Second Circuit Vacates Dismissal of Cigna’s ERISA Claim Against Laboratory Testing Companies, Finding Claim Subject Only to Equitable Doctrine of Laches

In Connecticut Gen. Life Ins. Co. v. BioHealth Labs., Inc., No. 20-2312-CV, __F.3d__, 2021 WL 476111 (2d Cir. Feb. 10, 2021), Plaintiffs, collectively “Cigna,” appealed the dismissal of their claims against several laboratory testing companies (the “Labs”) as time-barred under Federal Rule of Civil Procedure 12(b)(6). Cigna asserted various federal and Connecticut state-law claims based on allegations that “the Labs submitted fraudulent or overstated charges for medical testing services that the Labs purportedly provided to patients covered by benefits plans overseen by Cigna.”

The Second Circuit resolved three issues. First, it considered which time-bar rules apply to Cigna’s federal claims since federal law does not provide a limitations period for either Cigna’s ERISA § 502(a)(3) claim or Declaratory Judgment Act claim. The court determined that Connecticut’s unjust enrichment claim is most analogous to these federal claims so the same limitations rules will apply to those claims.

Second, it determined that under Connecticut law, Cigna’s equitable claims are not subject to the same statute of limitations that governs analogous legal claims that were asserted based on the same facts. Instead, they are subject only to the doctrine of laches. Thus, the district court erred by dismissing them as automatically barred by the three-year statute of limitations for tort claims.

Third, the court determined that the limitations period applicable to Cigna’s claims was not tolled during the pendency of a prior federal action between the parties because Connecticut law does not provide for such tolling. Under Connecticut law, the timeliness of counterclaims is measured from the date on which they are interposed, not the date the complaint was filed. Here, Cigna never interposed counterclaims in the prior action so the three-year limitations period was not tolled during the previous action. The court affirmed in part, vacated in part, and remanded the case for further proceedings.