Koberg v. John Alden Life Ins. Co. U.S. Dist. Ct. (Mont.) Dec. 8, 2011
The District Court of Montana dismissed a putative class action against insurer John Alden last Thursday citing the Policy’s 3-year statute of limitations. The plaintiff brought suit against the insurer alleging it had used a defective database that produced inaccurate calculations for reimbursement of health care charges. Plaintiff was insured under an ERISA-governed employee welfare benefit plan that included medical coverage.
In 2005, the insured incurred more than $20,000 in health care costs of which he agreed to pay $4500 as required by the policy and submitted the remaining amount to the insurer. The insurer refused to pay the remaining amount, on the basis that the charges exceeded the prevailing rate in the locality as determined by the Ingenix database. The insured retained counsel and filed an internal appeal in 2006. During this appeal process the insured was informed of the insurer’s process in determining the reimbursement amount and of his right to file an ERISA action after exhaustion of the internal appeals process.
Later in 2009, the insured learned of a settlement between the New York Attorney General’s Office and United Healthcare in a lawsuit concerning the database. The insured then filed this lawsuit in March 2011 asserting five ERISA causes of action, a declaratory judgment claim, and state law claims arising out of the insurer’s method of reimbursing policyholders for healthcare services. The court focused on the tardiness of the action finding that the Policy’s three-year statute of limitations was reasonable.
The insured argued that the three-year period should be tolled, or that the insurer should be equitably estopped from raising the defense because it prevented him from filing within the deadline by its affirmative misrepresentations. The court stated that the insured had not met its burden to show any “active conduct by the defendant above and beyond the wrongdoing upon which the plaintiff’s claim is filed.” The court found that there was no allegation that the insurer had lulled the insured into delaying his legal action and therefore, no basis for equitable estoppel.
The court then discussed the insured’s argument that his claim did not accrue until 2009 because he lacked “actual knowledge” of the insurer’s violation until he learned of the settlement regarding the database. The court stated that the insured had ignored contrary mandatory authority from the Ninth Circuit which holds that “actual knowledge” requires only knowledge of all the relevant facts, not that the facts establish a cognizable legal claim under ERISA. The court dismissed the insured’s ERISA claims and the declaratory judgment claim on the basis that they were untimely filed and also dismissed the remaining state law claims as being preempted by ERISA.
For a copy of the decision click here