Do you have a disability insurance policy, health insurance policy or life insurance policy through your work? If you do, you should read this article as you may miss some important deadlines if you do not.
The Supreme Court’s recent holding that the limitations periods in employer-sponsored plans are enforceable, even where such limitations periods began to run before a cause of action accrued, had a rippling effect through federal courts, the insurance bar and participants alike. Under the Employee Retirement Income Security Act of 1974 (“ERISA”), participants must exhaust the plans’ administrative process before bringing suit. Previously, the Ninth Circuit and majority of circuit court of appeals had held that the statute of limitations for filing suit under ERISA commenced after an insured exhausted all administrative remedies. However, the high court explained that a plan may impose a particular limitations period, which begins from the date proof of claim is due, rather than after the conclusion of the administrative process. Heimeshoff v. Hartford Life & Accident Insurance Co. et. al., 134 S. Ct. 604 (2013). Below, we examine the implications Heimeshoff has for insureds and provide helpful tips.
1. Know Your Deadlines for Filing Legal Action
Heimeshoff serves as a warning that insureds should be informed as to any deadlines for judicial review. The Supreme Court held that absent a statute to the contrary, a contractual limitations period which begins prior to an insurer’s denial is enforceable, so long as it is reasonable. Heimeshoff, supra, 134 S. Ct. at 610. The case involved a contractual limitations period for filing legal suits within three years of when proof of loss was due. The plaintiff brought suit to recover her benefits within three years after the final denial, but almost six years after the proof of loss was due. The high court upheld the plan’s limitation period, explaining a participant and plan may contract for a particular limitations period, even one that begins to run before the administrative process is completed, so long as the period is reasonable. Accordingly, participants should clearly read their policies for both the length of the limitations period, and the commencement of this period. After filing a claim, participants should schedule reminders specifying when there is at least six months left on the limitations period, to ensure adequate time to file suit, if necessary. Failure to do so may result in legitimate claims being time-barred.
2. Obtain Your Policy or Summary Plan Description
Insureds cannot claim ignorance of filing deadlines as an excuse to untimely claims, even if insurers fail to inform them of applicable limitations periods. So held the Ninth Circuit in Freeman v. Am. Airlines, Inc. Long Term Disability Plan, 2014 U.S. Dist. LEXIS 22131 (C.D. Cal. Feb. 20, 2014), in its opinion after Heimeshoff. Factually, Freeman involved an insured who brought suit after the plan’s two-year limitations period, but within the four-year statute of limitations for contract disputes to ERISA benefits arising in California. The insured alleged that the insurer violated 29 C.F.C. 2560.503-1(g)(iv) by failing to notify him of his time limit to file suit in two denial letters, and therefore his late appeal should be excused. First, the Ninth Circuit Court upheld the plan’s limitations period, explaining a limitations period permitting two years to file suit is reasonable. Next, the Court declined to impose a “duty to inform” on insurers where the summary plan descriptions notified insurers of the limitations period, noting other circuits have rejected such a rule. In light of this clear holding, insureds are advised to keep their policies or summary plan descriptions handy and review applicable deadlines so as not to miss their window for filing suits. If you do not have them, you should immediately request them from both the claims and plan administrators.
3. Consult an Attorney Immediately if Your Plan Administrator Unreasonably Delays the Administrative Process
While the administrative appeals process itself does not toll the statute of limitations, equitable doctrines may demand tolling if plan administrators unduly prolong the process. The Supreme Court explained that if plan administrators act so as to cause participants to miss deadlines for filing suit, waiver or estoppel may prevent the administrator from claiming the limitations provision as a defense. Heimeshoff, supra, 134 S. Ct. at 614. If you believe your insurer is unreasonably delaying your claim, consult an experienced ERISA attorney immediately to determine whether equitable remedies are available. Similarly, if you believe your policy’s limitations period is unreasonable, you should seek legal help well in advance of any deadlines.
On its face, Heimeshoff appears to favor insurers by limiting an insureds’ window for filing suit. However, ERISA imposes strict, statutory timelines on insurers to act on claims, provide information and issue decisions. See 29 CFR §2560.503–1(l). Consequently, insureds are entitled to equitable remedies if insurers unreasonably delay the claims process. Moreover, the high court limited its holding to “reasonable” limitations periods.” While the Court declined to define a “reasonable” time period, plans are likely to err on the side of caution, lest their limitations provisions be stricken. Ultimately, insureds should heed Heimeshoff’s warning by staying informed of their deadlines to file suit, but take solace in the fact that ERISA and courts provide oversight by granting traditional equitable remedies if plan or claims administrators unreasonably delay the administrative process.
