In pretty much every other area of the law, figuring out when a lawsuit has to be filed is relatively easy. First, you figure out what the "bad action" that you're suing over was, and when it happened, and then you look up the law that says what the deadline is (called a "statute of limitations"), put the two together, and voila! That's your deadline! So for a personal injury case, you just figure out what your state's statute of limitations is for a personal injury claim (often, it's one year), and make sure you sue within a year of the injury.
Unfortunately, it's not nearly that easy in the world of ERISA long term disability claims. First of all, there is no statute of limitations - not one written into the ERISA law for a benefits claim, anyway. You might ask, then, "does that mean there's no deadline, and I can sue anytime?" Of course not!
First of all, if an ERISA benefits claim has only been denied once, you probably can't sue yet. The courts have decided that since ERISA requires plans to offer you an appeal, you're required to "exhaust" those appeals before going to court. If you sue after a first denial, and never even try to appeal, you'll usually be thrown out of court. If you're lucky, they'll send you back to do the appeal, but many times they'll just dismiss your case, and you have no way to go back and pursue the appeal. So that's the first thing - making sure you exhaust all of the necessary* appeals. (*Note: There can also be optional appeals, that you can skip, but it's sometimes hard to tell which is which.) I'm not going to discuss the pre-lawsuit appeal process in this article, but just know that you do have the right to hire an attorney for help with those appeals, and it is a very, very good idea to do so. If you do the appeal without an attorney's help, there could irreparable holes in your case later on.
But say you have gotten a final denial, and there are no more appeals left - what then? What's the deadline to sue, if there's no statute of limitations in the ERISA law? The courts have decided that if the plan documents don't say anything about a deadline, then they will use the state law deadline for similar types of cases. It's not always easy to figure out which state law deadline is "most similar," but that's not usually a problem, because almost always, the employee benefit plan will have it's own deadline written into it. Sometimes, attorneys will call that deadline the "contractual period of limitations," since the employee benefit plan document works like a contract.
Unfortunately, for reasons that are too complicated to get into here, most benefit plans say the deadline is something like this:
"You can start legal action regarding your claim 60 days after proof of claim has been given and up to 3 years from the time proof of claim is required, unless otherwise provided under federal law."
That's a real example from an LTD policy in a case I've worked on recently, and is typical of hundreds of other plans I've reviewed over the years. What does it mean? Can you really sue 60 days after your claim is filed? Do you have 3 years from a claim denial to sue?
No and No! As we discussed above, first you have to exhaust the appeals (sometimes called "administrative remedies") before you can sue, so if you did what the quoted provision said, and sued 60 days after you gave proof of your claim, you'd likely be thrown out of court. You don't necessarily have 3 years from a denial to sue, either, because that deadline is measured "from the time proof of claim is required." So how long do you have?
Most of these policies say that "proof of claim" or "proof of loss" is required 90 days after the end of the benefits waiting period (which is usually called an "elimination period"). For most long term disability policies, that waiting period is 180 days, or roughly 6 months. So if you stop working on January 1st, the waiting period goes through around the end of June, and then you have to provide proof by around the end of September. Add 3 more years, and the deadline to file a lawsuit, according to the policy, is around the end of September 3 years later, about 3 years and 9 months after you stopped working. I cannot stress enough - this goes for many policies, but NOT ALL! Some policies have wildly different language, and it's the language of YOUR particular policy that determines your deadline.
For someone who's claim is denied from the very beginning, this usually isn't a hard deadline to meet. If someone stops working January 1st, as in the example above, files their claim for LTD benefits in the summer, it gets denied in the fall, they hire me to work on the appeal, and all the appeals are denied by the end of the next year, that still leaves roughly 2 years to file the case in court, and there's no reason it should take that long.
Where it gets really tricky is with people who aren't denied in the beginning. What happens if you get paid LTD for a few years, then you get denied? Often, LTD carriers will pay someone for 2 years because they're disabled from their "own occupation," then deny them after that because they are not disabled from "any occupation." This is allowed under the terms of most LTD policies, but what's the lawsuit deadline then? 3 years from that denial?
Well, that would be the fair and rational thing to do, but that's not what the Supreme Court says. In 2013, the Supreme Court said in case called Heimeshoff v. Hartford Life & Accident Insurance Company that you just do what it says in the policy, even if the "lawsuit clock" is running before someone's claim is even denied! So under the example policy language above, you could have this timeline:
- Stop working due to a disability on January 1st, 2014
- Claim approved by LTD carrier, start getting paid July 1, 2014
- Get paid for disability from your "own occupation" from July 1, 2014 - June 30, 2016
- Claim denied June 30, 2016 because they say you could do other work
- You appeal within the statutory 6 month deadline, on December 20, 2016
- Your LTD carrier takes 90 days to decide your appeal, denying you again on March 20, 2017
What's your deadline to sue? You probably only have about 6 months from the "final denial" to get into court, under this scenario. That's a lot less than the 3 years you might think you have if you look at the policy! And this example is when everything goes relatively smoothly, and no one receives any extra extensions beyond the norm. Quite often, the process takes longer than that, meaning you could find yourself with even less time after a final denial to get into court.
Sometimes, the court deadline can come and go before you're even done with the mandatory appeals! What do you do then? If you have an attorney who's experienced in this field, he or she might ask the LTD carrier to enter into a "tolling agreement," as I have in a few cases. A tolling agreement is just a short contract between you and the LTD company that says that even if the deadline to sue technically passes while you're working on the appeals, the LTD carrier will let you take the case to court after the appeals are done. The LTD companies will usually consent to these agreements, in my experience. That's good, because aside from it being required by the courts, you generally don't want to short-circuit the appeals process in these cases, because it's usually your only opportunity to submit evidence of your disability.
Long story short - when people ask me what the "statute of limitations" or "SOL" is on an ERISA benefits claim, I have to give them a lawyer's favorite answer: "It depends!"