zThe United States Supreme Court has handed down a decision that is sending shock waves through the disability plaintiff’s bar. In Heimeshoff v. Hartford Life & Accident Insurance Co., the U.S. Supreme Court has held unanimously that the time limit contained within the ERISA plan is enforceable – and the clock starts ticking from the date that the plaintiff’s “proof of loss” is due – even before a lawsuit is filed, and possibly, even while a claimant is still receiving benefits, or has not yet “exhausted” their administrative remedies, a predicate to even being permitted to bring litigation.
This is extremely dangerous news to claimants, and adds yet another layer of difficulty to plaintiffs whose policies are part of their benefits package from their employers. As a result of this decision, plaintiffs may be faced with a dilemma as to how to proceed, as they may be subjected to a clock starting on their time to pursue relief, even while engaging in an administrative process with their insurer.
The administrative appeals process is not a fast one – and the insurance companies control the process. This is going to prove costly to claimant, in having to engage counsel earlier in the process, or potentially in seeing viable claims be time barred and unable to be heard in Federal Court.
The plaintiff in Heimeshoff v. Hartford Life was an employee of Wal-Mart Stores who owned a group long term disability insurance policy. She filed a claim for disability benefits in August 2005, and when it was denied, began the administrative appeals process, which did not conclude until November 2007. She did not file a federal suit until November 2010 – more than five years after she first filed a claim for benefits. The language of the plan said that all claims must be filed three years after proof of loss was required to be submitted. The District Court hearing the case dismissed the case, and when the case was brought to the Second Circuit Court of Appeals, that court agreed.
The plaintiff argued that a limitations period that starts before the administrative process has been exhausted is fundamentally wrong and should not be enforced. The Supreme Court disagreed, and now any plaintiff in a long term disability insurance matter needs to start gathering information on dates.
It must be acknowledged that by law ERISA claims are required to be administered within twelve to sixteen months, but we do not live in a perfect world, and not every matter is resolved in a timely manner. There are remedies available to plaintiffs, but they also add another layer of complexity to the cases.
The limitations period, often three years, means that claimant’s clocks start ticking from the moment their claim is filed, in any matter that falls under ERISA – not just long term disability insurance, although that is our focus here.
Every step of the claims process must now be watched with the precision of a space launch. Plaintiffs and their attorneys must be extremely aware of the time limits – or risk losing the right to take their case to court.
To read the Supreme Court of the United States decision on Heimeshoff v. Hartford, click here.