988 F.3d 127
2d Cir.2021Background:
- Cigna investigated several out-of-network labs and alleges they submitted fraudulent/overstated charges, resulting in over $17 million in improper payments; Cigna began denying outstanding charges after its investigation (completed before Aug. 17, 2015).
- Two labs sued Cigna in the Southern District of Florida in Aug. 2015; that suit was dismissed without prejudice for failure to exhaust administrative remedies and was not refiled.
- In Aug. 2019 Cigna sued the labs in D. Conn., alleging state-law torts (fraud, negligent misrepresentation, conversion, statutory theft), unjust enrichment (equitable), and federal claims under ERISA §502(a)(3) and the Declaratory Judgment Act to recover overpayments.
- The district court dismissed all claims with prejudice as time-barred under Connecticut’s three-year tort statute; Cigna appealed.
- On appeal the Second Circuit considered (1) which state cause maps to Cigna’s federal equitable claims, (2) whether equitable claims are governed by statutory limitations or laches under Connecticut law, and (3) whether the prior Florida action tolled limitations as to compulsory counterclaims.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What state-law claim is most analogous to Cigna’s ERISA §502(a)(3) and Declaratory Judgment Act claims for limitations purposes? | Federal claims are analogous to unjust enrichment (equitable) and should borrow its rules. | Federal claims should borrow a legal tort limitation (3-year) because they arise from the same facts as tort claims. | The federal claims are most analogous to Connecticut unjust enrichment; they adopt the limitations/tolling regime applicable to that equitable claim. |
| Are equitable claims (unjust enrichment and the federal claims) subject to Connecticut’s 3-year tort statute or only to laches? | Equitable claims are exempt from statutory limitations and are governed only by laches. | Because the equitable claims arise from the same facts as untimely legal claims, they should be time-barred under Certain Underwriters. | Under Reclaimant (Conn.), equitable claims are not subject to statutes of limitations and are governed by laches; district court erred to dismiss them as automatically time-barred. |
| Did the prior Florida Action toll the limitations period for Cigna’s state-law legal claims as compulsory counterclaims? | Filing the Florida suit tolled limitations on compulsory counterclaims under federal common-law tolling for counterclaims, so Cigna’s claims remain timely. | State law governs tolling for state claims; Connecticut measures timeliness from when a counterclaim is interposed, and Cigna never interposed them. | Connecticut law controls; the Florida Action did not toll the statute because Cigna never filed counterclaims there—Cigna’s legal (tort) claims are time-barred. |
Key Cases Cited
- Reclaimant Corp. v. Deutsch, 211 A.3d 976 (Conn. 2019) (equitable claims are not subject to statutory limitations and are governed by laches)
- Certain Underwriters at Lloyd’s, London v. Cooperman, 957 A.2d 836 (Conn. 2008) (courts may look to statutory limitations as a prudential factor in equitable proceedings)
- Pacelli Bros. Transp., Inc. v. Pacelli, 456 A.2d 325 (Conn. 1983) (for statute-of-limitations purposes a counterclaim begins when interposed)
- Sandberg v. KPMG Peat Marwick, L.L.P., 111 F.3d 331 (2d Cir. 1997) (federal claims borrow the limitations period of the most analogous state cause of action)
- 118 E. 60th Owners, Inc. v. Bonner Props., Inc., 677 F.2d 200 (2d Cir. 1982) (federal courts adopt state limitations for federal claims lacking their own period)
- Bd. of Regents of Univ. of N.Y. v. Tomanio, 446 U.S. 478 (U.S. 1980) (state tolling rules govern borrowed limitations periods except when inconsistent with federal policy)
- Miles v. N.Y. Teamsters Conf. Pension & Ret. Fund Emp. Pension Benefit Plan, 698 F.2d 593 (2d Cir. 1983) (federal statutes sometimes supply no limitations period, requiring borrowing)