What is ERISA?
The Employee Retirement Income Security Act, also known as ERISA, are the federal statutes that govern employee benefit plans, including long-term disability, available to workers through their employment.
ERISA sets minimum standards to which private employer-based benefits plans must adhere. When an employee’s benefits plan is covered by ERISA, the statute provides the exclusive remedy for claims made by that employee, even preempting California laws that may relate employee benefits.
The original purpose of ERISA was to protect pension benefits and streamline the administration of employee benefits. Unfortunately, ERISA has been more broadly applied by insurers to limit the remedies available to employees when their insurers refuse to play a claim.
California Sets Time Limit for ERISA Claims
When former employees believe they are being denied or not receiving the full amount of ERISA-protected benefits, they must challenge the insurers’ final denial of their claim within a certain period of time. California’s 9th Circuit Court of Appeals recently determined the statute of limitations for filing an ERISA lawsuit – or how long former employees have to file a lawsuit challenging the denial of benefits – for the denial of an ERISA-protected benefits claim is four years.
This limitation applies even though there may be no express limitation periods within the insurance plan or spelled out by ERISA. The Court of Appeals elected to apply California’s statute of limitations for contract disputes, which is four years, as an expiration date for insurance claims. The four year statute of limitations applies to all ERISA claims whenever a limitations period is not included in the plan itself.
The case that determined these time limits, Withrow v. Bache Halsey Stuart Shield, Inc. Salary Protection Plan, is an important one for Californians. It emphasizes the importance of having an experienced ERISA appeals attorney who can investigate a claim and help individuals make sure they are getting the benefits they deserve.
In December 1986, Withrow became permanently disabled. The following year, Withrow applied for and was approved to receive long-term disability payments from her employer’s insurance plan.
After speaking with the insurer about the payments, Withrow believed she was being underpaid for her disability insurance claim. In about 1990, Withrow began asking – which she continued to do periodically through the years – the insurer to increase the amount she received in benefits or at least investigate the calculation used to determine the amount of her monthly benefit payments, neither of which the insurer ever did.
In 2003, Withrow filed an appeal with the insurer in which she asked for an increase in her monthly benefit payments. The insurer, through a message left with Withrow’s attorney, denied the appeal request in early 2004. Just over two-years later, in February of 2006, Withrow filed a lawsuit claiming that ERISA benefits due to her had been denied.
In response, the insurer claimed that Withrow had not filed the lawsuit within the proper amount of time. In other words, the insurer’s claim is that the statute of limitations had run, barring Withrow’s lawsuit.
The Court’s Decision
To reach a decision as to whether Withrow’s lawsuit was time barred or not, the court first had to determine the applicable statute of limitations.
Noting that the insurance plan may and can contain a limitations period, the court first looked to see if the insurance plan contained a limitations period that was germane to the lawsuit, which the court determined there was not.
Because the Withrow’s lawsuit was filed as an ERISA claim for benefits, the court next looked to the ERISA statutes for guidance. However, the court did not find any applicable statute of limitations.
Without a time bar set by either the insurance plan or the ERISA statute, the court decided that California’s statute of limitations for contract disputes should apply to Withrow’s ERISA claim.
Next the court had to determine when the statute of limitations began to run – or when the ERISA claim accrued. Under federal law, an ERISA claim accrues when either the benefits are denied or when the claimant had “reason to know” their benefits claim was denied. The court found that Withrow did not have reason to know that the insurer had denied her claim prior to 2004. Therefore, the court said that Withrow’s ERISA claim accrued in 2004 when her attorney was told the appeal was denied. Thus, Withrow’s claim was timely filed within the four-year statute of limitations.
Los Angeles Insurance Claims Involve Complex Issues
ERISA claims and appeals may involve the interplay of different state and federal laws and rules; therefore it is extremely important to seek the guidance of an attorney with experience with and knowledge of ERISA claims and appeals. When an ERISA claim accrues will depend on the specific circumstances of your case, an attorney can help ensure that all lawsuits are filed in a timely manner.
Even determining what kind of claim to file can be challenging. When an individual has been denied insurance benefits, it is important to determine whether an unfair or wrongful denial has been made or if the individual’s claim was not properly investigated. A Los Angeles disability insurance dispute lawyer can differentiate whether you have a breach of contract or bad faith claim and make sure that important deadlines are not missed.