Widow’s Claim For Survivor Retirement Benefits Was Time-Barred

A claim for survivor retirement benefits “accrued” in 2004, when the retirement benefits ended due to the death of plan participant, not in 2012 when the participant’s widow discovered the waiver of joint and surviving spouse annuity that provided the basis for the cessation of benefits, according to the U.S. Court of Appeals at Philadelphia (CA-3). Thus, the widow’s claim was ruled to be barred by the statute of limitations.

Background. A widow’s late husband worked for an employer that sponsored a retirement plan. He was a plan participant and began receiving benefits upon his retirement in 1987. The plan distributed his retirement benefits in the form of a single life annuity in reliance on a waiver of joint and surviving spouse annuity. The widow asserted that she did not sign or consent to the waiver.

Her late husband continued to receive monthly benefits from the plan until his death in 2004. After her husband’s death, the widow contacted `the plan administrator. She was advised that her late husband’s benefits would end. At no time, however, did the plan’s representatives advise the widow about the waiver or that, absent such a waiver, she would be entitled to annuity benefits.

Around June 2012, the widow located a file containing a copy of the waiver that had purportedly been signed by her in 1986. The waiver provided the basis for cessation of her late husband’s retirement benefits upon his death. After she discovered the waiver, the widow contacted the plan to contest the validity of the waiver and submitted a formal claim for benefits. The plan denied her initial claim and subsequent appeal.

The parties agree that Pennsylvania’s four-year statute of limitations applied to the action, but dispute the date on which the cause of action accrued.

In the ERISA context, a non-fiduciary cause of action generally accrues when a party’s claim for benefits has been formally denied. Under the “clear repudiation” rule, however, an event other than a denial can trigger the statute of limitations, as long as it is: (1) a repudiation (2) that is clear and made known to the beneficiary. Under this rule, the statute of limitations begins to run when a plaintiff discovers or should have discovered the injury that forms the basis of his claim.
The federal district court determined that the widow’s claim for benefits accrued in July 2004 when the benefits were discontinued. Regarding the first requirement of the “clear repudiation” rule, the district court found that “the total cessation of benefit payments to [the widow] was a clear repudiation because it was a full termination of benefits.” Under the second requirement of that rule, repudiation by the cessation of benefit payments “should ordinarily be made known to the beneficiary when they do not receive the payment to which they allege they are entitled,” the court said. Here, the widow spoke with the plan’s representative and was informed that all benefits would be terminated. Thus, the district court found, the termination of plan benefits was clear and made known to the widow.

The court of appeals affirmed the holding of the district court. When she became aware of the cessation of plan benefits in 2004 she should have exercised reasonable diligence to find out if she had a claim for survivor annuity benefits. Under such circumstances, when there was an outright repudiation at the time of the husband’s death, it was reasonable to expect that the statute of limitations would begin to run at that point, the appellate court held. Accordingly, the court found that the widow’s claim was time-barred when she filed her complaint. (Christian v. Honeywell Retirement Benefit Plan (CA-3).)

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