• Island View Residential Treatment Ctr. V. Blue Cross Blue Shield of Massachusetts No. 08-1287 (1st Cir. Nov. 14, 2008)
  • January 23, 2009 | Authors: Arthur N. Lerner; Bruce O. Tavel
  • Law Firm: Crowell & Moring LLP - Washington Office
  • The United States Court of Appeals for the First Circuit affirmed the dismissal of a complaint brought under ERISA for denial of benefits, finding the claim was time-barred by a contract provision that required lawsuits to be brought within two years of the denial of benefits.

    Appellants, Island View Residential Treatment Center ("Island View"), had filed a lawsuit against Blue Cross Blue Shield of Massachusetts ("Blue Cross") in federal district court, alleging that Blue Cross wrongly denied reimbursement and seeking to recover costs for inpatient care provided to a beneficiary covered under an ERISA plan. The district court dismissed the case, holding that the suit was time-barred by a provision in the contract and finding that the denial of benefits was not arbitrary or capricious.

    On appeal, Island View argued that the district court incorrectly applied the contract provision, rather than the longer time limitation provided under the state statute of limitations. The Court of Appeals rejectedappellants' argument, finding that state law permitted the contractual time limitation. The Court then noted that although it had the ability to refuse to enforce the contract, it would not do so because the provision was neither unreasonable nor unconscionable. Accordingly, the Court of Appeals applied the shorter two year time limiting provision included in the insurance policy and affirmed the district court dismissal of appellants' claim.