The Supreme Court today announced a decision that upheld a long-term disability plan’s provision requiring a lawsuit to be filed within three years of the claim. In Heimeshoff v Hartford Life & Accident Insurance Co., the court decided that the limitation period was reasonable, and the claimant under the plan bound by the deadline. The case arises under the Employee Retirement and Income Security Act (ERISA), imposing federal rules over all employee benefit plans. For whatever reason, Justice Thomas seems to write most of the ERISA decisions for the Supreme Court. Today’s decision was unanimous. The Court held that unless it is unreasonable, the time limitation in a plan (the parties’ contract) will be upheld.
The seesaw between the two sides comes with the requirement in employee benefit plans that the claimant have available, and use, an internal appeal procedure. Usually that procedure doesn’t take as long as three years. But some internal procedures have multiple steps, and sometimes one party or the other needs additional time to process the claim, seek additional medical records, engage a specialized consultant, and so on. This is more likely to happen in a disability case than a pension dispute. The issue whether someone is disabled permanently or for the indefinite future can be difficult to determine, involving questions of medical condition, potential cures, and suitable occupations available to the claimant.
Under ERISA, the claimant has to go through the administrative process in order to sue. In federal court, the review is limited to whether the decision made at the administrative level was either incorrect or arbitrary (depending on the way the plan is written). Therefore creating a good record at the internal appeal is crucial.
But someone can wait too long, even if it’s not all the claimant’s fault for the delay. In this case, the claimant did wait to file in court for nearly three years after the final decision, she was not forced to choose between waiting for a ruling and filing in court. But that ruling took well over two years, so she did not have a lot of time to head to federal court. This is the same kind of problem that plagues discrimination claimants though, where the state’s two year statute of limitations can slide by unnoticed while the Maryland Commission on Civil Rights continues to dig through its pile of backlogged cases.
In every lawsuit, it’s essential to get a handle early on the statute of limitations and how it affects a right to sue in court. If settlement or administrative remedies break down, someone might need that final option, and should not let the time tick away altogether.