How to litigate an Erisa disability claim

AuthorScott M. Riemer/Jennifer L. Hess
Chapter 10
ERISA was enacted to promote the interests of beneciaries in
employee benet plans and to protect their contractually dened ben-
ets. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 104 (1989). To
achieve this, ERISA provides key remedial measures, including the right
to bring private actions. ERISA 502(a)(1)(B), 29 U.S.C. 1132(a)(1)(B).
See also Salovaara v. Eckert, 222 F.3d 19, 28 (2d Cir. 2000).
is chapter provides an overview of how to litigate an ERISA long
term disability claim from beginning to end. Litigating these matters as
a plaintis’ attorney can be a complicated, time-consuming, and stress-
ful process. After all, it is you and your client—who lacks critical xed
disability income—against an administrator with copious resources at its
ngertips. e role you will play as a plaintis’ attorney is an important
one. In addition to helping your client, you also are helping to keep plan
administrators’ abusive and wrongful tactics in check. A win also may
help future claimants by deterring plan administrators from engaging
in similar tactics.
Before commencing any long term disability litigation, there are sev-
eral logistics you must consider. ese include when to le, who to sue, and
where to sue. is section will address these pre-litigation considerations.
§10.1.1 ERISA Disability Claims and Litigation 10-128
§10.1.1 When to File
It may be tempting to le an action at the rst sign of trouble for
your client. ERISA, 29 U.S.C. §1001, et seq., enables claimants to le an
action to recover benets under employee benet plans, to clarify their
rights under such plans, and to recover attorneys’ fees and costs. Section
502(a)(1)(B), 29 U.S.C. §1132(a)(1)(B). Unfortunately, you can le the
action in federal court only after all administrative remedies have been
exhausted. Burke v. PriceWaterHouseCoopers LLP Long Term Disability Plan,
572 F.3d 76, 79 (2d Cir. 2009) (per curiam); Kennedy v. Empire Blue Cross
and Blue Shield, 989 F.2d 588, 594 (2d Cir. 1993); McFarlane v. First Unum
Life Ins. Co., 274 F. Supp. 3d 150, 154 (S.D.N.Y. 2017). In other words,
your client must go through the claim and appeal process before ling
suit. Note that “ERISA itself does not contain an exhaustion require-
ment; the requirement is instead judge-made.” Kirkendall v. Halliburton,
Inc., 707 F.3d 173, 179 (2d Cir. 2013).
ere are two narrow exceptions to the court-created exhaustion
First is where a plainti shows that exhaustion would be futile. Ken-
nedy, 989 F.2d at 594-95. “Usually, the futility exception is applied in a
context in which there has been, in some form, an unambiguous applica-
tion for benets and a formal or informal administrative decision denying
benets and it is clear that seeking further administrative review of the
decision would be futile.” Barnett v. Int’l Bus. Machines Corp., 885 F. Supp.
581, 588 (S.D.N.Y. 1995). Under these circumstances, a plainti must
show that no purpose would be served by requiring further exhaustion
before judicial review. See id. See also Elizabeth W. v. Empire Healthchoice
Assurance, Inc., 2016 U.S. Dist. LEXIS 129880, at *19-20 (S.D.N.Y. Sep.
15, 2016). is is an uphill battle. Caution always should be exercised if
you decide not to exhaust remedies.
Second is where the administrator failed to follow a reasonable
claims procedure. is exception was created by the Regulations eective
April 1, 2018. Under this exception, if the administrator “fails to strictly
adhere to all the requirements in this section with respect to a claim,
the claimant is deemed to have exhausted the administrative remedies
under the plan….” 29 CFR 2560.503-1(l)(2)(i). is exception, however,
does not apply if the failure was: (i) de minimis; (ii) non-prejudicial;
(iii) attributable to good cause or matters beyond the plan’s control;
(iv) in the context of an ongoing good-faith exchange of information;
10-129 How to Litigate an ERISA Disability Claim §10.1.1
and(v)notreective of a pattern or practice of non-compliance. 29 CFR
§2560.503-1(l)(2)(ii). If you elect to le for immediate relief as a result
of this exception, but guess wrong, “the claim shall be considered as
re-led on appeal upon the plan’s receipt of the decision of the court.
Id. erefore, the downside of this exception is a substantial delay in
time, rather than being dismissed with prejudice.
Whether or not you could invoke one of the exceptions to the exhaustion
requirement, be aware a lawsuit still must be commenced within the applica-
ble statute of limitations. e need to exhaust administrative remedies does
not toll the statute of limitations. Indeed, courts are quick to dismiss ERISA
actions where the statute of limitations has not been satised. ERISA sets
forth a statute of limitation for breach of duciary duty claims, but not for
benet claims. As a result, the courts have looked to the analogous state stat-
ute of limitation, which usually is for breach of contract. However, because
most states permit parties to alter the statute of limitations by contract, the
courts often have applied any limitations period found in the policy.
Unfortunately, even if you locate a limitations period in the policy,
the date the statute of limitations begins to run often is unclear. “Absent a
controlling statute to the contrary, a participant and a plan may agree by
contract to a particular limitations period, even one that starts to run before
the cause of action accrues, as long as the period is reasonable.” Heimesho v.
Hartford Life & Acc. Ins. Co., 134 S. Ct. 604, 610 (2013) (emphasis added).
Such terms are enforceable unless the court determines “either that the
period is unreasonably short, or that a controlling statute prevents the
limitations provision from taking eect.Id. at 611. Indeed, most policies
state that an action must be brought within three years of the date proof
of loss is required, and the Supreme Court has held that such a provision
is enforceable because it is not unreasonably short. See id. at 612-13.
To be safe, calculate the applicable statute of limitations from the
date “proof of claim” was due, rather than the date of the claim or appeal
denial. If the litigation only would be timely using the date of the claim
or appeal denial, the claim may not be precluded but you should be
prepared to face a motion to dismiss. Check to see how courts in your
ling jurisdiction have handled similar situations.
Recognizing that unwary claimants could fail to satisfy a statute of lim-
itations, the Department of Labor specied in its regulations issued eective
in 2018, that insurance companies must specify in the nal denial letter the
date by which the statute of limitations will run. 29 C.F.R. §2560.503-1(g)(1)
(iv); see also Mirza v. Ins Adm’r of Am., Inc., 800 F.3d 129, 136 (3d Cir. 2015).

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT