Amicus Curiae Brief — Sun Life Assurance Co. of Canada v. White (No. 07-331)

=m 2 | i

= EET 2 2007

No. 07-331

IN THE

Supreme Court of the Wnited States

SUN LIFE ASSURANCE COMPANY OF CANADA,

Petitioner,

v.

MARGARET T. WHITE,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES Court OF APPEALS

FOR THE FourTH CIRCUIT

BRIEF OF AMICUS CURIAE

THE AMERICAN COUNCIL OF LIFE INSURERS IN

SUPPORT OF SUN LIFE ASSURANCE COMPANY OF

CANADA'S PETITION FOR A WRIT OF CERTIORARI

CarRL B. WILKERSON RICHARD B. Lazarus

Vice President & Chief Counsel, Counsel of Record

Securities & Litigation CAROLYN DopPELT GRAY

Lisa TATE TERESA L. JAKUBOWSKI

Associate General Counsel, BARNES & THORNBURG LLP

Litigation 730 17" Street, N.W.

American Council of Life Insurers — Washington, D.C. 20006

101 Constitution Ave., N.W. (202) 289-1313

Suite 700

Washington, D.C. 20001

(202) 624-2153

Counsel tor Amicus Curiae

i

TABLE OF CONTENTS

TABLE OF CITED AUTHORITIES ......... ili

INTEREST OF AMICUS CURIAE .......... 1

SUMMARY OF ARGUMENT ................ 3

REASONS FOR GRANTING THE petition ... 5

A. The Disputed Policy Provision Is A

Standard Policy Provision Uniformly

Mandated By The States And

Traditionally Used Within The Insurance

TnGasteK vse cb eee ehe sees cees 5

B. A Conflict Exists Among The Circuit

Courts Of Appeal Regarding

Enforcement Under ERISA Of State-

Mandated Insurance Policy Provisions

That Require A Limitations Period To

Commence When Proof Of Claim Is Due.

1. The Majority of Circuits Enforce the

Limitations Provision Where

Reasonable as Applied to the

Particular Facts of the Case. ....... 9

2. The Minority Of Circuits Hold That

Proof Of Loss Accrual Clauses Are

Not Enforceable In The ERISA

il

Contents

Page

Context, But Adopt Different

Standards For The Appropriate

DOE TID. 0c0s ie csnkectemsae 10

C. The Conflict Among The Circuits

Undermines Basic ERISA Policies And

Adversely Affects Employee Benefit

Plans Funded Through Insurance. ...... 12

1. Enforceability of Contractual

Limitations and Accrual Provisions is

Fundamental to ERISA Plans and

oo ee eee 12

2. The Conflict Undermines the

National Uniform Regulation

Intended by ERISA, and

Consequently Increases the Cost to

Employers of Providing Benefit

FR ctncscdrkdedanecmeene cae 13

D. State-Mandated Limitations And Accrual

Policy Provisions Should Be Enforced

CNT SEED once sci cverecoesacueie 15

CRCRAEEEE cb dccnnesvesevnksiexenseen 18

RPC GIES. 80005 kus inxenduiwesceieasseun la

ill

TABLE OF CITED AUTHORITIES

Page

Cases:

Black & Decker Disability Plan v. Nord, 538 U.S.

DE op wetwkt ebuns beunk iy eeae in Wess 13

Blaske v. Unum Life Insurance Company of

America, 131 F.3d 763 (8 Cir. 1997),

cert. denied, 525 U.S. 812 (1998) ............ 9,17

Clark v. NBD Bank, NA, 3 Fed. Appx. 500

a ee eae 10

Doe v. Blue Cross & Blue Shield United of

Wisconsin, 112 F.3d 869 (7" Cir. 1997) ....... 9,17

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1

EE -Viwk aU ERR dee wkwa eel cadaureceieees 4,14

Harris Methodist Fort Worth v. Sales Support

Services Inc. Employee Health Care Plan,

426 F.2G S50 (GF Cir. BOOB) ....ccccccccccvess 9

Miller v. Fortis Benefits Ins. Co., 475 F.3d 516

NED cgi docescinuccseiannwaasteuers 10, 11

Moore v. Berg. Enters., 1999 U.S. App. LEXIS

Ee re 10

New York State Conference of Blue Cross & Blue

Shield Plans v. Travelers Ins. Co., 514 U.S.

I 500s cay pcs b Aa kaa sien eeinee ccs 14

iv

Cited Authorities

Page

Order of United Commercial Travelers v. Wolfe,

Pe URED 645 5 ab vee vawen deena 3, 7,8

Price v. Provident Life & Accident Ins. Co.,

Oe A Ge LOUD kn a ivechdeveduconees 10, 11

Wetzel v. Lou Ehlers Cadillac Group Long Term

Disability Insurance Program, 222 F.3d 643

Se ME iC ka euinta bd aet ne vane i eeaseees 11,12

Statutes:

as MEO sae icnddeisndenpaccans l

Me RR SOUUOED 60h ve cvordevaceniacedens 12

eC ROOD on 6 64 <0 ch Re cewecesexacss 12

Ie bee Be 8k) ee ee 8

ee ils © BRUCE) ok svccccnccdcevsenceeves 12

Pes Wes eis BOO ECED oikcccccsosecaevevens 5, 6

N.C. Gen. Stat. § 58-51-15(a)(11) .............. 5

Utah Code Ann. § 31A-21-313 ................. 6

Vv

Cited Authorities

Page

Regulations:

29 C.FLR. §$ 25660.508-1(f)(S) ..... ce ccccccceees 16

29 C.ER. §§ 2560.503-1(f)(4) «0.0... - ee eee ee eee 17

29 C.F.R. § 2560.503-1(h)(3)(i) .. 0. eee eee ee ee 17

29 C.F-R. § 2560.503-1(h)(4) .............00008e 17

29 C.F.R. § 2560.503-1(i)(I)G) «0... eee eee eee 16

29 C.F.R. § 2560.503-1(i)(3)(i) «wee eee eee ee 16

Other Authorities:

H.R. Rep. No. 93-533, at 9 (1973), reprinted in

1974 U.S.C.C.A.N. 4639, 4647 .............. 13

I NAIC, “Group Health Insurance Standards

Model Act,” Model Laws, Regulations and

Guidelines at 100-1, § 8(N) (2007) .......... 5

II NAIC, “Uniform Individual Accident and

Sickness Policy Provision Law,” Model Laws,

Regulations and Guidelines at 180-1,

ie ee ive ia beehaanee mt 5

Uniform Individual Policy Provisions Law Model

Bill of 1950, § 3(A)(11), reprinted in William

F. Meyer, Life and Health Insurance Law app.

SEE EN diard cueh ota caudeibeieceweses 6

1

INTEREST OF AMICUS CURIAE

The American Council of Life Insurers (“ACLI’”)' is

the largest life insurance trade association in the United

States, representing the interests of 373 legal reserve

life insurers operating in the United States. ACLI

member companies are the leading providers of financial

and retirement security products covering individual and

group markets. They provide life, disability income and

long-term care insurance. In the United States, ACLI

members account for 93 percent of the life insurance

industry’s total assets, 91 percent of life insurance

premiums, and 95 percent of annuity considerations. The

life insurance policies issued by ACLI members include

employer-sponsored group disability insurance policies

and group life policies. The annuities issued include

group annuities issued to employer-sponsored

retirement plans. The vast majority of the products sold

by ACLI members in the group employee benefits

market are subject to the requirements of the Employee

Retirement Income Security Act of 1974 (“ERISA”),

29 U.S.C. § 1001, et seq.

Resolution of the question presented — whether an

unambiguous limitations period set forth in an ERISA-

governed disability insurance policy is unenforceable

solely because it requires that the limitations period

1. Pursuant to Rule 37.6, the ACLI’s counsel of record

hereby certifies that this brief was authored in whole by Barnes

& Thornburg LLP, and that no individual or entity other than

the ACLI has contributed monetarily to the preparation of this

brief. Pursuant to Rule 37.3(a), ACLI states that both petitioner

and respondent have consented to the filing of this brief. Their

respective letters of consent are being filed concurrently

herewith.

2

commence when proof of claim is due — presents

significant issues for employee benefit plans and the

insurance industry as a whole and will have legal and

practical ramifications far beyond the disposition of this

particular case. The policy provision at issue is a

standard limitations provision that is not only mandatory

in North Carolina (where this case arises), but also in

nearly every other state. The accrual clause set forth

within the provision, pursuant to which the limitations

period commences at the time proof of claim is due, also

has long been the traditional practice within the

insurance industry.

The decision below broadens the current conflict

among the circuits respecting enforcement of such

limitations provisions when set forth in policies that fund

an ERISA plan. Given the extensive involvement of

ACLI’s members in the employee benefits field

regulated by ERISA, ACLI is well-positioned to address

the practical impact of, and the significant adverse

consequences stemming from, the decision below and the

conflict among the circuits on this question for insurers

and the employers who fund their benefit plans through

the purchase of insurance. Such conflict undermines the

uniform regulatory regime Congress intended in

enacting ERISA, alters unambiguous policy terms

mandated by state law and agreed to by the parties, and

presents particular issues for plans operating across

multiple state jurisdictions. ACLI is uniquely positioned

to explain the practical ramifications of this conflict upon

employer-sponsored benefit plans, and hence the need

for the Court to resolve this conflict.

3

SUMMARY OF ARGUMENT

Enforceability of a policy’s limitations provision is a

fundamental issue affecting all types of ERISA plans

funded by insurance policies, including employer-

sponsored life, health and disability benefit plans. The

question presented is of critical importance because

insurance laws in nearly every state require that life,

health and disability insurance policies include a

provision which specifies that the limitations period

commences at the time proof of claim is due under the

policy, which is consistent with long-standing industry

practice.

Furthermore, ERISA and federal law afford plan

drafters broad leeway in specifying such terms. ERISA

is silent with respect to the limitations period applicable

to suits for denied benefits. When statutes do not specify

a limitations period, the Court’s precedent provides that

a contractual limitations period is enforceable where it

provides a reasonable time for the parties to file suit.

Order of United Commercial Travelers v. Wolfe, 331 U.S.

586 (1947). The “reasonableness” of the limitations

provision at issue and its accrual clause is evidenced by

its incorporation into the insurance laws of nearly every

state as well as model laws drafted by the National

Association of Insurance Commissioners (“NAIC”). This

reflects a broad consensus that the standard limitations

provision at issue herein preserves an appropriate time

within which insureds and plan participants can pursue

court action while also guarding against the difficulties

and burdens that can arise in litigating stale claims.

Despite the near uniform adoption of this limitations

provision in state insurance law, there is a conflict among

4

the federal circuit courts of appeal as to whether such

provisions are enforceable under ERISA insofar as the

accrual clause commences running of the limitations

period at the time proof of loss is due. The decision of

the Fourth Circuit below further exacerbates this conflict

and creates a proverbial “Catch-22”: state insurance laws

mandate that insurance policies include such limitations

provisions, but those very same provisions are

unenforceable (at least in three circuits) when such

policies fund an ERISA plan.

The existing conflict among the circuits is

particularly problematic because it undermines

Congress’ key objective in enacting ERISA - to establish

a “uniform administrative scheme” for ERISA-covered

benefit plans and a uniform body of federal common law

for enforcement of such plans. Fort Halifax Packing Co.

v. Coyne, 482 U.S. 1, 9 (1987). Congress sought to

establish this uniformity as part of its effort to encourage

employers to establish benefit plans by eliminating the

difficulties presented by, and increased costs resulting

from, a patchwork of conflicting state and local laws.

Herein, state insurance law is essentially uniform

regarding proof of claim accrual clauses, but federal case

law is creating the lack of uniformity. This lack of

uniformity among the circuits significantly impacts the

manner and cost of operating employer-sponsored

benefit plans, especially for those offering such plans in

multiple jurisdictions.

5

REASONS FOR GRANTING THE PETITION

A. The Disputed Policy Provision Is A Standard

Policy Provision Uniformly Mandated By The

States And Traditionally Used Within The

Insurance Industry

The limitations provision at issue in this case

provides in relevant part that no legal action may be

brought to recover on the policy “more than 3 years after

the time Proof of Claim is required.” Pet. at 4. The

limitations provision was mandated by North Carolina

General Statutes § 58-51-15, which requires in relevant

part that accident and health policies issued or delivered

in that state contain a provision to the effect that no

action at law or equity shall be brought “after the

expiration of three years after the time written proof of

loss is required to be furnished.” N.C. Gen. Stat. § 58-

51-15(a)(11). This statute is consistent with the model

insurance laws drafted by the National Association of

Insurance Commissioners. See I NAIC, “Group Health

Insurance Standards Model Act,” Model Laws,

Regulations and Guidelines at 100-1, § 8(N) (2007); II

NAIC, “Uniform Individual Accident and Sickness Policy

Provision Law,” Model Laws, Regulations and

Guidelines at 180-1, § 3(a)(12) (2007).

Nearly every state (and the District of Columbia)

requires that health and/or disability insurance policies

sold or delivered within the state contain a limitations

provision which commences running of the limitations

period at the time proof of loss is required under the

6

policy,’ consistent with the model laws and the policy

provision at issue in this case. Only the state of Utah

does not specify by statute that policies contain a

limitations provision specifying that the limitations

period begins to run at the time proof of loss is due.

Instead, Utah has mandated by statute that any action

on a written policy or contract of first party insurance

must be commenced within three years after “inception

of the loss.” Utah Code Ann. § 31A-21-313.

The limitations provision and accrual clause typically

mandated by the states is also reflective of long-standing

practice within the industry. The limitations provision

itself dates at least to NAIC’s Uniform Individual Policy

Provisions Law Model Bill of 1950, which required that

policies contain a limitations provision identical to that

currently set forth in North Carolina General Statutes

§ 58-51-15.* Use of the accrual clause in the insurance

2. Acomplete list of legal citations for the state laws mandating

incorporation of limitations provisions that commence the limitation

period when proof of loss is due is set forth in Appendix A hereto.

While a few of the states specify a limitations period longer than

three years, all contain a accrual clause which mandate that the

period commences when proof of loss is due under the policy.

3. The 1950 model law required that policies contain the

following provision:

LEGAL ACTIONS: No action at law or in equity shall

be brought to recover on this policy prior to the

expiration of sixty days after written proof of loss has

been furnished in accordance with the requirements of

this policy. No such action shall be brought after the

expiration of three years after the time written proof

of loss is required to be furnished.

See Uniform Individual Policy Provisions Law Model Bill of 1950,

§ 3(A\(1L), reprinted in William F. Meyer, Life and Health Insurance

Law app. A (1971).

7

industry predates the 1950 model law. For example, as

the Court observed in Order of United Commercial

Travelers v. Wolfe, 331 U.S. 586 (1947), South Dakota

law at that time mandated that such a limitations

provision be included in all health or accident policies,

and further described the provision as “a standard

provision.” Jd. at 612 & n. 23 (“action must be brought

within two years from the expiration of the time within

which proof of loss is required by the policy” (citing

s 3(14), c. 229, S.D.L. 1919, at page 235)).

The fact that states uniformly require that policies

contain the limitations provision underscores that crucial

role that it plays in the administration of insurance

policies and the ERISA plans they fund. As with any

specified limitations period, the purpose is to address

the difficulties associated with litigating stale claims. The

problem presented by stale claims takes on heightened

significance in the health and disability context, however,

where a plan participant’s disability or health status

may shift significantly over time. Evidence of the

participant’s contemporaneous condition can prove

difficult to reconstruct. Additionally, subsequent changes

in the participant’s medical status, whether such change

be improvement or deterioration, can potentially distort

interpretation of the contemporaneous evidence of the

participant’s condition at the time the claim is made.

Overall, the limitations provision balances both the

concern against litigating stale claims and the concern

that insureds or plan participants be provided with an

adequate period of time in which to press their claims.

The proof of claim accrual clause addresses the former

by linking the limitations period to the time when

evidence relevant to the claim can most easily be

8

obtained. The length of the period specified — in North

Carolina (and in most states) three years — for

proceeding with an action is set to provide an adequate

ime both for an ultimate decision to be made upon a

claim and for the participant to thereafter pursue court

action.

B. A Conflict Exists Among The Circuit Courts Of

Appeal Regarding Enforcement Under ERISA

Of State-Mandated Insurance Policy Provisions

That Require A Limitations Period To Commence

When Proof Of Claim Is Due.

ERISA does not specify a limitations period

applicable to ERISA suits for denied benefits under

29 U.S.C. § 1132(a)(1)(B). Lower courts have applied “the

most analogous” state limitations period, unless the

ERISA plan sets forth a limitations period. Where the

ERISA plan specifies a limitations period, courts have

enforced the period where the period is reasonable, in

accordance with Order of United Commercial Travelers

v. Wolfe, 331 U.S. 586, 608 (1947) (holding that

contractual limitations periods are binding where the

period is reasonable).

In the context of insured plans, as discussed supra,

state insurance law typically mandates the limitations

provision that must be included in the policies funding

the plans as one of several standard provisions state law

requires to be included in policies. The specific accrual

clause set forth therein which is the subject of the

Petition also is a standard and uniform provision of

insurance disability income, health and life policies

funding ERISA plans.

9

Eight circuits have considered whether a policy

limitations provision which specifies that the period

commences at the time proof of claim is due is enforceable

under ERISA. As discussed below, the majority of these

eight circuits have applied the provisions where such

application is “reasonable.” The minority of circuits which

do not enforce such limitations provisions in the ERISA

context conceptually correlates the accrual date with the

denial of benefits (or at least notice thereof), but each sets

forth a different formulation of the appropriate accrual

date.

1. The Majority of Circuits Enforce the

Limitations Provision Where Reasonable as

Applied to the Particular Facts of the Case.

Five of the eight circuits have enforced limitations

provisions containing such accrual clauses, provided the

time remaining for a participant to file suit after the claim

and internal appeal process is completed is reasonable

under the particular facts of the case. The Fifth, Seventh

and Eighth Circuits all have enforced accrual clauses that

run from events other than the denial of benefits.

See Harris Methodist Fort Worth v. Sales Support Services

Inc. Employee Health Care Plan, 426 F.3d 330, 337-38

(5 Cir. 2005) (enforcing three-year limitations period that

began to run from date proof of loss was due); Doe v. Blue

Cross & Blue Shield United of Wisconsin, 112 F.3d 869,

875 (7" Cir. 1997) (enforcing thirty-nine month limitations

period that began to run from the date of the services for

which benefits were sought); Blaske v. Unum Life

Insurance Company of America, 131 F.3d 763, 764 (8"" Cir.

1997), cert. denied, 525 U.S. 812 (1998) (enforcing policy

limitations provision that began the period at the time that

proof of claim was required).

10

In unpublished decisions, the Sixth and Tenth

Circuits have also enforced such provisions. See Clark

v. NBD Bank, NA, 3 Fed. Appx. 500 (6 Cir. 2001)

(enforcing limitations period which commenced at the

time “written proof of loss is required to be furnished”);

Moore v. Berg. Enters., 1999 U.S. App. LEXIS 30481

(10" Cir. 1999) (enforcing three year limitations period

which commenced on the date proof of loss was required).

In assessing the reasonableness of the contractual

limitations provisions, these five circuits have implicitly

recognized that the specified accrual date is not ade facto

litmus test for the reasonableness of the limitations

period. Rather, these circuits have applied both the

accrual date and the specified length of the limitations

period in determining whether the provision as applied

to the tacts of the particular case was reasonable overall

and afforded the participant a reasonable opportunity

in which to file suit after the plan’s internal

administrative remedies had been exhausted.

2. The Minority Of Circuits Hold That Proof Of

Loss Accrual Clauses Are Not Enforceable In

The ERISA Context, But Adopt Different

Standards For The Appropriate Accrual Date.

In contrast, the Fourth Circuit herein joins the Third

and Ninth Circuits in essentially holding that an accrual

clause that runs from the date proof of loss is required

to be furnished is unenforceable per se under ERISA.

See Miller v. Fortis Benefits Ins. Co., 475 F.3d 516, 520-

521 (3d Cir. 2007); Price v. Provident Life & Accident

Ins. Co., 2 F.3d 986 (9 Cir. 1993). While these circuits

acknowledge that the parties can specify the length of

the limitations periods, they have held that the parties’

11

freedom to do so under federal law does not extend to

the accrual date itself.

Although each of these three circuits has rejected

the date proof of claim is due as an appropriate accrual

date, none agrees on what the appropriate accrual date

actually is. The Fourth Circuit herein established a

blanket rule that the appropriate accrual date is the date

that benefits are denied. 488 F.3d at 247 (holding that

“[ERISA’s] interlocking remedial structure does not

permit an ERISA plan to start the clock ticking on civil

claims while the plan is still considering internal

appeals”).

The Third Circuit has determined that the

limitations period begins to run once there is a “clear

repudiation” of a benefit claim. Miller, 475 F.3d at 522-

23. Pursuant to the Third Circuit’s formulation, a formal

denial of benefits is not required to start the limitations

period running. Rather, the limitations period

commences once there is a repudiation of the benefit

claim and that repudiation is both clear and made known

to the beneficiary. Jd. at 521.

The Ninth Circuit has adopted yet another accrual

rule, which provides that the limitations period begins

to run when the claimant knows, or has reason to know

of the denial. Price, 2 F.3d at 988. Significantly, Ninth

Circuit law respecting the parties’ ability to specify even

the length of the limitations period in the ERISA context

is at best unclear. In Wetzel v. Lou Ehlers Cadillac Group

Long Term Disability Insurance Program, 222 F.3d 643

(9 Cir. 2000), the en banc Ninth Circuit held that

California’s four-year statute of limitations for suits on

written contracts applies to an ERISA action for denial

12

of benefits, notwithstanding the fact that the policy

required that any action to recover benefits must be

commenced within “three years after the time written

proof of loss is required.” 222 F.3d at 648, 650. After

determining that the action was not barred by the four-

year statute of limitations, the Ninth Circuit nonetheless

remanded the case for a determination as to whether

the claimant complied with the policy’s contractual

limitations provision.

C. The Conflict Among The Circuits Undermines Basic

ERISA Policies And Adversely Affects Employee

Benefit Plans Funded Through Insurance.

1. Enforceability of Contractual Limitations

and Accrual Provisions is Fundamental to

ERISA Plans and Insurance Policies.

It is important for the efficient operation of

employer-sponsored benefit plans covered by ERISA

that this Court resolve the conflict among the circuits

regarding enforceability of limitations provisions that

commence to run at the time proof of loss is due. Under

ERISA’s statutory and regulatory scheme, enforcement

of plan terms is paramount. ERISA requires that plans

be “established and maintained pursuant to a written

instrument.” 29 U.S.C. § 1102(a)(1). Plan fiduciaries are

required to discharge their duties “in accordance with

the documents and instruments governing the plan.”

Id. § 1104(a). Plan participants, beneficiaries and

fiduciaries all are provided specific causes of action to

enforce written plan terms. /d. § 1132(a)(1)(B) (providing

plan participants and beneficiaries a cause of action to

recover benefits due and enforce their rights “under the

terms of the plan”); id. § 1132(a)(3) (providing plan

13

participants, beneficiaries and fiduciaries a cause of

action for injunctive and other appropriate equitable

relief to enforce or redress violations “of the terms of

the plan”).

Plan terms regarding applicable limitations and

accrual provisions are no less paramount than other plan

terms. As specified above, they play a crucial role in

safeguarding against the challenges presented in

litigating stale claims. The Court has previously

recognized that ERISA affords employers “large leeway

to design ... plans as they see fit.” Black & Decker

Disability Plan v. Nord, 538 U.S. 822, 833 (2003). Where

employers choose to fund ERISA plans through the

purchase of insurance, such “leeway” must encompass

incorporation of standard policy provisions mandated by

state insurance law.

2. The Conflict Undermines the National

Uniform Regulation Intended by ERISA, and

Consequently Increases the Cost to Employers

of Providing Benefit Plans.

Conflicting interpretations of federal law are

disfavored generally and they are particularly

problematic in the ERISA context. The circuit conflict

regarding enforceability of limitations provisions and

accrual clauses undermines the public policies

underlying ERISA. In enacting ERISA, Congress was

mindful not only of the need to establish certain

minimum standards to protect the rights of employees,

but also of the fact that benefit plans are voluntary on

the part of employers. H.R. Rep. No. 93-533, at 9 (1973),

reprinted in 1974 U.S.C.C.A.N. 4639, 4647. One of

ERISA’s bedrock purposes therefore is to encourage the

14

formation of employee benefit plans. 29 U.S.C.

§ 1001b(c)(2). Congress accordingly sought to minimize

disincentives to the establishment of such plans and to

facilitate their establishment at a reasonable cost.

The basic thrust of ERISA is to avoid multiplicity of

regulation in order to permit uniform national

administration of employee benefit plans. New York

State Conference of Blue Cross & Blue Shield Plans v.

Travelers Ins. Co., 514 U.S. 645, 657 (1995). For over 30

years, ERISA’s uniform regulation of employee benefit

plans has fostered and protected the development of a

system that extends crucial employee benefits to a vast

swath of the nation’s working population. ERISA has

encouraged employers to take on the challenge of

sponsoring benefit plans to provide employees and other

beneficiaries with substantial financial protection from

the high cost of health care, from the financial risk of a

disabling illness or injury, and for financial security in

retirement. A key component of ERISA’s success in

expanding and enhancing employee benefits is the

protection it affords plan sponsors, which frequently

have employees and operations in many states, from the

burdens of having to comply with multiple regulatory

regimes. As this Court has noted, conflicting

requirements make benefit administration more difficult

and inefficient. When inefficiencies or difficulties are

introduced into the benefit administration system,

employers may decide to reduce the level of benefits

offered, or to cease offering the benefits entirely. Fort

Halifax Packing Co., 482 U.S. at 11.

Herein, state insurance law is essentially uniform

regarding proof of claim accrual clauses, as nearly every

state requires their incorporation into insurance policies.

15

Federal case law is creating a lack of uniformity. The

disruption to a uniform system of administration is no

less problematic when the lack of uniformity stems from

conflicting interpretations of federal law, than when it

results from conflicting state laws and regulatory

requirements. In either context, unless the most

stringent of the conflicting requirements is adhered to,

the plan and claims procedures must be tailored to the

particular jurisdiction in which the claim arises. Both

situations increase the cost of providing benefits for all

participants, and both present particular challenges for

plans operating in multiple jurisdictions.

D. State-Mandated Limitations And Accrual Policy

Provisions Should Be Enforced Under ERISA.

ACLI respectfully submits that state-mandated

limitations and accrual provisions should be enforced

under ERISA. As the dissent concluded below, the

policy’s limitations provision is “eminently reasonable”

and tying the limitations period to the date on which

proof of claim is due serves the important function of

ensuring that a civil action is not “too temporally

removed from the events underlying it.” 488 F.3d at 259-

60, 263. The reasonableness of the disputed limitations

provision is amply demonstrated by the fact that nearly

every state mandates that it be included in insurance

policies, and by the fact that since at least 1950, it has

been incorporated into the model insurance laws adopted

by the NAIC.

The Fourth Circuit’s decision below failed to

acknowledge both the fact that North Carolina law

requires that the limitations provision be included in the

16

policy and the wide-spread adoption of the provision by

nearly every other state. Throughout its decision, the

Fourth Circuit refers to the limitations provision as

“Sun Life’s accrual provision,” as though Petitioner

independently conceived and voluntarily crafted the

provision for inclusion in the policy. For this reason, the

Fourth Circuit’s concern that insurers would craft

limitations periods of such short duration that they could

easily consume the minimum time periods required for

claims processing and the plan’s internal appeal process

under ERISA’s regulatory requirements is overstated.

While state insurance law may permit insurers to provide

limitations periods of longer duration than the minimum

required by state law, they cannot shorten it.

Furthermore, even if the limitations period were not

mandated by state law, any such provision that

established a shorter limitation period than the minimum

period required under ERISA for claims processing and

internal appeal would be facially unreasonable.

The Fourth Circuit’s conclusion that enforcing the

limitations provision at issue would create an incentive

for insurers to delay issuing a decision until the policy’s

limitations period has run is equally overstated. ERISA’s

implementing regulations sets forth certain time limits

for a plan’s initial determination on the claim as well as

on any internal appeal, and also minimum time period

for a claimant to file an internal appeal. See 29 C.F.R.

§ 2560.503-1(f)(3) (limiting the time in which the plan

may take in its initial consideration of the claim to 45

days from the date of filing of the claim, with two 30-day

extensions allowed when needed); zd. §§ 2560.503-

1(i)(1)(i), 2560.503-1(i)(3)(i) (limiting the time in which

the plan may take in considering an internal appeal to

17

45 days from the filing of the appeal and providing for one

45-day extension); id. §§ 2560.503-1(h)(4), 2560.503-I(h)(3)(i)

(requiring that plan afford a claimant with at least 180 days

to appeal an initial benefits determination). These time

limits are intended to provide a prompt and timely

resolution of the benefit claim.

Even allowing for the fact that ERISA’s regulations

also provide that in certain circumstances these time limits

can be tolled,‘ the three-year period mandated by North

Carolina law (and that of nearly every other state) provides

ample time for required exhaustion of the plan’s internal

appeals process prior to the claimant’s filing suit in the

vast majority of cases, even in those cases where the appeals

process is somewhat protracted. See, e.g., White, 488 F.3d

at 244-45 (benefit claim submitted on May 5, 2000; internal

appeal denied March 28, 2001); Blaske, 131 F:3d at 763-764

(proof of claim filed in February of 1995; internal appeals

process concluded and suit filed on October 15, 1995);

Doe, 112 F.3d at 873 (psychiatric treatment first sought in

December 1989; internal appeals process concluded on

September 25, 1991). Furthermore, in those limited cases

where the peculiar facts of a case result in an unusually

protracted claims decision process, equitable doctrines such

as tolling and estoppel may forestall strict application of

the limitations provision.

4. See 29 C.F-R. § 2560.503-1(f)(4) (providing that when plan

extends claims period to seek additional information needed to

resolve claim, the regulatory period is tolled from the date on which

notification of the extension is sent to the claimant until the date on

which the claimant responds to the request for additional

information). It is significant to note, however, that the length of

time the regulatory time period is tolled is within the control of the

claimant, not the plan or insurer. The more promptly the claimant

responds to the request for additional information, the shorter the

duration of the claims and appeals process.

18

CONCLUSION

ACLI respectfully requests that the Court grant Sun

Life Assurance Company’s petition for a writ of

certiorari.

Respectfully submitted,

RICHARD B. LAZARUS

Counsel of Record

CAROLYN DoPPELT GRAY

TERESA L. JAKUBOWSKI

BarRNES & THORNBURG LLP

750 17” Street, N.W.

Washington, D.C. 20006

(202) 289-1313

CARL B. WILKERSON

Vice President & Chief Counsel,

Securities & Litigation

Lisa TATE

Associate General Counsel,

Litigation

American Council of Life Insurers

101 Constitution Ave., N.W.

Suite 700

Washington, D.C. 20001

(202) 624-2153

Counsel for Amicus Curiae

APPENDIX

la

APPENDIX A

Ala. Code §§ 27-19-14, 27-20-5(7); Alaska Stat.

§ 21.54.030(7); Ariz. Rev. Stat. §§ 20-1355, 20-1405; Ark.

Code Ann. §§ 23-85-116, 23-86-102(c)(7); Cal. Ins. Code

§ 10350.11; Colo. Rev. Stat. §§ 10-16-202(12), 10-16-

214(3)(a)(XIV); Conn. Gen. Stat. § 38a-483(a)(11); Del. Code

Ann. tit. 18, §§ 3315, 3526, 3541(7); D.C. Code Ann.

§ 31-4712(c)(1)(K); Fla. Stat. §§ 627.616, 627.657(2);

Ga. Code Ann. § 33-29-3(b)(11); Haw. Rev. Stat. §§ 431:10A-

105(11), 431:10A-208; Idaho Code §§ 41-2115, 41-2207(7);

215 Ill. Comp. Stat. 5/357.12; Ind. Code §§ 27-8-5-3(a)(11),

27-8-5-15(b)(7); lowa Code § 514A.3(1)(k); Kan. Stat. Ann.

§ 40-2203(A)(11); Ky. Rev. Stat. Ann. §§ 304.17-150, 304.18-

070(7); La. Rev. Stat. Ann. § 22:213(A)(11); Me. Rev. Stat.

Ann. tit. 24-A, §§ 2715, 2828; Md. Code Ann. Ins. § 15-217;

Mass. Gen. Laws ch. 175 § 108(3)(a)(11); Mich. Comp. Laws

§§ 500.3422, 500.3610; Minn. Stat. §§ 62A.04(2)(11),

62A.10; Miss. Code Ann. § 83-9-5(1)(k); Mo. Rev. Stat.

§§ 376.426(14), 376.777(1)(11); Mont. Code Ann. §§ 33-22-

214, 33-22--602(7); Neb. Rev. Stat. § 44-710.03(11); Nev. Rev.

Stat. $§ 689A.150, 689B.080(9); N.H. Rev. Stat. Ann.

§§ 415:6(1)(11), 415:18(1)(n); N.J. Stat. Ann. §§ 17B:26-14,

17B:27-46; N.M. Stat. Ann. §§ 59A-22-14, 59A-23-4(A);

N.Y. Ins. Law §§ 3216(d)(1)(K), 3221(a)(14); N.C. Gen. Stat.

§ 58-51-15(a)(11); N.D. Cent. Code §§ 26.1-36-04(1)(m), 26.1-

36-05(14); Ohio Rev. Code Ann. § 3923.04(K); Okla. Stat.

tit. 36, §§ 4405(A)(11), 4505; Or. Rev. Stat. § 743.441; 40 Pa.

Cons. Stat. §§ 753(A)(1), 756.3; R.I. Gen. Laws

§ 27-18-3(a)(11); S.C. Code Ann. § 38-71-735(m); S.D.

Codified Laws § 58-18-27; Tenn. Code Ann. § 56-26-108(11);

Tex. Ins. Code Ann. § 1251.116; Vt. Stat. Ann. tit. 8,

$§ 4065(11), 4080; Va. Code Ann. §§ 38.2-3503, 38.2-3504;

Wash. Rev. Code §§ 48.20.142, 48.21.050; Wis. Stat.

§ 631.83(1)(b); W. Va. Code §§ 33-15-4(k), 33-16-3(d); Wyo.

Stat. Ann. §§ 26-18-115, 26-19-107(a)(vii).