One major area of our expertise is to help people whose long-term disability claims have been denied. It’s important to be aware of the statute of limitations and how it could apply in your ERISA long-term disability case. A statute of limitations is a period of time within which you have to file a federal lawsuit. Now in most cases, the insurance policy, the long-term disability insurance policy will specify what your statute of limitations is.
The earliest date a participant becomes aware of a breach is crucial for triggering the applicable statute of limitations.
If your policy does not specify a statute of limitations, then the federal courts typically look to the closest statute of limitations that your state has.
Often in these cases, the statute of limitations is three years. But it may be different in your case. The insurance company has the option to make it longer or shorter as a term of the insurance contract. Because you have a different policy, your statute of limitations may be different.
So, often what will happen is you will go through the insurance appeal process. Your claim is denied, you appeal the denial and then your final denial comes through. Then, you will get a letter saying all the reasons why they’ve denied your claim.
Understanding ERISA Statute of Limitations
The Employee Retirement Income Security Act of 1974 (ERISA) plays a crucial role in regulating private-sector employee benefit plans. It imposes fiduciary duties on individuals and entities responsible for providing plans, offering investment advice, or exercising discretionary authority over plan management and administration. Under ERISA section 413, there are specific time frames within which a plan participant can bring a lawsuit against a plan fiduciary for breaches of fiduciary duties or plan coverage violations.
The statute of limitations for ERISA claims is generally six years from the date of the breach or violation. However, a shorter, three-year statute of limitations applies if the plaintiff had “actual knowledge” of the breach or violation. The concept of “actual knowledge” was clarified by the U.S. Supreme Court in the 2020 decision Intel Corp. Investment Policy Committee v. Sulyma. The Supreme Court held that to have “actual knowledge” of a piece of information, one must indeed be aware of it. This means that merely providing information to plan participants is insufficient; defendants must also demonstrate that plaintiffs actually received and read the disclosures.
Understanding these time frames is essential for anyone involved in an ERISA plan, as it directly impacts the ability to seek legal recourse for any alleged fiduciary breach.
How to find your Statute of Limitations Period
At the very end of the final denial letter, the insurance company should tell you what that ERISA disability statute of limitations is. It should tell you how long it is and what you have to do prior to that statute of limitations. In fact, the last one that I saw actually had a physical date on it. That letter said, “Your statute of limitations is [this date].”
That’s good to have and it’s good to have the insurance company actually calculating what that date is for you. If the insurance company did the date calculation, then there’s no question that they try to raise an argument that you’ve not filed within the statute of limitations. You can point back and say, “But judge, they agreed that this was the statute of limitations and we’ve filed before that.” That may or may not work.
A statute of limitations is a limitation on when you can file your lawsuit. Now, you can file your lawsuit whenever you want to. The question is whether the court will dismiss it when the other side files in motion to dismiss, because you didn’t file within the appropriate time.
Impact of ERISA Statute of Limitations on Plan Participants
The ERISA statute of limitations significantly affects plan participants by limiting the time frame within which they can file a claim. Participants must file their claims within the applicable limitations period: either three years from the date they had “actual knowledge” of the breach or six years from the breach or violation itself.
Failing to file within this period can result in losing the right to sue.
The Supreme Court’s decision in Sulyma has underscored the importance of evidence regarding disclosures and participant access to such information. Defendants now need to prove that participants read and understood plan disclosures to invoke the three-year limitations period. This decision may also lead to a greater reliance on the six-year statute of repose, which could be more advantageous for defendants in certain situations.
For plan participants, being aware of the ERISA statute of limitations is crucial. They should diligently review plan disclosures and seek legal advice if they suspect any breach of fiduciary duty or plan coverage violation. By understanding these limitations, participants can ensure they file their claims timely and protect their right to legal recourse.
What Happens if You File Outside of the Three Year Limitations Period?
If you file outside of that period, then your case will be dismissed. Now, do not get this mistaken for how long you have to file your appeal. After the first denial, you have 180 days to file your denial appeal letter to the insurance company. That’s a lot shorter than three years. So please don’t mistake what I’m talking about here. Those are two very different things.
Just to recap, your ERISA disability statute of limitations is the time within which you have to file an appeal after the final adverse decision is made from the insurance company. This is usually three years. It usually begins from the date of that final decision or three years from the date of when the proof of loss or continuing proof of loss was requested. The Supreme Court’s ruling aligns with the majority of federal appellate courts that require an actual knowledge standard for breach claims.
So make sure that you know what that ERISA disability statute of limitations is. It’s in your policy, and you can read it right there once you get your policy. Make sure you put a calendar deadline on it. If you do not file your federal court claim within that time period, the judge will dismiss it. You will never see another dime from that insurance company.
