WETZEL  v. LOU EHLERS CADILLAC GROUP LONG TERM DISABILITY INSURANCE PROGRAM, 1999 U.S. App. LEXIS 21327 (9^th Cir. September 7, 1999)-Charles Wetzel made an ERISA claim for long-term disability insurance benefits, and appealed the district court’s summary judgment ruling that his claim was time-barred. The issue before the court was how to properly measure accrual of an ERISA cause of action. Because ERISA’s statute of limitations provision applies only to breach of fiduciary duty but not to claims against a plan for benefits, federal courts look to the most closely analagous state statute of limitations to determine the appropriate limitations period. Federal law, however, determines when a federal cause of action accrues.

The court sought to clarify the holdings of two previous decisions on this issue, Nikaido v. Centennial Life Insur. Co., 42 F.3d 557 (9^th Cir. 1994) (which used the "rolling accrual" rule) and Williams v. UNUM Life Insur. Co., 113 F.3d 1108 (9^th Cir 1997) (which used the "general federal accrual rule"—i.e. the time when an insured knew or had reason to know his claim was being denied).

The Nikaido court referred to the California Insurance Code’s statute of limitations provision, which based accrual on when proof of loss was required to be furnished. It then turned to the Policy’s provision regarding proof of loss, and determined that the phrase "period for which the company is liable" meant each month of continuing disability. Therefore, a separate cause of action accrued for each month that the claimant was disabled and continuing disability benefits were denied—i.e. each month of denial commenced a three-year limitations period. The Williams court limited Nikaido to situations in which the insured failed to provide adequate proof of loss, and so opted for the general federal accrual rule in cases where the requisite proof of loss had been provided.

This court therefore found that Williams and Nikaido together require a preliminary determination of whether the insured provided proof of loss for each month of his disability. Because the district court never determined whether Wetzel provided proof of loss for each month of his disability, the court reversed and remanded, with instructions that the Williams general federal accrual rule would apply to Wetzel’s claims for months where he gave adequate proof of loss, and the Nikaido rolling accrual rule would govern claims for any remaining months.

The dissent argued that "proof of loss" is relevant only to when the company initially received notice of a claim—i.e. if the insured initially fails to file a claim or provide proof of disability. Because Wetzel did, in fact, file a claim (and therefore provide proof of loss sufficient to put the defendants on notice, the dissent suggests), the limitations period began to accrue at that time, and Nikaido’s rolling accrual rule had no opportunity to kick in.