United States: Recurring Benefit Payments And The Statute Of Limitations

The First Circuit Court of Appeals held this month that the statute of limitations under ERISA for a claimed miscalculation of an ongoing stream of benefit payments started at the time of the calculation of the first payment, and was not renewed with each subsequent payment alleged to be erroneous.

In Riley v. Metropolitan Life Ins. Co., the plaintiff claimed that his benefits under Met Life's long term disability benefit plan had been miscalculated and that his monthly benefit was too low. The plaintiff had rejected MetLife's computation from the time of his first benefit payment in 2005, but (perhaps because of malpractice by his lawyers) did not bring his ERISA claim until March 2012.

The Court of Appeals upheld the dismissal of the case because it had been brought more than six years after the first benefit payment. Riley had attempted to avoid the limitations bar by arguing that each new benefit payment where he was underpaid was a new injury and a new wrong, as well as being a continuing violation. Riley claimed he should be able to at least collect for underpayments in six years immediately preceding his complaint and to get benefits restored to a higher level going forward into the future. The Court, however, found that any violation of Riley's rights had occurred when the benefits were first calculated and started to be paid, and it could not be said that a new violation occurred each and every month.

This case has potential relevance in situations where actuaries or plan administrators face claims relating to miscalculations many years in the past. The possibility of arguing that the statute of limitations began with the first payment may depend, however, on showing that the recipient disagreed with the benefit calculation at the outset in order to avoid the argument that the statue of limitations only began to run at a later point in time when the recipient "discovered" the error.

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