Change #4: The Statute of Limitations

ERISA allows plans to incorporate terms that provide deadlines or time frames. Usually if the time frames are not contrary to the minimum requirements of ERISA, they are contractually enforceable. One of those time frames is the deadline to file a lawsuit which is commonly called the statute of limitations. ERISA does not provide a statute of limitations for benefit claims and so generally it will import state law IF the plan does not provide a limitation.

However, many plans have utilized a policy form typically required by a state department of insurance. Alabama has such a form. That policy form will provide that the deadline to file a lawsuit is three years from the date proof of loss is required. So, to determine that, one must calculate when proof of loss was required. That may be two weeks after the claim was filed or it could be one year after it was filed depending on certain facts. Then add three years from that date. That leaves a wide range and some uncertainty.

It can get worse. For example, what if the claim is paid for five years and then terminated after three years? What is the deadline then? If proof of loss was required in year one, has the limitation already passed? You usually do not file lawsuits while your claim is being paid. This has created much uncertainty for claimants and lawyers alike.

The insurance company's claims handler often did not really know the deadline either. When inquiring upon the claim or plan administrator as to the deadline, you would usually be referred back to the plan language. This did not help at all. Can't they just say the date?

Now the regulation will require that the exact limitation date be provided along with a description of the applicable contractual limitations. So, if the final letter denying the claim or rejecting the appeal does not specify the exact date this will be a problem. To borrow a title and line from the Mowgli's song – they have to “Just Say It.”