ERISA And Contractual Limitations

Here is another opinion for ERISA lawyers to read.  The opinion is styled, Ricardo Rodriguez and All Others Similarly Situated v. Hartford Life And Accident Insurance Companyhttp://www.txs.uscourts.gov/offices/houston-division.  It is from the Southern District, Houston Division.

This is a motion to dismiss filed by Hartford and granted by the Court.

Rodriguez initiated this suit to recover disability benefits under an ERISA plan with Rodriguez’s employer, Walmart.  Rodriguez seeks to enjoin Hartford from imposing a contractual limitations period on long-term disability claims shorter than that permitted by Arkansas law.  The Policy provisions states:

Legal action cannot be taken against Hartford:

  1.  sooner than 60 days after the date Proof of Loss is given; or
  2. 3 years after the date written Proof of Loss is required to be given according to the terms of The Policy.
  3. This injunction is sought pursuant to 29 U.S.C. Section 1132(a)(3), which empowers a plan participant, beneficiary, or fiduciary to bring a civil action “(A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the Plan, or (B) to obtain other appropriate relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.”  Rodriguez also alleges breach of fiduciary duty premised on the same contractual period.

Dismissal under Rule 12(b)(6) is appropriate when a plaintiff’s theory is incorrect.

Rodriguez advances claims for breach of fiduciary duty and ERISA violations premised on the invalidity of the Policy’s contractual limitations period.  Because the court concludes that the Arkansas statute at issue does not apply to policies which, like Hartford’s Policy, do not insure property or life, Rodriguez’s claims fail.

Rodriguez argues that Hartford’s three year contractual limitation on legal actions is void because it requires that an action on the Policy be brought within a shorter time than the statutory five year limitations mandated by Arkansas law in Arkansas Code, Section 23-79-202.

Hartford argues that the statute does not apply to its disability policy because the statute is plainly limited to policies of insurance on “property or life,” categories that do not apply to the Policy.

This Court then discussed the Arkansas cases addressing the statute at issue and eventually stated that under Arkansas law, if the language of a statute is clear and unambiguous and conveys a clear and definite meaning, it is unnecessary to resort to the rules of statutory interpretation.  The Arkansas Supreme Court construes a statute so that no word is left void, superfluous, or insignificant, and gives meaning and effect to every work in the statute, if possible.  The statute at issue unambiguously  states that applies to actions “on the property or life.”   The phrase “on property or life” clearly limits the statute’s application.