Date: 02-01-2007

Case Style: Paul Miller v. Fortis Benefits Insurance Company and Resorts International Hotel

Case Number: 05-2539

Judge: Fuentes

Court: United States Court of Appeals for the Third Circuit on appeal from the District of New Jersey

Plaintiff's Attorney:

Robert P. Merenich of Gemmel, Todd & Merenich, Linwood, New Jersey Counsel for Appellants

Defendant's Attorney:

Randi F. Knepper and Joshua A. Zielenski of McElroy, Deutsch, Mulvaney & Carpenter, Morristown, New Jersey Counsel for Appellees

Description:

Appellant Paul Miller appeals the District Court's dismissal of his complaint under Federal Rule of Civil Procedure 12(b)(6). The focus of Miller's appeal is the accrual date of his cause of action to recover benefits under the Employee Retirement Income Security Act ("ERISA"). We must determine whether his cause of action accrued in 1987, when he first began receiving a miscalculated benefit award, or in 2003, when his request to correct that award was first denied. For the reasons that follow, we conclude that his cause of action accrued in 1987, when he first received the erroneously calculated award. Because Miller did not file his claim within the applicable statutory period, we will affirm the order of the District Court.

I. Background

Paul Miller became disabled on October 6, 1986 after undergoing heart surgery. About fourteen months before the surgery, Miller was employed by Resorts International Hotel ("Resorts") as a casino floor worker making $690 per week. However, immediately before becoming disabled, he worked as an outside marketing salesman earning $768 per week. In April 1987, he filed a claim for employee disability benefits under a long term disability policy ("the LTD plan") issued by Mutual Benefit Life Insurance Company ("Mutual Benefit"). Under the LTD plan, Miller was entitled to ongoing disability payments of sixty percent of his current salary until he reached the age of sixty-five. According to Miller's complaint, when Resorts reported his salary to Mutual Benefit, it mistakenly stated that he still held his old position as a casino floor worker earning $690. In April 1987, Miller began receiving disability payments erroneously based on this former salary.

It was not until 2002, about fifteen years after he began receiving benefits, that Miller realized the calculation was incorrect. On November 12, 2002, after consulting with an accountant, he sent a letter to Fortis Benefits Insurance Company ("Fortis"), which had acquired Mutual Benefit, seeking an upward adjustment to reflect his 1987 salary. Fortis agreed to investigate the matter, but subsequently informed Miller by letter that the relevant pay records were no longer available. According to Fortis, since Resorts kept pay information for only seven years, it no longer had the information needed to determine the merits of Miller's claim.

In August 2003, Miller filed a complaint in New Jersey Superior Court which was removed to the District of New Jersey. In his amended complaint, Miller alleged, under 29 U.S.C. § 1132(a)(1)(B), that Fortis and Resorts unlawfully denied him disability benefits, and, under 29 U.S.C. § 1132(a)(3), that they breached a fiduciary duty to him by misrepresenting his proper salary and failing to investigate thoroughly his claim for adjustment. Resorts and Fortis moved to dismiss Miller's complaint for failure to state a claim upon which relief could be granted. Specifically, they contended that Miller's claims were barred by a six-year statute of limitations which began to run in 1987.

Miller conceded that the six-year limitations period applied, but disagreed with Fortis about the appropriate date of accrual.1 The District Court ruled that the six-year statute of limitations began to run in July 1987, based on the following language in the LTD plan:

Proof of Loss

Written proof of loss must be given to Us at Our Home Office or one of Our Regional Group Claim Offices. For any loss for which the Policy provides periodic payment, the written proof of loss must be given within 90 days after the end of the first month or lesser period for which We may be liable. After that, proof must be given at such intervals as We may reasonably require. For any other loss, the written proof of loss must be given within 90 days after the date of loss.

. . .

Legal Actions

No action at law or in equity may be brought to recover on the Policy any earlier than 60 days after the required proof of loss has been given. No action may be brought after the expiration of the statute of limitations in the state having jurisdiction. In no event may action be brought any later than 6 years after the time required for submitting the proof has elapsed.

(Appendix at 57-58.) Relying on the LTD plan, the District Court reasoned:

The "Proof of Loss" section refers to the end of the "first month . . . for which we may be liable." The policy establishes that the insured must be totally disabled for six months before benefits are payable. Since Miller was disabled on October 6, 1986, Fortis would first become liable in March or April 1987. The policy also provides that the proof of loss must be sent in writing to Fortis within 90 days of the period that Fortis first became liable. Thus, if Fortis first became liable in March or April of 1987 then the time that Miller needed to provide written proof of loss expired in June or July of 1987. Consequently, the plan dictates that Miller had six years from this time, in June or July of 1987, to file a claim.

Miller v. Fortis Benefits Ins. Co., 363 F. Supp. 2d 700, 704-05 (D.N.J. 2005). Since Miller filed his complaint more than six years after 1987, the District Court dismissed the case. This appeal followed.

II. Jurisdiction and Standard of Review

The District Court had jurisdiction pursuant to 28 U.S.C. § 1441(a), because of "original jurisdiction" under § 502(e) of ERISA. 29 U.S.C. § 1132(e). This Court has jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary review over a grant of a motion to dismiss. Brown v. Card Servs. Ctr., 464 F.3d 450, 452 (3d Cir. 2006). When considering an appeal from a Rule 12(b)(6) dismissal, our review is limited to "the contents of the complaint and any attached exhibits." Yarris v. County of Delaware, 465 F.3d 129, 134 (3d Cir. 2006). We accept as true all well-pled allegations in the complaint and draw all reasonable inferences in favor of the non-moving party. In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 215 (3d Cir. 2002).

* * *

Outcome: In sum, when Miller began receiving benefits in April 1987 based on a salary of $690 per week, his right to receive benefit payments based on a salary of $768 per week was clearly repudiated. Therefore, his cause of action for adjustment of benefits accrued in April 1987. Miller had until April 1993 to file his complaint for adjustment of benefits. Since he did not do so until 2003, his claim is time barred. Accordingly, we will affirm.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: None