Long-term disability plans typically pay benefits on a monthly basis. When there is a dispute about the calculation of benefits, when does that claim accrue? And does each new underpayment give rise to a new claim? The First Circuit answered those questions in Riley v. Met Life Ins. Co., — F.3d –, 2014 WL 814742 (1st Cir. Mar. 4, 2014).

Riley filed an LTD claim that was approved in 2005, and Met Life determined that he qualified for only the minimum benefit. Riley contended that Met Life used the wrong salary for its calculation. When he received his first payment, he refused to cash it, and returned it to Met Life. He did the same with subsequent payments, and ultimately asked Met Life to stop sending him checks. There ensued two litigations filed by an apparently not-very-competent lawyer, which were dismissed without the merits being reached.

Riley hired new counsel, and sued for a third time in 2011. This time, Met Life moved for summary judgment, arguing that the claim was barred by the applicable six-year statute of limitations. The district court agreed, and the First Circuit affirmed.

First, the court held that Riley’s claim accrued when Met Life approved his claim, calculated the benefit, and issued the first check: “MetLife allowed Riley’s LTD claim, but with its first check for $50, MetLife denied his explicit assertion that any award of that sum was inaccurate. This was not a complete repudiation or a formal denial of all LTD benefits. But it was a clear repudiation of Riley’s assertion that he was entitled to more than the amount MetLife actually awarded.”

The court explicitly agreed with decisions by the Second, Third, Seventh and Eighth Circuits, which had “concluded that an ERISA cause of action accrues when, after a claim for benefits is made and a specific sum is sought, the ERISA plan repudiates the claim or the sum sought, and that rejection is clear and made known to the beneficiary.” See, e.g., Miller v. Fortis Benefits Ins. Co., 475 F.3d 516 (3d Cir.2007); Union Pac. R.R. Co. v. Beckham, 138 F.3d 325 (8th Cir.1998); Daill v. Sheet Metal Workers’ Local 73 Pension Fund, 100 F.3d 62 (7th Cir.1996); Novella v. Westchester Cnty., 661 F.3d 128 (2d Cir.2011).

Next, the court rejected Riley’s argument that each monthly payment gave rise to a new claim, and that the statute of limitations barred, at most, claims concerning benefits paid more than six years before the action was filed. Calling it an issue of first impression in the Circuit, the court “rejected Riley’s argument that the ERISA plan must be treated as a continuing violation or as an installment contract, with a new accrual date starting a new limitations period for each payment.”

The court held that “an underpayment can qualify as a repudiation because a plan’s determination that a beneficiary receive less than his full benefits is effectively a partial denial of benefits.” The court distinguished between a case in which there are separate violations of the same type or character, which are repeated over time (in which case each violation might be a separate claim), and a claim “based on a single decision that results in lasting negative effects” (in which there is a single claim accruing when the decision is made).

The court explained that its ruling on this point was consistent with decisions from the Second, Third and Ninth Circuits, and observed that Riley had not identified any circuit cases “applying an installment contract accrual theory to ERISA benefit claims.

Finally, the court gave a shout-out to the policies underlying ERISA, and held that those policies supported its decision:

One of ERISA’s main purposes is the promotion of predictability, through which ERISA seeks to induce employers to offer benefits by assuring a predictable set of liabilities. Allowing beneficiaries to challenge alleged miscalculations on which the statute of limitations has already run by limiting the challenge to recent and future payments would undermine that predictability interest. It could also undermine the ERISA plan’s reliance on its original calculations and payments for actuarial purposes. [citations, quotation marks and brackets omitted]