Employees in Chicago with coverage under an employer sponsored disability insurance plan rarely think to ask a long term disability attorney how much time the plan or insurance policy provides to file a lawsuit after a final administrative denial. It is among the first things a good long term disability lawyer thinks about when speaking to a prospective client. The policies often provide less time to file the lawsuit than you may think. Insurance policies often include a “limitations period” established to limit the period of time an employee can bring a lawsuit in court, which can be shorter than that of an applicable statute of limitations. Essentially, an insurance provider uses a limitations period to maximize limiting its liability to any potential ERISA § 502(a) claims. This period of time is often tied to when “proof of loss” is due, but it may also be tied to some other event that starts the clock on the limitations period running. Once the limitations period has run, a claim may be totally time barred from ever developing into a lawsuit—regardless of how strong the employee’s case may be.
Limitations periods in long term disability insurance policies are a rich area of disagreement between employees and insurance providers. A recent case illustrates how plaintiffs’ long term disability lawyers and insurers’ lawyers are still battling to persuade courts on how to interpret these limitations clauses to best serve their clients’ interests. In December 2014, the District Court for the Eastern District of Missouri ordered that a employee’s claim was time-barred, when she filed her case approximately two years after the insurance policy’s applicable limitations period. Mulholland v. MasterCard Worldwide, No. 4:13CV1329(JCH), 2014 U.S. Dist. LEXIS 169958 (E.D. Mo., Dec. 9, 2014). The limitations period clause stated, “[n]o legal action of any kind may be filed against [Hartford]. . . 2) more than three years after proof of Disability must be filed, unless the law in the state where [Plaintiff] live[s] allows a longer period of time.” The employee in Mulholland did not stop pursuing her benefits—even after her case was dismissed with prejudice. Instead, with the assistance of counsel she appealed to the Court of Appeals for the Eighth Circuit, which was an excellent strategy because the Court sided with the employee. The Court found that the additional language allowing a participant to file suit beyond three yeas if the law of the state provided for a longer period was integral to determining if the case was time-barred and the District Court had inappropriately overlooked and failed to properly apply this provision. Mulholland v. MasterCard Worldwide, No. 4:13CV1329(JCH) (8th Cir. Oct. 21, 2015).
The longer you wait to speak to a lawyer, the greater the chance you could lose all your benefits because the insurance policies provide less time to file a lawsuit than you may think. If you wish to preserve your rights to pursue your benefits after having your claim denied, do not delay in contacting a knowledgeable long term disability attorney.