10/4/2012, LTD Claims and the Dreaded Statute of Limitations


Statute of limitations refers to a legislatively-created time limit to file a lawsuit against a defendant. Most long term disability claims made under group disability plans are not governed by an actual statute, but rather, the time limit is usually found in the wording of the long term disability plan. Consider the following:

What happens if your long term disability insurance carrier has paid you benefits for several years, and then unfairly decides to terminate your benefits? Under most long term disability plans, you have an obligation to appeal within 180 days of receiving the termination letter. Assume you appeal by the 180th day, and then the insurer takes 45 days plus another 45 days to decide that they are still terminating your benefits. So now you are in a situation in which 9 full months after you receive the termination letter, in order to get your benefits paid, you must sue the insurance company in Federal Court under the Employee Retirement Income Security Act.

You have done everything correct according to the rules. You appealed as you were required to do, and you did so within the time frame. You might be surprised to find out that by the time you receive the letter from the insurance company denying your appeal, that your time to file a lawsuit has already expired!

The reason this is possible is because under controlling New York federal common law, your time limit for filing a lawsuit is governed by the specific wording in your long term disability insurance plan. Some plans actually have the time start ticking when you file your first claim forms. So if you have a long term claim, your time to file suit could theoretically expire before your benefits are actually terminated.

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