An insurance company’s initial denial of short or long term disability insurance benefits isn’t the final word. If an insurer determines you are ineligible for ERISA disability benefits, you have the opportunity to appeal the decision – first, internally to the plan administrator, and then to the court. While you should submit strong, comprehensive evidence of disability to the insurance carrier, it is equally important to meet all deadlines for completing the appeal process. Failure to do so could result in a forfeiture of your right to pursue your claim further.
Disabled Wal-Mart Employee Loses Opportunity to Recover Her ERISA Disability Benefits
The Supreme Court recently issued a decision confirming an insurance plan may modify the time period you have to bring an ERISA lawsuit to recover your disability benefits. In Wisconsin, claimants typically have six years to file ERISA § 502(a)(1)(B) claims to recover benefits due to them or to enforce their rights under the terms of the plan.i According to the decision in Heimeshoff v. Hartford Life & Accident Ins. Co., No. 12-729 (Dec. 16, 2013), however, shorter contractual limitations periods are permissible, provided they are not “unreasonably short.”
In the Heimeshoff case, the Hartford Life & Accident Insurance Company denied long-term disability insurance benefits to a former Wal-Mart Stores, Inc. employee. Ms. Heimeshoff had developed lupus and fibromyalgia, which prevented her from performing her job as a senior public relations manager for Wal-Mart. She had “extreme fatigue, significant pain, and difficulty in concentration,” and her physicians deemed her disabled. Despite the evidence supporting her disability, Hartford denied Ms. Heimeshoff ’s claim. The final denial occurred on November 26, 2007.
Ms. Heimeshoff retained counsel and filed an ERISA lawsuit on November 18, 2010, but her complaint was approximately a month and a half too late. The Hartford’s insurance policy contained a provision providing for a 3-year contractual limitations period, which began to run three years after “proof of loss” was due. Thus, the claimant did not have three years from the Hartford’s final denial of long-term disability benefits to file her lawsuit. Rather, after exhausting the administrative appeals process, the claimant had less than three years to file. The Supreme Court held that, under ERISA, it was acceptable for the limitations period to commence even before the administrative review process was complete and before claimant could file suit. Ms. Heimeshoff’s claim was properly dismissed.
What the Heimeshoff Decision Means for Wisconsin Employees Considering an ERISA Disability Benefits Claim
The Court’s holding in Heimeshoff is not entirely surprising. In the Seventh Circuit, we have been operating with the understanding that shorter contractual limitations periods may be enforced provided they are reasonable.ii Nevertheless, the decision confirms that plan participants need to act quickly to enforce their rights.
For those of you pursuing claims for disability benefits, DO NOT DELAY. If you have been wrongfully denied disability benefits, you may have less than a year to file a lawsuit against the insurance company. The internal appeal deadline is even shorter. The Plan Document , which you may request from the plan administrator, will dictate the time period you have to file a lawsuit. In rare instances, however, when the insurer has not issued a final determination prior to the expiration of the limitations period, the court may apply equitable doctrines to allow your case to proceed.
i ERISA does not provide a statute of limitations period for claims for benefits, so we borrow from the most analogous statute of limitations of state law, that being the statute of limitations for the enforcement of contracts. Young v. Verizon’s Bell Atlantic Cash Balance Plan, 2010 U.S. App. LEXIS 16483, *11 (7th Cir.).
ii See Abena v. Met Life, 544 F. 3d 880 (7th Cir. 2008) and Doe v. Blue Cross Blue Shield United of Wisconsin, 112 F.3d 869, 874 (7th Cir. 1997).
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