Have you been denied benefits form your employer, such as for long-term disability benefits? Depending on the terms of the benefits plan, the time to appeal that denial may be very short – and the clock may even start running before an employee is allowed to bring a lawsuit. A pending Supreme Court case may bring some sanity to this area, but for the time being, an employee who feels their benefits were wrongfully denied must be very careful to avoid losing all rights to go to court.
Under the federal Employee Retirement Income Security Act (ERISA), an employee who feels they were wrongfully denied benefits must first exhaust all administrative remedies first – generally, by appealing the denial to an administrator of the benefits plan. Only after that appeal has been exhausted can the claimant bring a case in court challenging the denial of benefits. In New York, the deadline to bring a claim for an ERISA wrongful denial of benefits claim is six years after the denial.
That is not the end of the story, however. Many benefit plans reduce the deadline to bring a lawsuit to less than the six years provided by law. Furthermore, those benefit plans often provide that the clock starts ticking when the claim is filed – not when the administrative appeal is finally denied. If the administrative appeal takes a long time, then the lawsuit might be due a short time after that appeal gets decided. Here in the Second Circuit, this is a-OK. Burke v. Pricewaterhouscoopers LLP, 572 F.3d 76 (2 Cir. 2009).
The Supreme Court will soon weigh in. In Heimeshoff v. Hartford Life, the employee’s long term disability policy required that any court action be brought within three years of the claim being made, and required that the administrative appeal be finished before any court action could be filed. Worse for the employee, these deadlines were not in the summary plan description, but were buried in the plan itself. She filed her lawsuit within three years of the administrative appeal being denied, but more than three years after she filed her claim. The district court, citing Burke, dismissed her case as untimely, and the Second Circuit agreed. The Supreme Court took the case, presumably because other circuits require the clock to start ticking only after the administrative appeal is denied.
Even if the Supreme Court reverses the decision, and requires a benefits plan’s statute of limitations to only start once the administrative appeal is decided, employees should still not dawdle in asserting their rights. Employers have great latitude in shortening the deadline to file a lawsuit, and with those deadlines often buried in a densely-worded benefits plan, employees could find themselves out of time very quickly – deadlines of as short as 45 days have been upheld. Anyone wrongfully denied employee benefits should consult with an experienced lawyer as soon as possible.