88 F.4th 40
1st Cir.2023Background
- Brian Smith, a Rhode Island resident, became disabled in 2015; Prudential approved long-term disability (LTD) benefits in Jan 2016 and paid them until it terminated benefits effective May 4, 2018; final denial came Aug 28, 2019.
- The Prudential policy’s limitations scheme required suit "up to 3 years from the time proof of claim is required," with proof due 90 days after a 13-week elimination period for Option 1 participants — effectively starting the clock well before any insurer denial.
- The policy also required a mandatory first internal appeal (180 days) and an optional second appeal (180 days) with tolling during the second appeal; the provisions are spread across multiple documents and described as "labyrinthine."
- By Prudential’s reading, Smith’s contractual limitations period expired in April 2019 (three years from proof deadline), before Prudential’s final denial; Smith sued on March 12, 2021, within three years of termination/denial but outside the policy’s stated window.
- The district court granted summary judgment to Prudential as time-barred but considered only ERISA-related defenses; on appeal Smith waived ERISA claims and pressed state-law defenses, including that enforcing the scheme would violate Rhode Island public policy.
- The First Circuit concluded Rhode Island law likely governs, found Smith’s public-policy challenge non-frivolous, and certified the dispositive public-policy question to the Rhode Island Supreme Court, staying the case and retaining jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the clause "unless otherwise provided under federal law" imports ERISA protections making the limitations clause invalid | Smith: that phrase imports ERISA/regulatory requirements (denial must state suit deadline), so the clause is invalid | Prudential: Smith waived ERISA issues; clause doesn't convert a non‑ERISA plan into an ERISA plan | Waived by plaintiff on appeal; court rejects reading that imports ERISA into this non‑ERISA policy |
| Whether Rhode Island's ordinary (e.g., 10‑year) statute of limitations should replace the policy's limitations (Webster Bank argument) | Smith: Webster Bank requires interest‑weighing and Rhode Island limitations should apply, making claim timely | Prudential: Webster Bank inapplicable; the contract, albeit confusing, does contain a limitations period | Court: Webster Bank likely overread by Smith; policy contains a contractual limitations period, so this argument fails |
| Choice of law: whether New York choice‑of‑law provision controls or Rhode Island law governs | Smith: Rhode Island law should apply given parties’ contacts and public‑policy concerns | Prudential: New York governs because the Group Contract was delivered there | Court: New York has no substantial relationship; applying Rhode Island conflict rules, Rhode Island law likely governs |
| Whether enforcing the policy’s limitations scheme violates Rhode Island public policy (including R.I. Const. art. I, § 5) | Smith: clause runs the limitations clock before any cause of action accrues and thus may be palpably unjust and contrary to RI public policy | Prudential: similar clauses have been upheld (Heimeshoff); statute requires certain policy language; Heimeshoff controls in ERISA context | Court: Smith raised a non‑frivolous, dispositive public‑policy claim; because resolution would likely expand RI law, the question is certified to the Rhode Island Supreme Court and the case is stayed |
Key Cases Cited
- Santana-Díaz v. Metropolitan Life Ins. Co., 816 F.3d 172 (1st Cir. 2016) (criticizing labyrinthine limitations schemes and ERISA notice requirements)
- Heimeshoff v. Hartford Life & Accident Ins. Co., 571 U.S. 99 (U.S. 2013) (upholding a three‑year limitations clause in an ERISA plan as reasonable)
- Am. States Ins. Co. v. LaFlam, 69 A.3d 831 (R.I. 2013) (voiding a limitations clause that ran from the date of the accident because it could bar claims before they accrued)
- Kennedy v. Cumberland Eng'g Co., Inc., 471 A.2d 195 (R.I. 1984) (holding a statute of repose unconstitutional under R.I. Const. art. I, § 5 where it could bar claims before injury discovery)
- Com. Park Realty, LLC v. HR2-A Corp., 253 A.3d 1258 (R.I. 2021) (authorizing Restatement conflicts analysis and limits on enforcing choice‑of‑law clauses lacking a substantial relationship)
- Webster Bank v. Rosenbaum, 268 A.3d 556 (R.I. 2022) (discussing when an interest‑weighing approach is required to select an applicable statute of limitations)