When does the Clock Start Ticking For the Deadline to File an ERISA Suit?

My Friend Steve Krafchick, one of the best ERISA lawyers in the country, handled a case for Ms. Julie Heimeshoff against Hartford. The insurance policy said that any suit for benefits against Hartford had to be filed within 3 years of the date proof of loss was first due. As a general rule, proof of loss is first due upon filing the original application for benefits. That provision is not peculiar to ERISA disability policies, similar limitation periods can be found in just about any kind of insurance policy.

ERISA cases are different, though. In most claims for insurance benefits, the beneficiaries are free to file suit at any time. Not so with ERISA cases. ERISA beneficiaries are required to exhaust their administrative appeals to the insurance company before suit can be filed. In other words, if an ERISA claimant is denied benefits he or she must first file an appeal with the insurance company and await the insurance company’s final decision before he or she has the right to file suit. Sometimes that can take years, as in the case of Mrs. Heineshoff.

The suit was filed about a year after Hartford’s decision, and more than 3 years after proof of loss was first due. The New York federal district court threw out the suit, and that ruling was upheld on appeal.

The Supreme Court heard oral arguments on the case Tuesday. The lineup was Hartford on one side and Ms. Heimeshoff and the US Department of Labor on the other.

Ms. Heimeshoff and the DOL argued that since Ms. Heimeshoff did not have the right to sue until the internal appeals were exhausted, her time limits to file suit should not start running until Hartford made its final decision. Hartford argued that she had a whole year after the final appeal decision and that was plenty of time.

It is difficult if not impossible to accurately predict what the Supreme Court might do, but I do wish that the case presented a little bit better set of facts. There have been cases where the beneficiaries did not have the right to sue until after the final decision by the insurer and that decision did not occur until after the time limit had elapsed. This was not one of those cases, and the justices’ questions seemed to indicate a problem with the fact that Ms. Heimeshoff did have a year to file suit.

We will just have to wait and see what they do.  You can read a transcript of the oral argument here.

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