When Can You File Your ERISA Long Term Disability Litigation?

Introduction

Timing is critical for ERISA long term disability litigation – and a factor claimants often overlook or misunderstand. Failure to file your ERISA litigation at the correct time can have dire consequences for you and your disability benefits.

If you file too early, the court often will dismiss your case, thus costing you valuable time and money spent on preparing your litigation. You may have an opportunity to correct the error of filing too early, as detailed below. However, there are much more serious and permanent consequences if you file your lawsuit too late. If you file after the statute of limitations, your claim will likely be dismissed, and you will be permanently unable to recover your benefits in court.

Do you need to appeal your long term disability denial before you can sue?

You will almost always have to appeal your long term disability denial through your insurer before you can sue. Generally, if your claim is subject to ERISA, your policy will state that you cannot file any long term disability lawsuit until you exhaust all of your “administrative remedies.” This means you must do everything you can to claim benefits from your insurer through its administrative process first. This process will involve at least one administrative appeal handled by your insurance company.

Below is an example where a hypothetical plaintiff, Tiffany, exhausted her administrative remedies:

Tiffany’s long term disability insurer, UNUM, initially rejected her claim for benefits. Tiffany filed an administrative appeal with UNUM, which UNUM denied. UNUM offered no further appeal options for her claim. Having exhausted all administrative remedies through UNUM, Tiffany filed an ERISA long term disability lawsuit to recover her benefits in court. Unum did not contest that Tiffany had exhausted administrative remedies. The action was therefore appropriate for the court to hear. Ultimately, Tiffany won her ERISA long term disability litigation and recovered her benefits with the help of her attorney.

While typically you must go through your insurer’s entire administrative process before pursuing litigation, there are limited exceptions that will allow you to file a lawsuit earlier:

• Under the first exception, your attorney would need to show exhaustion of the process would be futile. This is sometimes called the “futility exception.” This is a difficult standard to meet. 
• Under the second exception, your attorney would need to show that the insurer failed to follow a reasonable claims procedure. For example, if your insurer failed to render a timely decision, you might qualify under this exception. This exception was more recently provided under the Department of Labor’s updated ERISA Regulations, effective April 1, 2018. 29 CFR 2560.503-1(l)(2)(i). There are nuanced circumstances where this exception does not apply, which your attorney will evaluate. See 29 CFR 2560.503-1(l)(2)(ii).

Whether your case may fall under either of these exceptions will heavily depend on the facts of your case.  Don’t guess.  We recommend you always consult with an experienced long term disability attorney to determine whether one of these exceptions might apply to you. 

What happens if you file your long term disability lawsuit too early?

If you file your lawsuit too early, your case may be subject to a “motion to dismiss.” A motion to dismiss is a motion filed by the defendants asking the judge to toss out your lawsuit. In this case, the defendants would allege the lawsuit should be dismissed on the basis of you, the plaintiff, not following proper procedures, as the insurer’s administrative remedies were not exhausted before you brought suit. 

You will have a chance to respond to this motion before the judge’s decision.  However, it is likely in this situation that the judge will grant the defendant’s motion, unless you meet one of the exceptions above.  If the court grants the defendant’s motion, the lawsuit will not go forward.  Your only option will be to wait until you’ve exhausted all administrative remedies before filing again.  This can cause unnecessary frustration and undue delay.

Below is an example where a hypothetical plaintiff, Tony, filed too early by failing to exhaust administrative remedies:

MetLife, the insurer for Tony’s long term disability benefits, rejected Tony’s initial disability claim.  Tony brought a claim in federal court against MetLife to recover benefits without first filing an administrative appeal.  MetLife filed a motion to dismiss on the basis that Tony did not appeal the denial and thus had not “exhausted all administrative remedies” as required.  Unfortunately for Tony, the judge granted MetLife’s motion.  This caused substantial delay for Tony.  With no other options, Tony then went back to MetLife and filed an appeal, which MetLife rejected.  Finally, having exhausted all administrative remedies, Tony returned to Court and filed another lawsuit.  This time, the judge finally allowed the lawsuit to proceed.

Is there a deadline or “statute of limitations” for filing your lawsuit?

Yes, there is a deadline to filing your ERISA litigation.  Your long term disability lawsuit must commence within a certain period known as the “statute of limitations.”  The statute of limitations is essentially an expiration date by which you must file your litigation. 

The applicable statute of limitations will vary from state to state.   However, the time you have to file your long term disability lawsuit can also be limited to a shorter period by your insurance policy.  Many states permit the statute of limitations to be altered by contract terms. Therefore, courts often have applied shorter limitation periods found in the policy itself. For example, most policies provide that a litigation must be brought within three (3) years of the date proof of loss is required. The United States Supreme Court has held that such a provision is enforceable because it is not unreasonably short.

Understandably, the above caused a lot of confusion for claimants. In response, the Department of Labor updated its most recent regulations (effective April 2018) to require your insurer to specify the statute of limitations date in the final denial letter. 29 C.F.R. § 2560.503-1(g)(1)(iv). Even if the final denial letter specifies a statute of limitations date, it is still advisable to consult with an attorney in case the letter contains an error. You should always seek the advice of a qualified long term disability attorney to determine how much time you have to file.

What happens if you file your long term disability lawsuit too late?

If you file your litigation after the statute of limitations set in the policy, your lawsuit will likely again be subject to a motion to dismiss by the defendants. You will have a chance to respond to this motion. However, in this case there is a very slim chance that the judge will rule in your favor. If the defendants can show that you violated the statute, the judge will be bound by law to dismiss. If the judge dismisses your case, there is nothing that can you do to continue to pursue your lawsuit.

Below is an example where a hypothetical plaintiff, Tom, filed his ERISA long term disability too late:

Tom filed a disability claim against his insurer MetLife. Per Tom’s insurance policy, his proof of loss was required by September 1, 2017.  His claim was rejected, and he subsequently appealed that decision.  The appeal was then also denied.  The policy’s language states that a civil action must be filed within three years of the date proof of loss is required.  Tom filed his lawsuit on December 1, 2020.  MetLife moved to dismiss based on Tom filing after the statute of limitations had expired.  The court granted the motion to dismiss.  Tom’s lawsuit is stopped, and he will recover nothing.

Conclusion

The timing of your ERISA long term disability litigation can make all the difference between you recovering a large amount of money or nothing at all.  The experienced ERISA long term disability attorneys at Riemer Hess can help you determine the optimal filing time for your ERISA lawsuit.

Riemer Hess has been filing ERISA long term disability litigations for over 25 years and we are widely regarded as one of the premier firms in the country in handling these lawsuits.  We’ll help you decide when makes the most sense for you to file your ERISA litigation.  Contact us at any time to help you file your claim, protect your benefits, or file a long term disability lawsuit.