For Life Insurance Benefit and Other Claim Denials, Deadlines Matter
Employees and their families often rely on their employer’s benefit plans to provide a variety of insurance protections, including life insurance, health insurance, accidental death and dismemberment, and other forms of insurance coverage. Unfortunately, the claims made by employees under the employers’ benefit plans are sometimes wrongfully denied, and employees must file lawsuits in order to enforce their rights. This process has been made more urgent by the Employee Retirement Income Security Act (“ERISA”), a federal statute which governs many of the insurance benefits sponsored by employers, including life insurance denials. Under ERISA, if employees miss their deadlines to file lawsuits against the benefit plans or the plan administrators, their claims may be permanently lost.
When Is It Too Late To Sue?
The deadlines to sue for employer-provided life insurance benefits (and others) are frequently contained in the plans themselves and may be far shorter than those contained in non-employer plans or applicable law. In many cases, employers have drastically shortened in their plans the time for employees and their families to hire an attorney and sue to enforce their rights to have their life insurance claims paid. For example, a New Jersey federal court decision recently held that, because an employee did not file a lawsuit to enforce his rights within ninety days after the final denial of his benefit claim, his lawsuit was dismissed, and his claim for benefits was lost. The ninety day period was part of the employer’s benefit plan, and the court allowed the employer to hold the employee to this shortened period for filing a lawsuit. This is a severe consequence, and employees must take heed – the time to act on denials of life insurance claims, as well as other insurance claims, can be very short and if deadlines are missed, the insurance benefits might never be received.
Employers Are Supposed to Disclose Lawsuit Deadlines To Employees
Although the ninety day deadline in the above case is a relatively short amount of time to find a lawyer and bring a lawsuit, employer-sponsored insurance plans are supposed to clearly disclose to employees their rights when life insurance benefits are denied. The Department of Labor has issued regulations which require employers to give employees notice in their denial letters of certain information, including:
1. The right to file a lawsuit concerning the denied insurance benefits, and
2. The deadline within which to file a lawsuit.
If the notice does not include this information, it may be held to be invalid, and the shortened time frame for filing life insurance lawsuits contained in the employer’s insurance plan may not apply. In other words, if the employee is not told that he may file a lawsuit within the shortened period of time, the shortened time frame for life insurance lawsuits mandated in the benefit plan may not apply to the employee.
And, although employers do not always disclose this, ERISA provides employees who are successful in suing to receive their life insurance benefits the opportunity to request that the insurance plan pay the employee’s attorney fees.