimant’s right to bring a civil action … following an adverse benefit determination on
review[.]” 51 Subsection (j)(4)(i) applies only to “benefit determination[s] on review[,]” i.e., final
adverse benefit determinations, and requires “[a] statement describing any voluntary appeal
procedures offered by the plan and the claimant’s right to obtain the information about such
procedures … and a statement of the claimant’s right to bring [a civil] action[.]”52
Bill argues the plain reading of these regulations requires all denial letters to disclose a
plan’s limitations period for seeking judicial review. 53 On the other hand, Defendants argue that

48

Witt v. Metro. Life Ins. Co., 772 F.3d 1269, 1280 (11th Cir. 2014) (quoting Halpin v. W.W. Grainger, Inc., 962
F.2d 685, 689 (7th Cir. 1992)); see also Richardson v. Cent. States, Se. and Sw. Areas Pension Fund, 645
F.2d 660, 665 (8th Cir. 1981).
49

29 U.S.C. § 1133.

50

29 C.F.R. §§ 2560.503-1(g)(1), (j)(4)(i).

51

Id. § 2560.503-1(g)(1)(iv).

52

Id. § 2560.503-1(j)(4)(i).

53

Opposition at 10-19.

8

the plain language merely requires disclosure of the right to bring a civil action and not the time
limit for filing a civil action in federal court. 54
The plain language of Subsection (g)(1)(iv) requires all denial letters to disclose a plan’s
limitations period for seeking judicial review
Defendants maintain that a proper reading of Subsection (g)(1)(iv) requires disclosure of
only the time limits applicable to internal appeal procedures to be described in a denial letter, and
not the limitations period for filing a civil action after the administrative process has been
exhausted. 55 In other words:
[T]he two phrases in section 2560.503-1(g)(1)(iv) could be read separately, such
that a plan administrator is, first, required to include in its denial letter a
“description of the plan’s review procedures and the time limits applicable to such
procedures,” and second, required to include “a state of the claimant’s right to
bring a civil action,” though not necessarily the time period for filing the action. 56
However, reading the regulation in this way—as having two unrelated requirements—
necessitates reading the word “including” out of Subsection (g)(1)(iv), and replacing it with the
word “and.” 57 Such a reading is improper because the word “including” cannot be easily
removed or changed since it “modifies the word ‘description,’ which is followed by a
prepositional phrase explaining what must be described—the plan’s review procedures and
applicable time limits for those procedures.” 58 Therefore, it follows that “[i]f the description of
the review procedures must ‘includ[e]’ a statement concerning civil actions, then civil actions are
logically one of the review procedures envisioned by the Department of Labor[‘s regulation].” 59

54

Reply at 10-14.

55

Id.

56

Santana-Diaz v. Metro. Life Ins. Co., 816 F.3d 172, 179 (1st Cir. 2016).

57

Id. at 180.

58

Mirza v. Ins. Adm’r of America, Inc., 800 F.3d 129, 134 (3rd Cir. 2015).

59

Id.

9

Accordingly, the only proper reading of Subsection (g)(1)(iv)’s plain language requires a plan
administrator to disclose the plan’s applicable civil action time limits in any denial letter.
This reading is further supported by the differing language choices of
Subsection (g)(1)(iv) and Subsection (j)(4)(i). Specifically, Subsection (j)(4)(i) uses the phrase
“appeal procedures,” when referring to the requirement that a final denial letter disclose a plan’s
voluntary internal appeal procedures. Subsection (g)(1)(iv), on the other hand, uses the general
phrase “review procedures,” referring to both the internal appeal procedures of a plan and
judicial review. “A familiar principle of statutory construction ... is that a negative inference may
be drawn from the exclusion of language from one statutory provision that is included in other
provisions of the same statute.” 60 In other words, when particular language is included in one
provision but omitted or changed in another, it is generally presumed that the drafter acted
intentionally. 61 If the Department of Labor intended that Subsection (g)(1)(iv) require denial
letters to disclose only time limits related to internal appeal procedures, it would have used the
more narrow phrase—“appeal procedures”—found in Subsection (j)(4)(i) rather than the broader
phrase—“review procedures”—when drafting Subsection (g)(1)(iv).
The three Circuit Courts of Appeals that have addressed this specific issue—the First,
Third, and Sixth Circuits—have interpreted Subsection (g)(1)(iv) in this way. 62 Defendants
nevertheless cite to cases from two other circuit courts of appeals—the Ninth and Eleventh
Circuits—to support their interpretation. 63 However, the cases Defendants rely on are

60

Hamdan v. Rumsfeld, 548 U.S. 557, 578, 126 S.Ct. 2749, 165 L.Ed.2d 723 (2006).

61

Id.

62

Santana-Diaz, 816 F.3d at 180; Mirza, 800 F.3d at 134; Moyer v. Metro. Life Ins. Co., 762 F.3d 503, 505 (6th
Cir. 2014).

63
Reply at 12-14 (citing Wilson v. Standard Ins. Co., 613 Fed. App’x 841 (11th Cir. 2015); Scharff v. Raytheon Co.
Short Term Disability Plan, 581 F.3d 899 (9th Cir. 2009)).

10

inapplicable and unpersuasive. In Wilson v. Standard Ins. Co., the Eleventh Circuit’s analysis did
not rely on an interpretation of Subsection (g)(1)(iv). 64 Rather, the court determined
Subsection (g)(1)(iv) was ambiguous and simply assumed the regulation required denial letters to
“notify the claimant of her time for filling a lawsuit under ERISA[.]” 65 It then decided the case
on equitable tolling grounds. 66 Because the Eleventh Circuit does not rely on an interpretation of
Subsection (g)(1)(iv) and because a discussion of equitable tolling is unnecessary to the
resolution of Defendant’s Motion to Dismiss, 67 Wilson is inapplicable and unpersuasive.
Likewise, the Ninth Circuit’s opinion in Scharff v. Raytheon Co. Short Term Disability
Plan is inapplicable and unpersuasive because its analysis does not reference or rely on
Subsection (g)(1)(iv). 68 In Scharff, after the plaintiff conceded that the plan administrator had
met its obligations under ERISA, the Ninth Circuit merely declined to adopt a similar California
state regulation that would require plan administrators to disclose civil filing deadlines in denial
letters:
Plaintiff concedes that the Plan met all applicable ERISA disclosure requirements
and that [Defendant] was not obligated under ERISA to inform her of the
deadline. She argues, however, that we should impose an additional “duty to
inform” on claims administrators, drawn from a California insurance regulation.
We decline to do so. 69
Because the Ninth Circuit did not interpret Subsection (g)(1)(iv), Scharff does not persuasively
support Defendants’ argument.

64

Wilson, 613 Fed. App’x at 844.

65

Id.

66

Id. at 845.

67

See infra at 17-18.

68

Scharff, 581 F.3d 899.

69

Id. at 907.

11

In further support of their interpretation of Subsection (g)(1)(iv), Defendants cite a Utah
District Court ruling in the case of Michael C.D. v. United Healthcare. 70 In Michael C.D., the
court declined to interpret Subsection (g)(1)(iv) to require denial letters to include the contractual
imitations period for filing an ERISA claim in federal court. 71 In doing so, the court considered
Subsection (j)(4)(i), which applies to only final denial letters, in conjunction with
Subsection (g)(1)(iv). 72 Subsection (j)(4)(i) requires final denial letters to disclose information
about a plan’s voluntary internal appeal procedures, but does not expressly require plan
administrators to disclose the time limits for bringing a civil suit. 73 Relying on Michael C.D.,
Defendants argue that it is counterintuitive for plan administrators to be required to disclose time
limitations in previous denial letters, but not in final denial letters—“especially where ERISA’s
exhaustion of administrative remedies doctrine only allows a plan participant to sue after
completing any requisite appeals[.]” 74 This argument is not persuasive in light of subsection
(g)(1)(iv)’s plain language.
Defendants’ argument incorrectly assumes that Subsection (j)(4)(i) is the only provision
that applies to final denial letters. This reading of Subsection (j)(4)(i), which renders the plain
language of Subsection (g)(1)(iv) meaningless, is unacceptable. “A statute should be construed
so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void
or insignificant[.]” 75

70

Reply at 11-12 (citing Michael C.D., 2016 WL 2888984).

71

2016 WL 2888984, at *4-5.

72

Id.

73

29 C.F.R. § 2560.503-1(j)(4)(i).

74

Reply at 13, docket no. 24.

75
2A N. Singer, Statutes and Statutory Construction § 46.06, pp. 181–86 (rev. 6th ed. 2000); see also Hibbs v.
Winn, 542 U.S. 88, 101, 124 S.Ct. 2276, 159 L.Ed.2d. 172 (2004).

12

Here, Subsections (g)(1)(iv) and (j)(4)(i) can be reconciled because Subsection (g)(1)(iv)
applies to any adverse benefit determination—including final denial letters. Therefore, a final
denial letter must meet the requirements of both Subsection (g)(1)(iv) and Subsection (j)(4)(i),
thereby giving full effect to both regulations. Reading the regulations together reveals that
Subsection (j)(4)(i) expands the requirements of Subsection (g)(1)(iv) for final denial letters—it
does not eliminate them. The only language duplicated in the two regulations is the requirement
that final denial letters include a statement of the claimant’s right to file a civil action. 76 This
duplication merely underscores the importance of providing plan participants a fair opportunity
for judicial review in accordance with ERISA’s purpose. 77
A plain reading of both provisions requires that final denial letters provide a description
of voluntary internal appeal procedures in addition to the description of review procedures
required by Subsection (g)(1)(iv). There is no language in Subsection (j)(4)(i) suggesting that it
eliminates the requirements of Subsection (g)(1)(iv). Rather, its language adds to the disclosure
requirements of Subsection (g)(1)(iv) to include voluntary internal appeals procedures that have
not yet occurred. 78 Reading Subsection (j)(4)(i) to eliminate the disclosure requirements of
Subsection (g)(1)(iv) would render meaningless Subsection (g)(1)(iv)’s language requiring the
disclosure of a plan’s review procedures, including the applicable time limits for filing a civil
action, in any adverse determination letter. 79 Subsection (j)(4)(i) may not be read to conflict with
Subsection (g)(1)(iv) or render it meaningless. 80 Therefore, reading Subsection (j)(4)(i) in

76

29 C.F.R. § 2560.503-1(g)(1)(iv), (j)(4)(i).

77

See supra at 7; see also infra at 15-16.

78

29 C.F.R. § 2560.503-1(j)(4)(i).

79

See supra at 9.

80

Hibbs, 542 U.S. at 101.

13

concert with Subsection (g)(1)(iv) requires plan administrators disclose a plan’s voluntary
internal appeal procedures and the plan’s civil action limitations period in final denial letters.
This reading also makes practical sense because the voluntary internal appeal procedures and the
civil action limitations periods are the only remaining options for a claimant seeking to challenge
a denial of coverage following the issuance of a final denial letter.
Defendants’ argument regarding the plain language of Subsection (g)(1)(iv) also relies on
the Tenth Circuit’s unpublished decision in Young v. United Parcel Servs., Inc. 81 In Young, the
court interpreted a contractual provision in the UPS Summary Plan Description. 82 The provision
is nearly identical to Subsection (g)(1)(iv), except the UPS plan required disclosure of time limits
applicable to “appeal procedures[.]” 83 Subsection (g)(1)(iv) uses the phrase “review
procedures.” 84 The plan participant in Young argued that the language of the contractual
provision required disclosure of civil action time limits, but the Tenth Circuit disagreed. 85 The
court interpreted “appeals procedures” to refer only to the internal appeal procedures required
under ERISA, which is not to be confused “with the filing of a legal action after that process has
been fully exhausted.” 86
Defendants argue that because the language is similar, the Tenth Circuit would find that
Subsection (g)(1)(iv) does not require disclosure of civil action time limits.87 In a recent decision

81

Reply at 11-12 (citing Young, 416 Fed. App’x 734 (10th Cir. 2011)).

82

Young, 416 Fed. App’x at 737.

83

Id. at 739.

84

29 C.F.R. § 2560.503-1(g)(1)(iv).

85

Young, 416 Fed. App’x at 740.

86

Id.

87

Reply at 11-12.

14

from the District of Utah, District Judge Tena Campbell rejected this application of Young,
stating:
A civil suit is commonly referred to as “judicial review” of a plan administrator’s
decision not, commonly, an appeal. Though the language of the UPS plan differs
only subtly from the language of Subsection (g)(1)(iv), the distinction casts doubt
on whether the Tenth Circuit’s reasoning in Young would apply equally to an
interpretation of Subsection (g)(1)(iv). 88
Judge Campbell’s analysis is persuasive. The Tenth Circuit’s holding in Young, that the specific
phrase “appeals procedures” in the UPS Plan only refers to the internal appeals procedures, does
not rule out that the Department of Labor intended the more general phrase—“review
procedures”—to include both the internal appeals procedures and judicial review. 89 Indeed, the
term “review” is used interchangeably in the Department of Labor’s ERISA regulations to
reference both internal appeals procedures and judicial review, while the term “appeal” is used to
refer to only internal appeals procedures. 90
This interpretation is supported by the Supreme Court’s discussion of ERISA’s remedial
scheme in Heimeshoff v. Hartford Life & Acc. Ins. Co.:
The first tier of ERISA’s remedial scheme is the internal review process required
for all ERISA disability-benefit plans. … Upon exhaustion of the internal review
process, the participant is entitled to proceed immediately to judicial review, the
second tier of ERISA’s remedial scheme. 91
The Supreme Court’s reference to ERISA’s “two-tiered remedial scheme” encompasses both the
internal appeals procedures and judicial review, indicating that judicial review is an equal, albeit
secondary, partner to the internal appeals procedures in ERISA’s review process. 92 The use of
88

Order on Motion to Dismiss at 13, ECF no. 26 in John H. v. United Healthcare, case no. 1:16-cv-00110-TC,
entered Apr. 26, 2017 (internal citations omitted).
89

See supra at 10.

90

See, e.g., 29 C.F.R. §§ 2560.503-1(h)(4)(i)-(ii), (l)(2)(i)-(ii).

91

134 S.Ct. 604, 613, 187 L.Ed.2d 529 (2013) (emphasis added).

92

Id.

15

“review” to describe both internal appeals procedures and judicial review also cuts against
Defendants’ argument that “appeals procedures” and “review procedures” should be interpreted
as having the same meaning, i.e., only a plan’s internal appeals procedures.
Because the opportunity for judicial review is inseparably bound up in ERISA’s remedial
scheme, 93 it cannot be ignored when interpreting the Department of Labor’s regulations. These
regulations are designed to advance ERISA’s remedial scheme and purpose of enabling
claimants to adequately prepare for any further administrative appeals and judicial review.
Indeed, and as will be discussed, 94 policy considerations in furthering this purpose support the
conclusion that a plain reading of Subsection (g)(1)(iv) requires disclosure of civil action time
limits.
Therefore, the Tenth Circuit’s unpublished decision in Young does not control the
interpretation of Subsection (g)(1)(iv) because there is no indication that the court either
reviewed the express language of Subsection (g)(1)(iv), or considered the policy concerns that
often pervade a regulation interpretation case. 95 The Tenth Circuit was merely interpreting a
contract between two parties and did not balance the important policy considerations surrounding
ERISA’s purpose or its regulations. Accordingly, Young does not persuasively support
Defendants’ interpretation of Subsection (g)(1)(iv).
Policy considerations support a reading of Subsection (g)(1)(iv) that requires disclosure of a
plan limitations periods in denial letters
“[B]ecause ERISA is remedial legislation [it] should be liberally construed to effectuate
Congress’s intent to protect plan participants.” 96 As mentioned, to protect plan participants
93

Witt, 772 F.3d at 1280.

94

See infra at 16-18.

95

Chevron, U.S.A., Inc. v. Nat. Res. Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).

96

Brown v. J.B. Hunt Transp. Servs., Inc., 586 F.3d 1079, 1086 (8th Cir. 2009).

16

ERISA affords them “a reasonable opportunity … for a full and fair review[,]”97 including
judicial review in federal court. 98 A reading of Subsection (g)(1)(iv) that requires a denial letter’s
disclosure of the plan’s civil action limitations periods supports this goal. Any other
interpretation would allow plan administrators to “easily hide the ball and obstruct access to the
courts.” 99 Indeed, the six-month time limit provisions applicable in this case are located on pages
151, 161, and 162 of the SPDs. 100 In contrast, UBH’s denial letters are only six pages long. 101 As
the Third Circuit rhetorically asked: “Which is a claimant more likely to read—a [186] page
description of the entire plan or a [six]-page letter that just denied thousands of dollars in
requested benefits?” 102 A relatively simple requirement to disclose the plan’s civil action
limitations period in a denial letter prevents plan administrators from “hid[ing] the ball” and
potentially denying plan participants access to judicial review. 103
Additionally, by not including a statute of limitations for ERISA actions, Congress
essentially gave plan administrators the authority to create their own limitations periods for
judicial review. Because this flexibility would advantage plan administrators by giving them the
ability to substantially shorten a plan’s civil action limitations period, 104 it is understandable that
the Department of Labor would want to make sure claimants are aware of the time limits. 105 The

97

29 U.S.C. § 1133.

98

Santana-Diaz, 816 F.3d at 178-79 (citing Witt, 772 F.3d at 1280).

99

Mirza, 800 F.3d at 135.

100

Motion to Dismiss at Ex. A at 151, docket no. 5-1, Ex. B at 161, docket no. 5-2, Ex. C at 162, docket no. 5-3,
filed Feb. 2, 2017 (emphasis in originals).
101

Declaration of Ngoc Han Nguyen at Ex. 1, Ex. 2, docket no. 24-1, filed Apr. 21, 2017.

102

Mirza, 800 F.3d at 135.

103

Id.

104

Compare Motion to Dismiss at Ex. A at 151, docket no. 5-1, Ex. B at 161, docket no. 5-2, Ex. C at 162, docket
no. 5-3, filed Feb. 2, 2017 with Utah Code Ann. § 78B-2-309(2).
105

Mirza, 800 F.3d at 135-36.

17

importance of protecting plan participants under ERISA and providing them a fair opportunity
for both internal appeals procedures and judicial review far outweighs the relatively small burden
the disclosure requirement places on plan administrators.
Defendant’s failure to disclose the Plan’s limitations period in the denial letters is
prejudicial and renders the limitations period unenforceable against Bill
Having determined that the plain language of Subsection (g)(1)(iv) requires plan
administrators to disclose limitations period information in final denial letters, there are two
potential consequences for a violation of the regulation. The first option is to undertake an
equitable tolling analysis, as the Eleventh Circuit did in Wilson, 106 to determine if Bill was on
notice of his right to file a civil action and was prevented from timely filing due to extraordinary
circumstances. The second option is to take the approach of the First, Third, and Sixth
Circuits, 107 by presuming prejudice and rendering the Plan’s limitations period unenforceable
against Bill.
Defendants argue that the equitable tolling analysis should control and that no
extraordinary circumstances prevented Bill from filing his Complaint within the Plan’s time
limitation. However, this argument is unpersuasive because a plan administrator may always
argue that a claimant was on notice of the limitations period because the contractual deadline is
in the plan documents, and copies of the plan documents are given or made available to all plan
participants. 108 Such an approach would make Subsection (g)(1)(iv)’s disclosure requirements
irrelevant. Indeed, “[t]o accept that plan administrators may … dodge this simple regulatory
obligation so long as claimants have received the plan documents at some point during their

106

Wilson, 613 Fed. App’x at 844-45.

107

Santana-Diaz, 816 F.3d at 180; Mirza, 800 F.3d at 134; Moyer, 762 F.3d at 505.

108

Mirza, 800 F.3d at 137.

18

tenure as employees, would … effectively make [Subsection] (g)(1)(iv) a ‘dead letter.’” 109
Further, requiring extraordinary circumstances is inconsistent with ERISA’s purpose of affording
claimants “a reasonable opportunity … for a full and fair review[,]” 110 including in federal
court. 111 Therefore, the equitable tolling approach will not be applied to Bill. Rather, the
approach of the First, Third, and Sixth Circuits 112 is appropriate to resolve the issue.
Therefore, because Defendants failed to comply with Subsection (g)(1)(iv) by not
including the Plan’s civil action limitations period in their denial letters to Bill, prejudice is
presumed and the Plan’s limitations period is unenforceable against Bill. Accordingly, the
applicable state six-year statute of limitations 113 applies to the portion of Bill’s ERISA claim for
W.G.’s treatment at Second Nature and Waypoint. 114 It is undisputed that the final denial on
internal appeal occurred on January 13, 2015, for W.G.’s treatment at Second Nature, and on
July 17, 2015, for W.G’s treatment at the Waypoint. 115 Thus, on September 30, 2016, Bill timely
filed his Complaint within the applicable state six-year statute of limitations.

109

Santana-Diaz, 816 F.3d at 184.

110

29 U.S.C. § 1133 (emphasis added).

111

Santana-Diaz, 816 F.3d at 178-79 (citing Witt, 772 F.3d at 1280).

112

Id. at 180; Mirza, 800 F.3d at 134; Moyer, 762 F.3d at 505.

113

Utah Code Ann. § 78B-2-309(2).

114

See Michael C.D., 2016 WL 2888984, at *2.

115

Complaint ¶¶ 49, 63; see also Motion to Dismiss at 3-4.

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ORDER
IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss 116 is DENIED.
Signed June 2, 2017.
BY THE COURT

________________________________________
District Judge David Nuffer

116

Docket no. 5, filed Feb. 2, 2017.

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