Harrison v. Digital Health Plan

• Decision Date: 09 August 1999
• Docket Number: No. 98-8932,98-8932
• Citation: 183 F.3d 1235
• Parties: (11th Cir. 1999) BRENDA HARRISON, Plaintiff-Appellant, v. THE DIGITAL HEALTH PLAN; DIGITAL EQUIPMENT CORPORATION; JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, Defendants-Appellees
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1235

183 F.3d 1235 (11th Cir. 1999)

BRENDA HARRISON, Plaintiff-Appellant, v. THE DIGITAL HEALTH PLAN; DIGITAL EQUIPMENT CORPORATION;

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, Defendants-Appellees.

No. 98-8932

IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

August 9, 1999

[Copyrighted Material Omitted]

Appeal from the United States District Court for the Northern District of Georgia D.C. Docket No. 1:98-CV-0348-MHS

Before BLACK and BARKETT, Circuit Judges, and GOLD^*, District Judge.

PER CURIAM:

Brenda Harrison appeals from an order dismissing her lawsuit brought under the Employee Retirement Income Security Act, (ERISA), 29 U.S.C. 1001, et seq, against her former employer and health plan administrator for wrongful denial of medical benefits, breach of fiduciary duty, and failure to give proper notice of COBRA continuation of coverage. The district court found that the claims were time barred or failed to state a claim upon which relief may be granted. On appeal, the only issue meriting discussion is whether the district court erred when it borrowed Georgia's one-year statute of limitations applicable to workers' compensation claims rather than the six-year limitations period applicable to actions on a simple contract when it considered the timeliness of Harrison's action for wrongful denial of medical benefits under ERISA. ¹ We hold that the district court should have borrowed the limitations period governing contract actions because an action for breach of a contractual relationship is the Georgia claim most analogous to plaintiff's ERISA section 502(a)(1)(B) claim for wrongful denial of medical benefits even though some of the medical claims denied were for the treatment of work-related illnesses.

I. BACKGROUND

Brenda Harrison was employed by Digital Equipment Corporation from March 1, 1982 through August 6, 1992. During her employment, she participated in Digital's self-funded employee health plan which was administered in part by John Hancock Mutual Life Insurance Company. The plan covers employees' expenses for non-experimental care that is medically necessary for the treatment of injury or disease.

In 1989 Harrison became sick after her employer moved her into a new office building. Doctors diagnosed Harrison as suffering from several medical conditions, including multiple chemical sensitivity secondary to "sick building" syndrome. Harrison underwent extensive treatment, including detoxification at the Dallas Environmental Health Center. She submitted her medical claims to the plan for reimbursement, but most were denied. On January 2, 1998, almost three years after she received her final denial letter from the defendants, Harrison filed a lawsuit against Digital, the Digital Health Plan, and John Hancock Mutual Life Insurance Company asserting claims under ERISA for wrongful denial of medical benefits, breach of fiduciary duty, and failure to provide proper notice of COBRA continuation coverage. ² The trial court dismissed all counts of the complaint finding that the claims for wrongful denial of medical benefits and for failure to provide notice of COBRA continuation of coverage were barred by the statute of limitations and that the claim for breach of fiduciary duty failed to state a cause of action. ³

II. ANALYSIS

The district court's interpretation and application of a statute of limitations is a question of law that this Court may review de novo. United States v. Gilbert, 136 F.3d 1451, 1453 (11th Cir. 1998); Pinnacle Port Community Ass'n, Inc., v. Orenstein, 952 F.2d 375, 377 (11th Cir. 1992).

Civil enforcement of ERISA is provided for in section 502 of the Act, codified at 29 U.S.C.A. 1132.⁴ No federal statute of limitations is provided in ERISA for lawsuits to recover benefits under section 502. Northlake Reg'l Med. Ctr., v. Waffle House Sys. Employee Benefit Plan, 160 F.3d 1301, 1303 (11th Cir. 1998). When Congress has not established a statute of limitations for a federal cause of action, the settled practice is for federal courts to borrow the forum state's limitations period for the most analogous state law cause of action when "it is not inconsistent with federal law or policy to do so," Wilson v. Garcia, 471 U.S. 261, 266-67, 105 S.Ct. 1938, 1941-42, 85 L.Ed.2d 254 (1985), and there does not exist "a more closely analogous federal statute of limitations." Byrd v. MacPapers, Inc., 961 F.2d 157, 159 n.1 (11th Cir. 1992). There is a longstanding presumption that state law will be the source of the missing federal limitations period. North Star Steel Co. v. Thomas, 515 U.S. 29, 35, 115 S.Ct. 1927, 1930, 132 L.Ed.2d 27 (1995). Federal courts should decline to follow a state limitations period "only 'when a rule from elsewhere in federal law clearly provides a closer analogy than available state statutes, and when the federal policies at stake and the practicalities of litigation make that rule a significantly more appropriate vehicle for interstitial lawmaking.' "Id. (quoting Reed v. United Transportation Union, 488 U.S. 319, 324,109 S.Ct. 621, 625, 102 L.Ed.2d 665 (1989)).

When a federal court borrows a limitations period from state law for use in implementing a federal law that does not possess a self-contained statute of limitations, the court is nonetheless applying federal law. For in borrowing the state statute of limitations to impose a time limitation on the federal cause of action, the federal court is "closing the gap" left by Congress in order to fashion a body of federal common law to supplement the federal statutory cause of action. See Holmberg v. Armbrecht, 327 U.S. 392, 395, 66 S.Ct. 582, 584, 90 L.Ed. 743 (1946)(state limitations periods apply to federal claims, not of their own force, but by virtue of their "implied absorption . . . within the interstices of the federal enactments" through the process of fashioning federal common law); Glass v. United of Omaha Life Ins. Co., 33 F.3d 1341, 1347 (11th Cir. 1994)(Congress intended federal courts to borrow from state law to fashion body of federal common law to govern ERISA lawsuits). Georgia is the forum state in this case, so the district court was required to borrow the Georgia statute of limitations for the state law claim most analogous to plaintiff's ERISA claims. See Blue Cross & Blue Shield v. Sanders, 138 F.3d 1347, 1356 (11th Cir.1998); T.A. Musick v. Goodyear Tire & Rubber Co., 81 F.3d 136, 138 (11th Cir. 1996).

In selecting the state limitations period most relevant to the federal cause of action, the district court must first characterize the essential nature of the plaintiff's claim. Clark v. Coats & Clark, Inc., 865 F.2d 1237, 1241 (11th Cir. 1989). "The characterization of [a federal claim] for statute of limitations purposes is derived from the elements of the cause of action, and Congress' purpose in providing it. These, of course, are matters of federal law." Wilson, 471 U.S. at 268-69, 105 S.Ct. at 1943. After characterizing the essential nature of the claim, the court must borrow the limitations period for the most analogous state law claim. Byrd, 961 F.2d at 159; Clark, 865 F.2d at 1241.

Through ERISA, Congress sought to protect the interests of participants in employee benefits plans by regulating the administration of such plans and by providing participants and beneficiaries with a variety of remedies to assure compliance with the statutory framework. See 29 U.S.C. 1001 (b). Harrison's complaint seeks relief pursuant to ERISA sections 502(a)(1)(B) and 502(a)(3). Under section 502(a)(1)(B), a plan participant may bring an action to recover benefits due under the terms of the plan. Section 502(a)(3) permits a plan participant to seek "appropriate equitable relief" to remedy an ERISA violation.

Count I of Harrison's complaint makes the following allegation: "the Plan provides benefits ... for care that is medically necessary for the treatment of an injury, disease, or pregnancy and is rendered by an eligible provider. The Plan excludes experimental treatment and treatment not approved by the AMA. ... Having sought recognized, non-experimental diagnoses and treatment...Plaintiff is entitled to recover benefits under the Plan denied to her, including reimbursement of all medical expenses." Thus, the essential nature of plaintiff's claim is to recover medical benefits that were allegedly wrongfully denied under the terms of the plan.

Harrison argued before the district court, and now on appeal, that her claim to enforce payment of medical benefits under section 502 (a)(1)(B) is essentially an action for breach of contract and therefore Georgia's six-year statute of limitations for actions on a simple written contract, O.C.G.A. 9-3-24, is the state limitations period the federal court should borrow. ⁵ We have never characterized a section 502(a)(1)(B) action for statute of limitations purposes, but in Blue Cross & Blue Shield v. Sanders, 138 F.3d 1347 (11th Cir.1998), we held that an ERISA fiduciary's action to enforce the reimbursement provision of a plan pursuant to 502 (a)(3) is closely analogous to a simple contract action brought under Alabama law and should therefore be governed by Alabama's six-year limitations period for a simple contract.⁶ Id. at 1357. As we noted in Sanders, other circuits have used state contract law to establish limitations periods for civil enforcement actions brought under 29 U.S.C. 1132. Id. n.9. A survey of decisions from other circuits shows that almost without exception, federal courts have held that a suit for ERISA benefits pursuant to section 502 (a)(1)(B) should be characterized as a contract action for statute of limitations purposes. E.g., Hogan v. Kraft Foods, 969 F.2d 142, 145 (5th Cir. 1992)(four-year Texas limitations statute governing suits sounding in contract is most analogous to plaintiff's claim for benefits under 502(a)(1)(B)); Meade v. Pension Appeals & Review Comm., 966 F.2d 190, 195 (6th Cir. 1992)("courts have...