When a Long Term Disability (LTD) claimant cannot convince the insurance company to reverse their earlier denial decision, the only recourse left is to file in Federal Court. At this juncture the claimant is said to have exhausted his administrative remedy and must litigate the controversy.

For those LTD claims covered by ERISA, the federal law governing most employer purchased group LTD disability policies, the Statute of Limitations issue can be tricky. The reason for this is because ERISA has no Statute of Limitations provision in it. ERISA merely directs the claimant to the applicable state law Statute of Limitations of the state in which you plan to file your complaint. This can get messy because the Statute of Limitation on a breach of contract case varies wildly from state to state. For example, I practice in the Washington DC metropolitan area. In Maryland and Washington, D.C., the Statute of Limitation on a breach of contract case is three years. In Virginia, the Statute of Limitations on the alleged breach of written contract is five years. In West Virginia, my understanding is the Statute of Limitations varies based on the subject matter of contract. In other words, the careful practitioner must know the ins and outs of state level Statute of Limitations in order to ensure the timely filing of the ERISA complaint. 

Further complicating matters is the fact that within each policy, there may or may not be a unique clause mandating an earlier Statute of Limitations than the one set forth by your state. Case law holds that the clause in the LTD policy controls. The upshot here is obvious: read the policy carefully and do not assume that all policies are created equal because a clause may exist shortening one’s filing time dramatically.

Finally, when calculating the deadline, claimants were also confronted with the thorny problem of when to start the clock? In other words, if the applicable Statute of Limitations is three years, do I start counting from when I last worked? When I last received my LTD benefits? When I received my first denial letter? When I received my final denial letter? Again, each policy could contain language that may assist in answering this question. Sometimes though, the policy may be silent on this front.

The good news is that the Department of Labor has recently passed a Regulation that should provide much more clarity in terms of the deadline to file in federal court. The new Reg can be read here, https://www.federalregister.gov/documents/2016/12/19/2016-30070/claims-procedure-for-plans-providing-disability-benefits, but for our purposes the relevant conclusion is that “this final rule includes in new paragraph (j)(4)(ii) a requirement that the notice of an adverse benefit determination on review must include a description of any applicable contractual limitations period and its expiration date.” In other words, the final denial letters should include a date by which the claimant must file in Federal Court. This new Reg will go a long way towards streamlining the Complaint filing process, reducing wasteful litigation in federal courts and providing claimant with a more certain timeline.

Peter Casciano

(240) 240-2872

peter@cascianolawgroup.com