Mr. Williams, who suffers from numerous physical illnesses and can no longer work, found out the hard way how confusing and unfair it can be to calculate the deadline for filing an ERISA lawsuit. His lawsuit “blew up” before it was filed! Williams v. Hartford, 2018 WL 1885783, (S.D. Miss 2018).

Many long-term disability plans governed by ERISA provide that suit must be filed within three (3) years of the date proof of loss is required to be provided. Many also provide that proof of loss is required to be provided within 90 days of the end of the elimination time frame. In this instance, the elimination time frame was 90 days as well. That all comes to about 3 ½ years, but the clock for filing a lawsuit starts while the claim is being paid!

The problem with this complicated and confusing method of calculating a limitation of action contract provision (which is serious, as it is the equivalent of a statute of limitations) is that it is not based on a breach of the contract, but rather runs automatically when a claim is filed. This is nonsensical because people are usually not concerned about filing a lawsuit regarding a long-term disability benefit while the benefit is being paid.

Rather, the time for being concerned about involving a court arises when the claim is denied or terminated. The time allowed for filing a lawsuit for Mr. Williams started long before his claim was terminated.

Tick, Tick, Tick…

• December 24, 2012 – November 10, 2014: Period of time Mr. Williams' long-term disability claim was paid.
• March 24, 2013: The date that, according to the court, the clock for filing a lawsuit started while Mr. Williams was being paid his long-term disability benefit.
• May 12, 2015: Date that appeal was denied. Mr. Williams was required to file an appeal—and he did so.

That was 1½ years before Mr. Williams's claim was terminated! The clock continued to run while Mr. Williams was going through the mandatory internal appeals process with Hartford. Once that was completed, he only had about 10 months left to file a lawsuit. He couldn't file his lawsuit before that 10-month time frame, as it would have been dismissed for failing to exhaust claim remedies. There was a mere 10-month window of opportunity in which he had to act. And that clock would have ticked down rapidly.

Ten months sounds like plenty of time to file an ERISA lawsuit, but it is actually cutting it close. If an ERISA lawyer is not on board, one will have to be found, engaged, and brought up to speed. The claims file will have to be received from the insurer, and they rarely provide the entire file when first asked.

Thus, it is critical for claimants to have an ERISA attorney involved during the claim process. The other problem is that it can be very difficult to calculate when this time period runs. I have requested many claims adjusters to provide me with a calculation as to when the limitation of action provision runs. Many cannot do it, and many will not do it. Knowing when a lawsuit must be filed is especially critical for individuals who have been on claim for more than four years. If the claim is denied at that point – and under the logic of Williams – the claimant would have no right to file a lawsuit, as the time would have already passed.

The U.S. Supreme Court had occasion to consider this issue in part and held that the policy time period is enforceable as long as it is “reasonable.” That reasonable standard, however, is like a ticking time bomb with no indication when it will go off. It can be factually sensitive, which is grossly unfair to a claimant who may not have access to all the facts. If the time for filing suit has technically already passed, how long do you have to file a lawsuit after exhausting the claim process? In one case, the 11th Circuit said 90 days was reasonable, but that was clearly spelled out in the plan. I can't tell you, and neither can anyone else. It will all depend on what a judge thinks when the issue is raised and when all facts are fully developed. And by then, it may be too late! So, the lawsuit must be filed as soon as possible.

This is yet another critical reason why it is important to refer your clients' ERISA cases to experienced ERISA counsel during the claim process and not after the claim process has concluded. We will know to be ready to file a lawsuit as soon as possible after the final appeal denial and receipt of the entire claim record.