Fourth Circuit: In Suit for ERISA Plan Benefits, Court Cannot Equitably Toll Deadline to Convert Life Insurance Policy to Individual Coverage

In Hayes v. Prudential Ins. Co. of Am., No. 21-2406, __F.4th__, 2023 WL 2175736 (4th Cir. Feb. 23, 2023), the Fourth Circuit Court of Appeals considered the question of whether, for a claim for benefits brought under ERISA Section 502(a)(1)(B), a court can apply the doctrine of equitable tolling to allow for an exception to the life insurance conversion deadline set forth in an ERISA plan.

By way of background, Plaintiff-Appellant Kathy Hayes filed suit against Defendant-Appellee Prudential Insurance Company of America when it refused to pay life insurance benefits for the death of her husband who was covered by an employer-provided life insurance plan that Prudential insured. Prudential denied the claim because it was undisputed that Mr. Hayes’s coverage terminated and he did not convert the coverage to an individual policy within the deadline, which was the later of 31 days after his coverage ended or 15 days after receiving written notice of the conversion privilege. Mr. Hayes did contact Prudential about converting 26 days after the deadline and then died several months later. Hayes appealed to Prudential on the basis that Mr. Hayes was incapacitated due to his medical conditions. Prudential denied the appeal, finding that the records do not show that he was incapacitated during the time he had to convert his coverage but also that Prudential is required to administer claims made under the plan in strict adherence to the policy provisions. Hayes filed suit.

Applying abuse of discretion review, the district court entered judgment for Prudential. The court found that Prudential reasonably denied Plaintiff’s request for benefits because Hayes received timely notice of the conversion and did not convert his policy. The court also rejected Hayes’s request to apply the doctrine of equitable tolling, noting that ERISA Section 502(a)(3) is the statutory provision under which a court can grant “other appropriate equitable relief” but Hayes did not sue under that provision.

Also applying abuse of discretion review to Prudential’s decision, the Fourth Circuit agreed with the district court. The court explained that under CIGNA Corp. v. Amara, 563 U.S. 421, 435–36, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011), ERISA Section 502(a)(1)(B) does not permit modifying an ERISA plan’s terms to provide a workaround its conversion deadline. The plan administrator did not abuse its discretion in deciding that the terms of the plan do not provide for equitable tolling. Federal courts generally apply a presumption that federal statutes of limitations can be equitably tolled but a conversion deadline is not akin to a statute of limitations because no cause of action for benefits accrues when a participant misses a conversion deadline. And though the Supreme Court has suggested that equitable tolling may be available for deadlines in ERISA plans involving the time to file a lawsuit or appeal of a denied benefit claim, these deadlines are to be followed as ordinary statutes of limitations. The court also noted that Hayes could have sought relief under Section 502(a)(3) but did not decide whether she could have obtained equitable tolling under that provision. A plaintiff can assert claims under both (a)(1)(B) and (a)(3), seeking relief in the alternative. Affirmed.