I frequently get asked how long a long term disability claimant has to file a lawsuit after the insurer issues a final denial on the claim. The answer is, like most answers, it depends. It depends on whether it is an individual disability insurance policy or whether it’s a group long term disability policy enforced under ERISA § 502(a), and if the latter in which geographical location you live. Most long term disability insurance policies have a contractual limitation of time to file a lawsuit. So if you have an individual policy (common for many doctors, dentists, and lawyers), the answer is in your policy. If it’s a group policy, ERISA does not contain its own statute of limitations on benefit claims, so for Illinois based claims, courts look to the state statute of limitations for written breach of contract. But that can be shortened by the policy.
Group policies frequently state any lawsuit must be filed within three years of when proof of loss is due. Then the policy dictates when proof of loss is due, which is usually within 90 days of when benefits would begin. Then you must look at when benefits would begin, which is the policy’s elimination period (commonly 90 or 180 days after you stopped working). But there are also exceptions in the policy based on whether you reasonably could provide the proof of loss. It’s no surprise that claimants can’t quite tell by when they must sue. That prompted the U.S. Department of Labor to update its ERISA claims procedure regulations and require insurers state in the final denial letter the date by when you must file your lawsuit (and from reading these letters, often insurers are puzzled about that exact deadline, too). But what happens if the insurer does not tell you the date by when you have to file that lawsuit? Again, the answer is it depends.
In a recent case, Hewitt v. Lincoln Financial Corp., No. 18 C 8235, 2021 WL 353884 (N.D. Ill. Feb. 2, 2021), Lincoln Financial argued Hewitt filed his lawsuit too late, violating the three-year policy term. But Lincoln Financial did not disclose that deadline in its final denial letter. The court denied Lincoln Financial’s motion to dismiss, and held the failure to disclose that deadline made it inapplicable to Hewitt. But the court explained the courts are split on this issue. So it’s still risky business to delay filing that lawsuit if the insurer denied your claim.
If you have a long-term disability insurance claim denial and want to know by when your lawsuit must be filed, waste no time. Call an experienced long term disability lawyer right away, and protect your right to recourse.
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