Robert Riley v. Metropolitan Life Insurance Company, d/b/a METLIFE

United States Court of Appeals
For the First Circuit
No. 13-2166
ROBERT RILEY,
Plaintiff, Appellant,
v.
METROPOLITAN LIFE INSURANCE COMPANY, d/b/a METLIFE,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Lynch, Chief Judge,
Souter, * Associate Justice,
and Lipez, Circuit Judge.
Valeriano Diviacchi for appellant.
James F. Kavanaugh, Jr., with whom Johanna L. Matloff and Conn
Kavanaugh Rosenthal Peisch & Ford, LLP were on brief, for appellee.
March 4, 2014
* Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.

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LYNCH, Chief Judge. In 2012, plaintiff Robert Riley
filed suit under the Employee Retirement Income Security Act of
1974 ("ERISA"), 29 U.S.C. § 1001 et seq., against defendant
Metropolitan Life Insurance Co. ("MetLife"), arguing that MetLife
had been underpaying his monthly benefits since its 2005 denial of
his assertion that he was entitled to a larger payment calculation
under his long-term disability insurance plan. The district court
granted MetLife's motion for summary judgment on the grounds that
Riley's suit was barred by the six-year statute of limitations.
See Riley v. Metro. Life Ins. Co., ___ F. Supp. 2d ___, 2013 WL
5009618 (D. Mass. Sept. 11, 2013). We affirm, rejecting Riley's
argument that this long-term disability plan must be analogized to
an installment payment plan so as to alter the accrual date of his
claim. In doing so, we join three other circuits. We also reject
his claim that the plan documents here create a different accrual
rule for him based on a principle of "symmetry" and reject his
equitable arguments.
I.
The relevant facts of this case are undisputed. Riley
began working at MetLife in 1988. By 1999, Riley had been promoted
to associate general manager and earned approximately $80,000 per
year. In February 2000, however, Riley began experiencing chronic
back, neck, knee, and shoulder pain, which also led to a bout of
depression. Riley left work and received short-term disability
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(STD) benefits from February 2000 through July 2000. His claim for
continued benefits beyond July 2000 was denied.
In the spring of 2001, Riley returned to MetLife, this
time in a non-managerial role in which he earned much less than he
had previously as a manager. In May 2002, however, Riley's pain
returned, and he left work again. Riley received STD benefits
until November 2002. He then made a claim for long-term disability
(LTD) benefits. Riley's claim for LTD benefits was approved in
March 2005.
The MetLife LTD plan ("the Plan") is governed by ERISA
and explicitly gives MetLife authority in its discretion to
interpret the terms of the contract. The plan provided that, if on
LTD, Riley would receive half of his pre-disability earnings,
offset by any disability payments from Social Security and certain
other sources of income. To calculate Riley's benefits, MetLife
utilized his non-managerial salary from 2002, before he applied for
LTD. Use of that salary gave Riley LTD benefits of $871 per month,
which was fully offset by Riley's Social Security benefits to leave
a net benefit of $50 per month, the plan minimum. Had MetLife used
Riley's managerial salary from 2000 (before his STD leave) as its
starting point, Riley would have been entitled to benefits of about
$3,000 per month, leaving a net of about $1,400 per month after the
Social Security offset. In May 2004, when he submitted forms in
support of his claim for LTD benefits, Riley contacted MetLife
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through his (since fired) counsel and argued that his sum of each
monthly LTD benefit should be based on his managerial salary from
2000, not his lesser salary from 2002. MetLife disagreed.
MetLife issued Riley his first LTD benefits check for
$50, which was less than the amount he felt he was owed, on April
15, 2005. Riley refused to cash it. He likewise refused to cash
any of the subsequent checks he received, returning them all to
MetLife in December 2005. He also called MetLife in December 2005
to request that MetLife stop sending him the benefit checks. Riley
had retained counsel and, in October 2005, his counsel threatened
MetLife with suit based on MetLife's decision to base the LTD
benefits on Riley's 2002 non-managerial salary rather than his 2000
managerial salary.
On February 7, 2007, Riley, still represented by former
counsel, filed suit against MetLife in Massachusetts state court,
alleging violations of Mass. Gen. Laws ch. 93A. MetLife removed
the case to federal court, which dismissed Riley's claims as
preempted by ERISA in November 2007. This court affirmed the
dismissal in an unpublished order on October 14, 2009. Riley
asserts that his then-lawyers never told him that the suit had been
dismissed or that the dismissal was affirmed on appeal.
Early in 2011, Riley expressed concerns to his former
lawyers that the statute of limitations period would run on his
claim. In response, on March 18, 2011, Riley's counsel filed a
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second suit, this time in federal court. The 2011 complaint did
not conform to the district court's Local Rules and was not
properly served on MetLife. MetLife moved to dismiss the complaint
and Riley's counsel failed to oppose the motion. The district
court then dismissed the complaint in January 2012.
Riley retained present counsel, who filed this suit on
March 22, 2012. Riley's new complaint presented an ERISA claim for
unpaid disability benefits under 29 U.S.C. § 1132(a). 1 The
district court allowed limited discovery on the statute of
limitations question, after which MetLife moved for summary
judgment on the grounds that Riley's suit was untimely. In a
thoughtful and thorough opinion, the district court granted
MetLife's motion. Riley appeals.
II.
We review the district court's entry of summary judgment
de novo. Fidelity Co-Operative Bank v. Nova Cas. Co., 726 F.3d 31,
36 (1st Cir. 2013). Summary judgment is appropriate when there is
no genuine dispute of material fact and the moving party is
entitled to judgment as a matter of law. Id.
ERISA does not provide a statute of limitations with
respect to actions to recover unpaid benefits from non-fiduciaries
1 The complaint filed by Riley's present counsel also
included claims against Riley's prior counsel for malpractice. The
parties settled those claims and stipulated to their dismissal with
prejudice.
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under its civil enforcement provision, 29 U.S.C. § 1132(a). See
Santaliz-Ríos v. Metro. Life Ins. Co., 693 F.3d 57, 59 (1st Cir.
2012). Federal courts "borrow the most closely analogous statute
of limitations in the forum state." Id. The most closely
analogous statute of limitations here is the six-year period
Massachusetts applies to breach of contract claims. See Mass. Gen.
Laws ch. 260, § 2.
While state law governs the length of the limitations
period, federal common law determines when an ERISA claim accrues.
See Edes v. Verizon Commc'ns, Inc., 417 F.3d 133, 139 (1st Cir.
2005). Ordinarily, a cause of action for ERISA benefits accrues
"when a fiduciary denies a participant benefits." Cottrill v.
Sparrow, Johnson & Ursillo, Inc., 100 F.3d 220, 223 (1st Cir.
1996), partially abrogated by Hardt v. Reliance Std. Life Ins. Co.,
560 U.S. 242 (2010).
Here, 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. We agree with those
circuits which, in like circumstances, have 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
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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, 520-21 (3d Cir. 2007) ("In the ERISA context, the
discovery rule has been 'developed' into the more specific 'clear
repudiation' rule whereby a non-fiduciary cause of action accrues
when a claim for benefits has been denied. . . . [T]he clear
repudiation rule does not require a formal denial to trigger the
statute of limitations." (emphasis omitted) (quoting Romero v.
Allstate Corp., 404 F.3d 212, 222 (3d Cir. 2005))); Union Pac. R.R.
Co. v. Beckham, 138 F.3d 325, 330 (8th Cir. 1998); Daill v. Sheet
Metal Workers' Local 73 Pension Fund, 100 F.3d 62, 66 (7th Cir.
1996); see also Novella v. Westchester Cnty., 661 F.3d 128, 147 (2d
Cir. 2011) (holding that limitations period begins to run "when
there is enough information available to the pensioner to assure
that he knows or reasonably should know of the miscalculation," and
explaining its view that its standard is consistent with the Third
Circuit's reasoning in Miller).
Other provisions of ERISA support this interpretation.
In Edes, we applied a discovery rule to suits under § 510 of ERISA,
to hold that plaintiffs discovered the supposed miscalculation of
their status when they were hired. 417 F.3d at 139. In the
context of suits against fiduciaries, ERISA itself establishes that
the limitations period runs from "the earliest date on which the
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plaintiff had actual knowledge of the breach or violation." 29
U.S.C. § 1113(2). 2
There is no dispute that Riley's suit is untimely as to
MetLife's initial calculation of Riley's benefits and its first
payments. The facts show that Riley argued to MetLife that it
should use his managerial salary before he began receiving
payments, then saw the $50 amount on his checks, refused to cash
them, and threatened to sue MetLife. Together, these facts
demonstrate that Riley certainly was aware of his claim for
underpayment when he received his first $50 check in April 2005.
That was approximately six years and eleven months before he filed
this suit and thus falls outside the six-year limitations period.
And there has been no recalculation of benefits thereafter.
Riley argues, however, that even though his suit is
untimely as to the initial calculation and the first few monthly
payments, it is still timely as to all of the monthly payments made
within six years of the time he filed his complaint in this case.
He argues his ERISA Plan with MetLife is better characterized as an
installment contract, 3 giving him a separate cause of action and a
2 Riley has not alleged that MetLife is a fiduciary for
purposes of this suit. There is no inconsistency between the
statutory rule and our approach to accrual. See Pisciotta v.
Teledyne Indus., Inc., 91 F.3d 1326, 1332 (9th Cir. 1996) (per
curiam).
3 Installment contracts are used in different settings.
Installment contracts typically involve an asset transfer in the
form of a sale of goods. See, e.g., Black's Law Dictionary 372,
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new accrual of the limitations period with respect to every
individual monthly underpayment. He argues this must be so under
a provision in the Plan's terms allowing MetLife to recover
overpayments regardless of when they were made and argues that
"symmetry" and equity require that he be allowed to recover
underpayments, at least for those payments made within the six-year
limitations period. 4 We address each of these arguments in turn.
A.
In an issue of first impression in this circuit, we
reject Riley's argument that the ERISA plan must be treated as a
868 (9th ed. 2009) (referring "installment contract" to "retail
installment contract," which involves a "sale of goods"); 15
Williston on Contracts § 45:2 (4th ed. 2013) (observing that
installment contracts, "for the sale of goods," are governed by the
Uniform Commercial Code); see also Pride Hyundai, Inc. v. Chrysler
Fin. Co., 369 F.3d 603, 607 (1st Cir. 2004) (discussing operation
of installment contracts, which "allow the customer to pay for an
automobile over the course of an extended period of time," in the
context of car sales); cf. Berezin v. Regency Sav. Bank, 234 F.3d
68, 73 (1st Cir. 2000) (promissory note requiring monthly principal
and interest payments on loan financing purchase of real estate for
business venture is an installment contract).
4 On appeal, Riley has waived any argument that the statute
of limitations should be equitably tolled as a result of his
original attorneys' malpractice. See DeCaro v. Hasbro, Inc., 580
F.3d 55, 64 (1st Cir. 2009).
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continuing violation or as an installment contract, 5 with a new
accrual date starting a new limitations period for each payment.
We join the three other circuits which have squarely
confronted and rejected the plaintiff's accrual theory in this
ERISA context. They have concluded that the plaintiff's theory of
accrual is inapplicable where the alleged wrong is based on an
alleged one-time miscalculation of ERISA benefits of which the
plaintiff is aware.
The Third Circuit rejected the plaintiff's accrual theory
in Miller, 475 F.3d at 516. In Miller, the plaintiff had begun
receiving allegedly miscalculated disability benefits in 1987 but
did not file suit until 2003. The Third Circuit held that the
plaintiff's claim had accrued in 1987, and that a suit filed in
2003 was untimely. Id. at 522. The court held that the plaintiff
should have been alerted to the fact that he was being underpaid as
5 In his briefing, Riley used the terms "continuing
violation" and "installment contract" interchangeably for his
argument that a new accrual period began with each benefits check.
The district court used the term "installment contract" but equated
the two theories. At oral argument and contrary to his briefing,
Riley disavowed the "continuing violation" language and to
characterize his claim as involving only an installment contract.
The difference between the two theories, he says, goes to the
number of back payments that can be recovered: in the installment
contract theory, only those payments starting six years before he
filed suit may be recovered, while in the continuing violation
theory, all payments may be recovered as long as the most recent
violation was within six years. While we accept his disavowal of
any continuing violation theory, we do not engage this debate, and
use the terms as alternate expressions for Riley's accrual theory,
as he did in his briefing.
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soon as he saw the first check. Id. It explicitly rejected the
theory "whereby a new cause of action would accrue upon each
underpayment of benefits owed under the plan." Id. Like the Third
Circuit in Miller, we agree 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. Like a denial, an underpayment is
adverse to the beneficiary and therefore
repudiates his rights under a plan. Cf. 29
C.F.R. § 2560.503-1(m)(4) (defining "adverse
benefit determination" to include "a denial,
reduction, or termination of, or a failure to
provide or make payment (in whole or in part)
for, a benefit" (emphasis added)).
Id. at 521. We also agree that "repudiation by underpayment should
ordinarily be made known to the beneficiary when he first receives
his miscalculated benefit award." Id.
The Third Circuit reasoned that its rejection of the
installment contract accrual theory in ERISA cases would promote
the traditional aims of statutes of limitations -- "rapid
resolution of disputes, repose for defendants, and avoidance of
litigation involving lost or distorted evidence," id. at 522
(quoting Romero, 404 F.3d at 223) -- and was "consistent with the
broad, beneficiary-protective goals of ERISA," id.
The Second Circuit also rejected plaintiff's ERISA
accrual theory, with some glosses on the precise accrual date, 6 in
6 Those glosses do not require exploration on the facts of
this case. Riley was well aware of his claim for underpayment from
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Novella, 661 F.3d at 128. There, in considering whether class
certification was proper, the court examined when non-fiduciary
ERISA claims would accrue. It considered and rejected the
plaintiff's theory, explaining that "that method is appropriate in
ERISA cases, as elsewhere, only 'where separate violations of the
same type, or character, are repeated over time,'" and that "it is
not as clear a fit in cases where, as here, 'the plaintiff['s]
claims are based on a single decision that results in lasting
negative effects.'" Id. at 146 (alteration in original) (emphasis
added) (quoting L.I. Head Start Child Dev. Servs., Inc. v. Econ.
Opportunity Comm'n of Nassau Cnty., Inc., 558 F. Supp. 2d 378, 400,
401 (E.D.N.Y. 2008)).
The Ninth Circuit rejected a like theory in Pisciotta v.
Teledyne Industries, Inc., 91 F.3d 1326 (9th Cir. 1996) (per
curiam). It concluded that claims accrue under other provisions of
ERISA on the "earliest date" on which the plaintiff has knowledge
of the breach, and that those same concerns apply to ERISA's civil
enforcement provision. See id. at 1332.
Riley has identified no circuit court cases taking his
approach and applying an installment contract accrual theory to
ERISA benefit claims. Instead, Riley argues from dicta in McNamara
v. City of Nashua, 629 F.3d 92 (1st Cir. 2011), which speculated
that "conceivably if the City had to make periodic payments . . .
the first $50 check he received.
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and successively underpaid [plaintiff], a claim might arise each
time a payment was made." Id. at 96. That dicta is just that, and
in any event is distinguishable here.
The issue in McNamara was not whether the retirement plan
administrator had miscalculated the plaintiff's benefits and
continued to issue checks based on that miscalculation. Rather,
the complaint in that case alleged that the City of Nashua, the
plaintiff's former employer, had reported incorrect information to
the New Hampshire Retirement System (NHRS), causing NHRS to pay
pension checks that were too low. Id. at 93-94. More than seven
years later, the plaintiff sued the city for its alleged
misrepresentation of his period of service to NHRS; he did not sue
NHRS directly for the monthly underpayments. Id. at 94, 96.
Additionally, the payments at issue in McNamara were
governed by a state retirement plan under the laws of New
Hampshire. ERISA did not apply, and the case cited in support of
this position applied state law. See id. at 96. Finally, McNamara
itself went on to note its speculation was "beside the point." Id.
Indeed, it then cited a case involving successive underpayments
under ERISA, which explained that the installment contract theory
"does not apply to a claim based on a single distinct event," such
as "the defendants' single alleged miscalculation." Id. (quoting
Miele v. Pension Plan of N.Y. State Teamsters Conf. Pension & Ret.
Fund, 72 F. Supp. 2d 88, 102 (E.D.N.Y. 1999)).
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Riley's entire alleged injury derives from a single
action, MetLife's initial calculation of his disability benefits.
Riley does not allege that the calculation was actively confirmed
at later dates, nor does he allege that there is any provision of
ERISA that requires his accrual theory be accepted. Moreover,
Riley has not identified any provisions of the Plan documents
showing that the Plan should be interpreted as an installment
contract.
The policies underlying ERISA support our conclusion.
One of ERISA's main purposes is the promotion of "predictability,"
through which ERISA seeks to "induc[e] employers to offer benefits
by assuring a predictable set of liabilities." Conkright v.
Frommert, 559 U.S. 506, 517 (2010) (quoting Rush Prudential HMO,
Inc. v. Moran, 536 U.S. 355, 379 (2002)). 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. Cf.
Carey v. Int'l Bhd. of Elec. Workers Local 363 Pension Plan, 201
F.3d 44, 49 (2d Cir. 1999) (explaining that allowing a beneficiary
to sue long after benefits are calculated by changing the form of
the suit "would render the limitation period a limit in name
only"). It could also undermine the ERISA plan's reliance on its
original calculations and payments for actuarial purposes. Cf.
Conkright, 559 U.S. at 517-18 (discussing importance of deferring
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to actuarial determinations); Malden Mills Indus., Inc. v. Alman,
971 F.2d 768, 778 (1st Cir. 1992) (emphasizing importance of
preserving "actuarial soundness of pension funds" (quoting
Chambless v. Masters, Mates & Pilots Pension Plan, 772 F.2d 1032,
1041 (2d Cir. 1985))).
B.
Riley argues that whatever the general rule as to accrual
of claims for miscalculation of ERISA benefits, under the
provisions of his Plan with MetLife, he must be allowed to
challenge the underpayment even after the statute of limitations
has expired on the original calculation in order to promote
"symmetry." His argument turns on a provision of the Plan
documents entitled "Right To Recover Overpayments," which states:
We have the right to recover from you any
amount that we determine to be an Overpayment.
You have the obligation to refund to us any
such amount. . . .
An Overpayment occurs when we determine that
the total amount paid by us on your claim is
more than the total of the benefits due under
This Plan. This includes any Overpayments
resulting from:
1. retroactive awards received from
[certain other sources] . . . ;
2. fraud; or
3. any error we make in processing your
claim. . . .
We may, at our option, recover the Overpayment
by:
1. reducing or offsetting against any
future benefits payable to you or your
survivors;
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2. stopping future benefit payments
(including Minimum Benefits) which would
otherwise be due under This Plan.
Payments may continue when the
Overpayment has been recovered; or
3. demanding an immediate refund of the
Overpayment from you. 7
Riley argues that it is "asymmetrical" to grant MetLife authority
to recover overpayments at any time without granting him a
corresponding right to so recover underpayments, and that as a
result we must infer the existence of that right from the Plan
itself and consider his suit timely. We disagree.
ERISA plans, like other contracts, are construed
according to their written terms. US Airways, Inc. v. McCutchen,
133 S. Ct. 1537, 1549 (2013). Even if the written terms of the
Plan give MetLife a right to recover overpayments by offsetting
against future payments or demanding a refund regardless of when
the overpayment was first made, they do not establish a reciprocal
right for Riley to recover underpayments regardless of when the
underpayment was first made (or discovered). 8 Under the familiar
principle of expressio unius est exclusio alterius, this was a
choice which reflected the intention of the parties. As we have
explained:
7 We do not face the question of whether MetLife could
recover overpayments through a legal action instituted beyond the
statute of limitations.
8 If the terms of the Plan do not give MetLife such a right,
then there is no asymmetry on this point.
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The [expressio unius] maxim instructs that,
when parties list specific items in a
document, any item not so listed is typically
thought to be excluded. . . . While this
interpretive maxim is not always dispositive,
it carries great weight; and when, as now,
there is absolutely nothing in the agreement's
text that hints at some additional term
lurking beyond the enumerated list, we see no
reason why the maxim should not be
controlling.
Smart v. Gillette Co. Long-Term Disability Plan, 70 F.3d 173, 179
(1st Cir. 1995) (citation omitted).
Riley argues that we must "liberally constru[e]" the Plan
documents in his favor as the beneficiary on an insurance contract.
He cites Wickman v. Northwestern National Insurance Co., 908 F.2d
1077 (1st Cir. 1990), for the proposition that "insurance contracts
must be liberally construed in favor of a policyholder or
beneficiary . . . and strictly construed against the insurer." Id.
at 1084 (alteration in original) (quoting 13 Appleman, Insurance
Law and Practice § 7401 at 197 (1976)) (internal quotation mark
omitted). But Wickman itself goes on to explain, "We are bound by
[the policy's] plain language, and we may not distort it in an
effort to achieve a desirable or sympathetic result." Id. Because
we are bound by the Plan's plain terms, Riley's liberal
construction argument cannot save his case.
With nothing in the Plan documents to support his
position, Riley turns to equitable arguments, asking us "to do
justice" by adding a term to the document allowing Riley to recover
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underpayments. We may not alter the Plan documents. ERISA's
statutory scheme "is built around reliance on the face of written
plan documents." US Airways, 133 S. Ct. at 1548 (quoting Curtiss-
Wright Corp. v. Schoonejongen, 514 U.S. 73, 83 (1995)) (internal
quotation marks omitted). "The plan, in short, is at the center of
ERISA. And precluding [a party's] equitable defenses from
overriding plain contract terms helps it to remain there." Id. As
the Supreme Court has explained, "[t]he agreement itself becomes
the measure of the parties' equities," id.; we "do justice" by
enforcing its plain terms.
III.
Riley's claim against MetLife is barred by the statute of
limitations. His remedy for his failure to file a timely ERISA
claim lay, if anywhere, against his former attorneys. The decision
of the district court is affirmed.
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