Disability insurance is intended to provide financial protection for the individual who becomes unable to work due to a disability. There are two kinds of disability insurance coverage; one through individually purchased insurance policies and the other through employment at a company, or through an association or specific affiliation. Group policies are regulated through the Employee Retirement Income Security Act of 1974 (ERISA). ERISA was enacted to protect participants of an employee benefit plan but in practice, it often enables insurers to avoid their responsibility to pay valid claims. This is the focus of our practice at Bonny G. Rafel, LLC.
A group disability claim must be filed with the Plan and if denied, the claimant must first appeal the decision back to the insurer or claim administrator! Once this “administrative appeal” is exhausted, then and only then can the claimant have his/her day in court. A problem has arisen over when is the deadline for filing a lawsuit in these cases?
Most insurance contracts or plan documents contain a deadline for filing a lawsuit, known as a statute of limitations. Once this deadline has passed, a claimant cannot file the lawsuit. While most plans contain a three-year deadline for filing a lawsuit, we have come across several instances where the deadline is much shorter, in one case only providing the claimant six months after the decision to file a suit! This is a pothole into which many claimants unwillingly fall. They fail to recognize the deadline and thus do not hire legal counsel in time to protect their rights in federal court! To add further roadblocks to justice, the insurers rarely would notify the claimant, in the final denial letter of the deadline. Refer to our previous blogs which address when the clock starts to run for this strict deadline.
Fortunately our Third Circuit Court of Appeals recently issued a case to clarify the disabled’s rights to be informed of the deadline. The court recognized ERISA 29 U.S.C. §1132(a)(1)(B) does not provide a deadline for filing the action and decided that hiding such an important deadline in plan documents, which the claimant rarely has easy access to is wrong.
In Mirza, since the insurer failed to notify Mr. Mirza of the one year deadline to file litigation in the final denial letter, the Court reformed the claim and relied upon New Jersey’s six-year deadline for a breach of contract claim. The law is now clear that the plan is obligated to provide the deadline for filing suit in the participant’s denial letter. Mirza v. Ins. Admin. of America, No. 13-3535 (3d Cir. Aug. 26, 2015).
As counsel to the disabled, we at Bonny G. Rafel, LLC are very pleased with this result. It gives the disabled notice of how quickly they must obtain counsel following a denial of their claim to review the matter in time to file a lawsuit. We urge you to review your denial letter carefully and contact us at Bonny G, Rafel, LLC to ensure that your rights are protected.