If my benefits are denied, how long do I have to file suit?

Your ERISA claim for benefits has been denied or terminated. You submitted your internal appeal, which was also denied. Your only recourse now is to file suit. How long do you have?

You would think this question could be easily answered, but it's not. In fact, you have gone through the looking glass and down the rabbit hole and you are now in Wonderland with Alice.

First, there are two types of limitations that you must consider. Often these are different, so you have to file suit within the time allowed by the shortest limitations period. There are "contractual limitations" written into the plan or policy. And, there is also a statute of limitations, not set by ERISA, not written into the Plan or policy but adopted from the most comparable state statute of limitations applicable, generally, in the state in which you live. Of course, different states have different statutes of limitations). So, you have to determine which state statute of limitations is applicable. (You don't have to file suit in the state in which you live. For example, it is permissible to file suit in the state where the plan is administered. But even if you do so, the applicable statute of limitations is probably that of the state in which you live, not of the state in which you file suit.)

But it is not enough to know how long the statute of limitations and the contractual limitations periods are, it is also necessary to know when "they accrue" - - that is, when "the clock starts to run." Generally speaking, for statutes of limitations the "the clock starts to run" when your benefits are denied or terminated, but the period is "tolled" (the clock doesn't run) while you are pursuing administrative or internal appeals because you cannot file suit until you complete all appeals required by the terms of the plan or policy. (Most plans and policies require one appeal; some require two appeals; some also allow, but do not require, voluntary appeals.)

"Accrual of Contractual limitations periods may be much different. They come in a variety of forms. Some start "running" when the last appeal is denied - - so it's easy to determine the last date to file a lawsuit. Others explicitly state that they do not apply when the applicable statute of limitations is longer. In those circumstances you only have to concern yourself with the statute of limitations period.

But the most common form of contractual limitations start running while your claim is being evaluated and continue to run while you are receiving benefits and during your mandatory appeal or appeals. (But not during voluntary appeals). What does this mean? It means your time to file suit under a contractual limitations period may have run while you were still on claim, or during your mandatory appeal or appeals, or that you may only have days or weeks or months to file suit once your mandatory appeals have been denied.

While you may think that this state of affairs is too strange to be real, that is the holding of the United States Supreme Court in Heimeshoff v. Hartford Life and Accident Insurance Company, decided December 16, 2013. Heimeshoff stopped working on June 8, 2005; submitted a claim on August 22, 2005, which was denied in December 2005. Her appeal process was protracted and her final appeal denial was November 26, 2007. Heimeshoff filed suit almost three years later, within the applicable statute of limitation.

The insurance policy in Heimeshoff like many other insurance policies, had a contractual limitations period that "legal action cannot be taken . . . more than three years after the time written proof of loss is required to be furnished according to the terms of the policy." The policy also provided that written proof of loss must be sent to the Hartford within 90 days after the start of the period for which Hartford owes payment. The Heimeshoff decision does not state what that period was - - but most insurance policies have an elimination or waiting period, of usually 30, or 90, or 180 days for long term disability benefits and usually much shorter for short-term disability benefits. But, in any event, the "clock" setting the time for which Heimeshoff had to file suit under the contractual limitations period was "running" while Hartford was evaluating her claim and her appeal, but it hadn't completely run when it denied her appeal. And since Heimeshoff did not file suit before that time ultimately ran, her suit was dismissed by the court (even though it was "on time" under the statute of limitations.

What happens if you have a similar policy and you have received benefits for a couple of years and then your benefits are terminated and it takes you a year or so to process through the required appeal or appeals? What happens if the clock on such a contractual limitations period has run already before your benefits are terminated or mandatory appeals have been denied? The Supreme Court explained that "Courts are well equipped to apply traditional doctrines that may nevertheless allow participants to proceed." One such doctrine is when the administrator's conduct causes a participant to miss the deadline. Another example is when the participant has "diligently" pursued both internal review and judicial review but was prevented from filing suit by "extraordinary circumstances." Finally, a plan or policy's contractual limitations provision will not be given effect if the court determines that the period is unreasonably short.

It is probable that this means that if a contractual limitations period has already run while you are still receiving benefits or during your mandatory appeals, or if it only has a few days or weeks left to run after the denial of your mandatory appeals, then the contractual limitations period is probably unreasonably short and probably will not be enforced by the courts. But if it still has two or three months to run it may be enforced by the Courts. More than three months, then it probably will be enforced by the courts.

Courts all around the country will have to answer such questions for the next decade or more until and unless Congress remedies the situation by adopting a statute establishing a uniform statute of limitations for all ERISA benefits claims, prohibiting shorter contractual limitation periods, and specifying that the statute of limitations does not begin to run until all appeals have been exhausted. But for now, welcome to Wonderland.

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