Kathy Hayes v. Prudential Insurance Company of AmericaKathy Hayes v. Prudential Insurance Company of America
Affirmed by published opinion. Judge Heytens wrote the opinion, in which Judge Wilkinson and Judge Hudson joined.
ARGUED: M. Leila Louzri, FOSTER LAW FIRM, LLC, Greenville, South Carolina, for Appellant. Ian H. Morrison, SEYFARTH SHAW, LLP, Chicago, Illinois, for Appellee. ON BRIEF: Nathaniel W. Bax, FOSTER LAW FIRM, LLC, Greenville, South Carolina, for Appellant.
When Anthony Hayes’ employment ended, so did his employer-provided life insurance. Hayes then missed the deadline to convert his coverage to an individual policy. After Hayes died, his surviving spouse filed suit seeking relief under a provision of the
I.
Hayes worked as an environmental engineer for DSM North America, Inc., and had an employer-provided life insurance policy with defendant Prudential Insurance Company. Prudential was both the insurer and the administrator of the employer-provided benefit plan. The plan gave Prudential “the sole discretion to interpret [the plan‘s] terms . . . and to determine eligibility for benefits.” JA 97.
In 2015, Hayes lost his job because of medical issues, and his employer-provided life insurance coverage ended. The terms of the plan, however, allowed former employees to convert employer-provided coverage to an individual policy. To do so, the plan required Hayes to initiate the conversion process “by the later of” 31 days after his employer-provided coverage ended or 15 days after receiving “written notice of the conversion privilege.” JA 64. The parties agree Hayes’ conversion deadline was December 23, 2015.
Unfortunately, Hayes did not contact Prudential about converting his life insurance policy until 26 days after the conversion deadline. Hayes’ health continued to deteriorate, and he died in June 2016.
This case arises out of an attempt by Hayes’ surviving spouse—the plaintiff here—to collect benefits under Hayes’ employer-provided life insurance policy. Plaintiff submitted a request for benefits, which Prudential denied. The claim administrator explained Hayes’ employer-provided “coverage terminated on 11/16/15,” and although Hayes “was eligible to convert his Group Basic Life Insurance,” “there is no
Although Prudential offered another layer of “voluntary” internal review, JA 178, plaintiff chose not to pursue it. Instead, plaintiff sued Prudential in federal district court. Plaintiff‘s single-count complaint requested one form of substantive relief: for the district court to “declare, pursuant to
The parties submitted a joint stipulation of facts and an administrative record, and cross-moved for judgment based on those undisputed materials. The district court entered judgment for Prudential. The court concluded Prudential “reasonably denied [p]laintiff‘s
request for benefits” because “Hayes received timely notice of his conversion rights” and “did not convert his life insurance to an individual policy during the [c]onversion [p]eriod.” JA 294. The district court also rejected plaintiff‘s request to “apply the doctrine of equitable tolling and find that [p]laintiff is entitled to the life insurance [b]enefits she seeks.” JA 295. The court noted that a different statutory provision—
Because the plan gave Prudential discretion in construing its terms and determining eligibility for benefits, we—like the district court—review Prudential‘s denial of benefits for abuse of discretion. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111 (1989). “The abuse-of-discretion standard is a deferential one and the decision of the plan trustees will not be disturbed if it is reasonable, even if we would have come to a different conclusion independently.” Garner v. Central States, Se. & Sw. Areas Health & Welfare Fund Active Plan, 31 F.4th 854, 858 (4th Cir. 2022) (quotation marks omitted).1
A.
Plaintiff sued exclusively under
A civil action may be brought . . . by a . . . beneficiary . . . to recover benefits due . . . under the terms of [the] plan[.]
Despite postdating the district court‘s decision, we conclude Tekmen does not require a remand for further proceedings. For one thing, neither party asks us to do so. In addition, because the district court decided this case based on stipulated facts, its decision can properly be viewed as a grant of summary judgment—a matter we review de novo. See Hardwick v. Heyward, 711 F.3d 426, 433 (4th Cir. 2013) (court considering summary judgment motion may consider “stipulations“). Finally, Tekmen “express[ed] no view on the appropriate procedural mechanism for resolving cases” like this one—those “in which review in the district court is for abuse of discretion.” 55 F.4th at 961 n.5. We note, however, that the district court may need to revisit its specialized case management order for
Because Subsection (a)(1)(B) allows suits to recover benefits owed under “the terms of the plan,” it does not permit “a court to alter those terms.” CIGNA Corp. v. Amara, 563 U.S. 421, 435–36 (2011). As the Supreme Court has explained, “[t]he statutory language speaks of enforcing the terms of the plan, not of changing them.” Id. at 436 (alterations and quotation marks omitted). Subsection (a)(1)(B) thus does not allow a “change, akin to the reform of a contract,” because doing so “seems less like the simple enforcement of a contract as written and more like an equitable remedy.” Id.
The trouble for plaintiff is unfortunate, but simple. As plaintiff admits, Hayes “failed to convert his life insurance coverage in the time set forth in the policy.” Hayes Br. 24. Awarding benefits would thus require the very step the Supreme Court said Subsection (a)(1)(B) does not permit: modifying the plan‘s terms to provide a workaround to its conversion deadline. See Varity Corp., 516 U.S. at 492, 494–95, 515 (former employees who were misled into switching to a less generous plan “could not proceed under [Subsection (a)(1)(B)] because they were no longer members of the [ERISA] plan and, therefore, had no benefits due . . . under the terms of the plan” (alterations and quotation marks omitted)).
Plaintiff counters she “is not asserting that the plan terms should be rewritten.” Hayes Reply Br. 5. Instead, she “is asking the Court to apply the doctrine of equitable tolling to allow for an exception to the life insurance conversion deadline set forth in the policy” because Hayes was incapacitated during the conversion period. Id. at 6.
No matter how plaintiff‘s argument is characterized, we conclude the plan administrator did not abuse its discretion in deciding “the terms of the plan” do not provide
for equitable tolling. CIGNA Corp., 563 U.S. at 435. To be sure, federal courts generally apply a “presumption that federal statutes of limitations can be equitably tolled.” Lozano v. Montoya Alvarez, 572 U.S. 1, 13 (2014) (emphasis added). But that is not because courts have freewheeling authority to allow equitable tolling whenever they think it makes sense; rather, it reflects a prediction about legislative intent. In short, “Congress is presumed to incorporate equitable tolling into federal statutes of limitations because equitable tolling is part of the established backdrop of American law.” Id. at 11. For that reason, the Supreme Court has emphasized the presumption in favor of equitable tolling applies “only” to time periods that “operate as a statute of limitations.” Id. at 13–14; see Arellano v. McDonough, 143 S. Ct. 543, 548 (2023) (quoting Lozano for the proposition that the presumption in favor of equitable tolling has “only” been applied “to statutes of limitations“).
The Supreme Court‘s decision in Lozano v. Montoya Alvarez, 572 U.S. 1 (2014)—which held equitable tolling cannot extend the one-year period to petition for the return of a child under the Hague Convention on the Civil Aspects of International Child Abduction—is instructive. At first blush, an international treaty addressing child abduction may seem like an odd comparator to
As in Lozano, “[i]t does not matter” that Congress enacted a statute—here,
To be sure, both the Supreme Court and this one have suggested equitable tolling may be available for deadlines in
The life insurance conversion deadline at issue here is not a statute of limitations, nor does it operate as one. “Statutes of limitations establish the period of time within which a claimant must bring an action.” Heimeshoff, 571 U.S. at 105. “As a general matter, a
statute of limitations begins to run when the cause of action accrues—that is, when the plaintiff can file suit and obtain relief.” Id. (quotation marks omitted). The reason a plan‘s internal appeal deadline operates as a statute of limitations (the issue in Gayle) is because “the internal review process” is “[t]he first tier of
In contrast, no cause of action for benefits accrues when a participant misses a conversion deadline. Indeed, a participant whose policy has expired, unconverted, has no benefits due under the plan for any later occurrence because that participant lacks coverage. For that reason, a conversion deadline is even more removed from a statute of limitations than a pre-suit notice period, which the Supreme Court already held is not subject to equitable tolling. See Hallstrom v. Tillamook Cnty., 493 U.S. 20, 27 (1989). The Court‘s rationale for that conclusion is directly on point: Like a pre-suit notice period—and “[u]nlike a statute of limitations“—a deadline for converting benefits “is not triggered by the violation giving rise to the action.” Id.
Plaintiff cites various nonbinding decisions for the view that equitable tolling is “consistent with the purpose and intent of
added). “This focus on the written terms of the plan is the linchpin of a system that is not so complex that administrative costs, or litigation expenses, unduly discourage employers from offering
B.
As the district court noted,
amend her complaint to add such a claim, and continues to disclaim reliance on any such a theory before this Court. We note, however, that plaintiff errs in asserting she could not have sought relief under Subsection (a)(3). True, a plaintiff who prevails in a claim for benefits under Subsection (a)(1)(B) may not also obtain other relief under Subsection (a)(3). See Varity Corp., 516 U.S. at 512–15; Korotynska v. Metropolitan Life Ins. Co., 474 F.3d 101, 102–03 (4th Cir. 2006). But
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“Employers have large leeway to design [employee benefit] plans as they see fit,” but “once a plan is established, the administrator‘s duty is to see that the plan is maintained pursuant to that written instrument.” Heimeshoff, 571 U.S. at 108 (alterations and quotation marks omitted). Prudential did not abuse its discretion by fulfilling its duty here, and the district court correctly resolved the single claim before it based on the agreed-on facts and consistent with well-established law. The judgment of the district court is thus
AFFIRMED.
TOBY HEYTENS
UNITED STATES CIRCUIT JUDGE