Chapman v. Choicecare Long Island Term Disability

• Citation: 288 F.3d 506
• Decision Date: 29 April 2002
• Docket Number: Docket No. 01-7282.
• Parties: Cheryl CHAPMAN, Plaintiff-Appellant, v. CHOICECARE LONG ISLAND TERM DISABILITY PLAN, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

288 F.3d 506

Cheryl CHAPMAN, Plaintiff-Appellant, v. CHOICECARE LONG ISLAND TERM DISABILITY PLAN, Defendant-Appellee.

Docket No. 01-7282.

United States Court of Appeals, Second Circuit.

Argued November 16, 2001.

Decided April 29, 2002.

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Harry J. Binder, Binder & Binder, P.C., Hauppauge, NY, for Plaintiff-Appellant.

Evan L. Gordon, Law Office of Evan L. Gordon, New York, NY, for Defendant-Appellee.

Before: CARDAMONE, LEVAL, and SOTOMAYOR, Circuit Judges.

CARDAMONE, Circuit Judge.

We have before us on this appeal a plaintiff who declares that she is mentally disabled. Yet her claim for disability benefits under her employer's benefits plan was denied as untimely filed, as was her request for administrative review. She initiated suit in district court against the plan for judicial review of this decision. Although plaintiff's counsel argued that the untimely filings were a product of plaintiff's disabling mental condition, summary judgment was granted to defendant.

Principal among the issues with which we must deal is whether there is a limitations period for the filing of plaintiff's administrative appeal. Limitations periods perform the salutary office of preventing the assertion of rights long after memories have faded that would show such rights never existed, or had been satisfied and extinguished, if they did once exist. But a limitations period may also sometimes serve as a refuge for an inequity, and make the rule designed to prevent inequity the very means for it to succeed. We leave this question for the district court to resolve on the remand that we direct in this case.

BACKGROUND

Plaintiff Cheryl Chapman (plaintiff or claimant) formerly worked as a claims analyst/recovery specialist for ChoiceCare Long Island. Her last day of work was January 19, 1995, after which she says she could no longer perform her duties because of a mental disability. With the assistance of counsel, plaintiff submitted in November 1996 a long term disability benefits application to First UNUM Life Insurance Company (First UNUM). First UNUM was under contract with defendant ChoiceCare Long Island Long Term Disability Plan (Plan) to "pay the benefits" provided in a group long term disability policy covering ChoiceCare Long Island employees.

First UNUM denied plaintiff's claim as untimely filed. In a letter to plaintiff's counsel dated January 29, 1997 the insurance company cited the policy's proof of claim provision, which states that proof must be given "no later than 90 days after the end of the elimination period" or "as soon [thereafter] as reasonably possible." The "elimination period" is defined in the policy to be a period of 90 days in which no benefit is payable. Although the policy says nothing about what qualifies as "reasonably possible," the letter denying benefits explains that proof will not be considered if submitted later than one year after the deadline. Based on a disability date of January 20, 1995, plaintiff's elimination period ended April 19, 1995 and the deadline for submitting proof under First UNUM's reasoning would have been July 19, 1996 — four months before plaintiff's papers were filed. First UNUM's letter further informed claimant that a written request for review of a claims denial must be sent within 60 days of the receipt of the notice of denial and absent such a request, the "claims decision will be final."

By letter dated April 11, 1997 plaintiff's counsel asked for review. The parties agree this letter was ten days late. First UNUM denied the appeal in a May 29, 1997 letter, upholding its original decision with respect to the untimeliness of plaintiff's proof of claim, and noting "[a]dditionally" that the request for review was also untimely.

Plaintiff commenced the instant litigation in the United States District Court for the Eastern District of New York (Hurley, J.) on June 29, 1998. Pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., Chapman sought in her complaint (1) a declaratory judgment that from January 19, 1995 she was continuously disabled under the Plan's provisions and (2) an order for the Plan to pay her disability benefits.

The Plan moved for summary judgment on November 12, 1999, offering three grounds in support of its motion: (1) the Plan is not a proper party defendant; (2) plaintiff's proof of claim was not timely filed; and (3) plaintiff did not timely exhaust her administrative remedies. After oral argument on the motion on February 23, 2001, the district court ruled from the bench that a question of fact regarding whether plaintiff was entitled to equitable tolling for the late filing of her claim was mooted because plaintiff should have sued First UNUM, the insurance company, and not the Plan as defendant in her action; and, further, that plaintiff had failed to exhaust her intraplan remedies. Summary judgment was granted to defendant and entered on March 1, 2001. From that judgment, plaintiff filed this appeal.

DISCUSSION

Plaintiff argues principally: (1) that the Plan is not a proper party defendant, and (2) that the doctrine of equitable tolling excuses her untimely administrative appeal. We review the grant of summary judgment de novo, Curley v. Vill. of Suffern, 268 F.3d 65, 69 (2d Cir.2001), affirming only when no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

I Whether the Plan Is a Proper Party

The Plan points out that under the terms of its policy with First UNUM, the insurance company promised to pay plaintiff if she were to qualify for long term disability benefits. The Plan thereby reasons that since it owes no obligation to plaintiff, it should not be a party defendant. Instead, the only proper defendant is First UNUM, the insurance company.

ERISA expressly provides that a "participant or beneficiary" may bring suit "to recover benefits due ... under the terms of [a] plan" or "to enforce ... rights under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B) (1994). It goes on to provide in 29 U.S.C. § 1132(d)(1) that "[a]n employee benefit plan may sue or be sued under this subchapter as an entity," and in subsection (d)(2) that "[a]ny money judgment... against an employee benefit plan shall be enforceable only against the plan as an entity." §§ 1132(d)(1) & (2).

These provisions of the statute make plain that a plan can be held liable in its own name for a money judgment. We see no reason why such a liability should not arise upon a beneficiary's claim of entitlement to receive benefits from the plan. The Plan's argument to the effect that it may not be sued because it has contracted with First UNUM to make payments to Plan beneficiaries is wholly unsupported by the language of the statute.

Several times in prior opinions we have indicated that a plan is a proper defendant in an action to recover benefits under § 1132(a)(1)(B). "In a recovery of benefits claim, only the plan and the administrators and trustees of the plan in their capacity as such may be held liable." Leonelli v Pennwalt Corp., 887 F.2d 1195, 1199 (2d Cir.1989) (citing to § 1132(d)(2)). See also Crocco v. Xerox Corp., 137 F.3d 105, 107 (2d Cir.1998). The view espoused in Leonelli is also consistent with general practice. See, e.g., Martin Wald & David E. Kenty, ERISA: A Comprehensive Guide § 7.5 (1991) ("Employee benefits plans ... are the most frequent defendants in suits to recover benefits.").¹

Other circuits have noted that benefits may be recovered against a plan administrator. See, e.g., Neuma, Inc. v. AMP, Inc., 259 F.3d 864, 872 n. 4 (7th Cir.2001); Layes v. Mead Corp., 132 F.3d 1246, 1249 (8th Cir.1998); Garren v. John Hancock Mut. Life Ins. Co., 114 F.3d 186, 187 (11th Cir.1997) (per curiam); Hall v. Nat'l Gypsum Co., 105 F.3d 225, 230 (5th Cir.1997); cf. Cole v. Aetna Life & Cas., 70 F.Supp.2d 106, 115-16 (D.Conn.1999) (finding that plan administrators, where they are administering the plan and controlling the distribution of funds from the plan's assets, may be sued in addition to an ERISA plan, for claimed benefits). Those holdings are entirely consistent with the view we expressed in Leonelli and Crocco that "the plan and the administrators and trustees of the plan in their capacity as such may be held liable." Leonelli, 887 F.2d at 1199; Crocco, 137 F.3d at 107.

Seeking to evade the statutory language, the Plan relies on Nozar v. John Hancock Mut. Life Ins. Co., No. 89 C 5496, 1990 WL 103216 (N.D.Ill. July 19, 1990). That case held "[a] suit to recover benefits is properly brought against the party that decides whether to grant or deny benefits." Id. at *3. But the central question in Nozar was whether the insurance company that issued a group insurance policy for an employer's welfare benefits plan was an administrator of that plan. The rule enunciated in Nozar was designed to identify who qualifies as an administrator; it does not purport to be a rule for deciding whether a plan is a proper party defendant. In fact, Nozar is silent as to the propriety of suing a plan as compared to an administrator, since that plaintiff did not sue the benefits plan.

We reject the Plan's argument that it is not a proper defendant.

II Plaintiff's Waiver Argument

Plaintiff argues that inasmuch as First UNUM ruled on the merits of her appeal, its argument that her appeal was untimely has been waived. There is no merit in plaintiff's contention.

Federal common law and New York common law both define waiver as an intentional relinquishment and abandonment of a known right or privilege. Compare United States v. Olano, 507 U.S. 725, 733, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993); HECI Exploration Co., Employees' Profit Sharing Plan v. Holloway (In re HECI Exploration Co.), 862 F.2d 513, 523 (5th Cir.1988) (applying ERISA), with Albert J. Schiff...