McKennon Law Group, Author at McKennon Law Group

The McKennon Law Group PC periodically publishes articles on its California Insurance Litigation Blog that deal with related issues in a series of articles dealing with insurance bad faith, life insurance, long-term disability and short-term disability insurance, annuities, accidental death insurance, ERISA, and other areas of the law. This is the second in a series of articles on How Insurance Companies Deny Claims. To speak with a highly skilled Los Angeles long-term disability insurance lawyer at the McKennon Law Group PC, call (949)387-9595 for a free consultation or visit our website at www.mckennonlawgroup.com and complete a free consultation form.

In our recent article entitled “The Prevalence of Life, Health and Disability Benefit Claim Denials is Astounding: It’s Worse Than You Thought,” we explained that the U.S. Department of Labor estimates that a whopping 75 percent of long-term disability claims are denied, and that it is so concerned about the alarming number that, in December 2016, it published new regulations governing disability benefit claim denials. (See our article in the Daily Journal re-published on our website.) The regulations require disability insurers to ensure independence and impartiality in their decision-making process, and explain more thoroughly the reasons for their benefits decision.

This article, the second in a series of articles on the prevalence of insurer claim denials, explains how disability insurers deny legitimate long-term disability and short-term disability claims. Stay tuned for our next two articles in the series which will explain how insurance companies deny legitimate health insurance claims and life insurance claims.

Long-Term and Short-Term Disability Claim Denials

Disability insurance cases dominate the ERISA (Employee Retirement Income Security Act) litigation landscape today. According to the DOL, from 2006 to 2010, long-term disability claims accounted for 64.5 percent of ERISA employee benefits litigation, whereas lawsuits involving health care plans and pension plans accounted for only 14.4 and 9.3 percent, respectively. It is no secret that insurers and plans looking to contain disability benefit costs are motivated to aggressively dispute disability claims.

How do insurers deny valid disability insurance claims when they are governed by federal law, ERISA? First, they draft a plan term that gives them (the entity funding the plan’s disability benefits), complete discretion to interpret the plan/policy language and decide whether a disability benefits claim is valid or not under the plan/policy terms. In other words, the same entity that is legally responsible to pay your benefits has the final say whether your claim is valid. In many states, but not in California, courts are required to give deference to the insurer’s benefits decision under these discretionary plan provisions unless the insurer “abuses its discretion.” Under the abuse of discretion standard, an insurer’s decision is only reversed if the claimant can demonstrate that the insurer’s actions were “arbitrary and capricious,” a difficult standard for insureds to overcome. In sum, disability insurers are sometimes able to get away with denying valid claims by drafting extremely one-sided plan/policy terms that benefit them at the expense of ERISA plan participants and their beneficiaries.

ERISA disability and life insurance claims can be the most difficult for insureds because this heavily slanted, pro-insurer practice is permitted. While some states, including California, recently enacted statutes prohibiting such discretionary provisions in disability and life insurance plans, most states do not have such claimant-friendly statutes. Because disability insurers are large national corporations, they make company-wide policy and practice decisions on a national level. Thus, even in California, these insurers still decide claims with the understanding that it may be difficult for a court to overturn their benefits decision.

To attempt to insulate themselves from a court finding they acted arbitrarily, disability insurers hire biased medical consultants to review a claimant’s medical records without examining or speaking to the claimant. (Not surprisingly, these medical consultants usually conclude that the claimant is not disabled.) Insurers hire the same doctors, over and over. The doctors implicitly understand their work will dry up if they come to the “wrong” conclusion too often. It is both easy and lucrative for these insurance industry doctors to spend a few hours reviewing a claimant’s file, typically without ever examining the claimant or speaking to them or to their doctors, and then write a boilerplate report that the claimant is not disabled based upon their review of the medical records. Insurers then point to and rely upon the “expert’s” opinion as evidence that they acted within their discretion to deny the claim. Fortunately, in California, these pro-insurer discretionary provisions are in most situations no longer legal and so, with an excellent ERISA lawyer, a claimant has strong grounds to fight back against an invalid claim denial.

There are many other tricks that disability insurers use to deny seemingly valid claims. For example, they review social media of their insureds to see if they can find anything there to support a claim denial. They also regularly hire private investigators to follow and secretly videotape their insureds whenever they venture outside their home, whether to take the trash out, go to the grocery store or to a doctor’s appointment. Insurers use the surveillance to assert that their insureds can work and are not entitled to disability benefits, often overstating the level of activity depicted on tape and the conclusions that can be drawn from it. Courts have ruled that an overstatement of a claimant’s activities in surveillance is improper, and warn that activities observed for a short amount of time do not necessarily translate into full-time work capacity. For example, in Thivierge v. Hartford Life, 2006 WL 823751, *11 (N.D. Cal. Mar. 28, 2006), the district court held that activities observed “for a couple of hours on five out of six days she was under surveillance does not mean that Plaintiff is able to work an eight-hour a day job.” Similarly, in Leick v. Hartford Life & Accident Ins. Co., 2008 WL 1882850, at *7-8 (E.D. Cal. April 24, 2008), the court concluded that surveillance depicting the insured running errands for a few hours during one of her “good days” does not establish her ability to perform full-time consistent work.

Once a policy converts from an “own occupation” to “any occupation” standard for disability – typically after two years – insurers often hire a vocational consultant to analyze the insured’s training, education and work experience. Often, the vocational consultant is an insurance company employee, and thus has a financial incentive to cater to his employer and find the insured capable of working. With very little analysis, the consultant usually determines the insured, despite physical/medical limits that prevent him working in his own occupation, can perform other similar occupations available in the local area for which he could qualify by his education, training and experience. In arriving at this conclusion, the vocational consultant often overstates the insured’s training and overlooks practical marketplace factors that will prevent the insured from realistically obtaining those other jobs (such as age and a significant absence from the workforce). Even if minimally qualified to do another occupation, an employer is unlikely to hire, for example, a 59-year-old that has been out of the workforce for two years and has no direct experience. But disability insurers and their biased vocational consultants simply ignore critical facts like these to achieve their goal of getting another person off claim to make the company more profitable.

Our Take

These are just some of the ways disability insurers find ways to deny legitimate claims. If you have a long-term disability or short-term disability insurance claim that was improperly denied, you need an experienced ERISA disability or bad faith attorney, such as the lawyers at McKennon Law Group PC, on your side. As mentioned in our last article, after litigating hundreds of life, health and disability claims, it is our experience that many insurers do not get serious about paying these types of claims until they perceive a true threat of their insured being represented by highly effective, experienced lawyers, especially where there is “extra-contractual exposure” (i.e., damages beyond the policy’s benefits such as emotional distress damages, attorney’s fees and punitive damages). You cannot count on your insurer acting in good faith or doing the right thing. The Department of Labor statistics and other empirical data show that often they will not unless credibly threatened from an insured with a highly effective and experienced lawyer. Let us try to get your insurer to listen. We have successfully done it for decades.

The California Insurance and Life, Health, Disability Blog at mslawllp.com/news-blog/ and at mslawllp.com
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The U.S. Department of Labor estimates that a whopping 75 percent of long-term disability claims are denied. With over six decades of collective experience representing both insurers and their policyholders, the lawyers at McKennon Law Group PC have seen insurers routinely deny valid claims. But that DOL statistic shocked even us! Irrespective of the precise percentage, one thing is certain: life, health and disability insurers often deny valid benefit claims. They deny claims at such an astounding level it leaves reasonable people wondering – is it an ingrained business practice aimed at maximizing insurer profits?

There is empirical support. According to a recent column in the Los Angeles Times about denied health insurance claims:

Insurance companies are playing the odds . . . They’re counting on people not having the stamina to challenge every denied claim, even when there’s a valid medical reason for a drug or treatment being covered.

(See January 17, 2017 article “How to fight back when an insurer denies your healthcare claim”). The DOL is so concerned about the alarming number of claim denials that, in December 2016, it published new regulations governing disability benefit claim denials. (See our article in the Daily Journal re-published on our website). The regulations require disability insurers to ensure independence and impartiality in their decision-making process, and explain more thoroughly the reasons for their benefits decision.

It has been our experience in litigating hundreds of life, health and disability claims that many insurers do not get serious about paying these types of claims until they perceive a true threat of their insureds being represented by highly effective, experienced lawyers, especially where there is “extra-contractual exposure” (i.e., damages beyond the policy’s benefits such as emotional distress damages, attorney’s fees and punitive damages). Absent a realistic threat of potential liability via a looming bad faith judgment or an attorney’s fees award (attorney’s fees are potentially available under California law or under the Employee Retirement Income Security Act (“ERISA”)), insurers prefer to earn interest income on your policy benefits rather than promptly pay, or better yet, not pay at all what they rightfully owe under the policy. Absent a credible extra-contractual threat from an insured with a very good lawyer, life, health and disability insurers would rather delay paying benefits, hold on to your money and hope you give up. The lesson: hire experienced and aggressive lawyers like McKennon Law Group PC to handle your denied life, health or disability insurance claims.

This article is in a series of articles from McKennon Law Group PC that will be followed by additional articles explaining how insurance companies deny long-term disability and short-term disability insurance claims, health insurance claims and life insurance claims.

The California Insurance and Life, Health, Disability Blog at mslawllp.com/news-blog/ and at mslawllp.com.
All rights reserved

McKennon Law Group PC is proud to announce that its founding shareholder Robert J. McKennon has been recognized as one of Southern California’s “Super Lawyers” and appears in the 2017 edition of Southern California Super Lawyers magazine published this month. Mr. McKennon has received this designation every year since 2011.

Each year, Super Lawyers magazine, which is published in all 50 states and reaches more than 14 million readers, names attorneys in each state who attain a high degree of peer recognition and professional achievement. The Super Lawyer designation is given to less than 5% of lawyers nationally after being nominated and voted on by their peers.
In addition, the American Society of Legal Advocates has recognized Mr. McKennon as one of the top 100 Insurance lawyers in the State of California for 2017. Mr. McKennon has received this designation every year since 2013. The American Society of Legal Advocates is an invitation-only, nationwide organization of top lawyers in practice today who combine excellent legal credentials with a proven commitment to community engagement and the highest professional standards.

Mr. McKennon was also awarded the designation of 2016 “Top Rated Lawyer in Insurance Law and Coverage” by American Lawyer Media and Martindale Hubbell, leading providers of news and rating information to the legal industry.

We all know that insurance companies are good at trying to find any way possible to deny claims, whether they be long-term disability claims, life insurance claims, health insurance claims or homeowner’s claims. To curtail their ability to do so, the Legislature enacted the Unfair Insurance Practices Act (“UIPA”) to regulate unfair or deceptive acts or practices in the insurance business. UIPA defines such unfair methods of competition or unfair or deceptive practices as including untrue, deceptive, or misleading statements with respect to the business or conduct of insurance. Under UIPA, the Legislature granted the Insurance Commissioner authority to promulgate rules and regulations, as well as to institute individual enforcement actions, against those who violate UIPA. In Association of Insurance Companies v. Jones, No. S226529, 2017 WL 280822 (Cal. Jan. 23, 2017), the California Supreme Court validated the Commissioner’s broad rulemaking authority as including the ability to define which types of statements fall under the broad definition of misleading statements in UIPA.

What is the Insurance Commissioner’s authority under the Unfair Insurance Practices Act?

Under UIPA, the Legislature granted the Commissioner two types of administrative authority: quasi-legislative rulemaking authority and quasi-judicial hearing authority. The basic difference between the two is how they are enforced. Rulemaking authority typically allows for enforcement penalties and as such, requires more stringent public notice and comment. In contrast, quasi-judicial authority is usually not subject to the extensive public notice and comment requirements, but it also does not have the same teeth in terms of enforcement, i.e. no monetary penalties or injunctions.

Under UIPA, the Commissioner may, after notice and public hearing, promulgate reasonable rules and regulations as necessary to administer the statute. UIPA §790.10. Where the unfair or deceptive practice is defined by statute, the Legislature grants the Commissioner the authority to investigate and determine whether insurance companies have engaged in an unfair method of competition or in any unfair act or practice as prohibited by UIPA. UIPA §790.03. To enforce this grant of authority, the Commissioner may bring an administrative enforcement action against, recover damages from, and enjoin any person engaged in such practices defined in section 790.03.

However, if the unfair practice is undefined in section 790.03, a separate statutory provision applies. Instead the Commissioner may use its quasi-judicial authority and issue an order to show cause. The Commissioner then conducts an administrative proceeding to determine whether the conduct is unfair or deceptive. The Commissioner then serves a written report declaring the practice as such. UIPA §790.06(a). Under this latter provision, the Commissioner may not assess monetary penalties and must apply to the superior court for an injunction.

Association of California Insurance Companies v. Jones

In Association of California Insurance Companies v. Jones, the Supreme Court of California held that statutory authority supports the Insurance Commissioner’s 2011 regulation categorizing estimates as a certain type of misleading or deceptive statement as defined under UIPA. The Supreme Court reversed and repealed the lower court’s judgment invalidating the regulation, finding the rule within the scope of the Commissioner’s authority under UIPA and consistent with the language of the statute.

A brief review of the facts of the case begins with the Commissioner’s investigation into homeowner’s insurance practices. Upon concluding his investigation, the Commissioner promulgated regulations that sought to improve the accuracy of replacement cost estimates. Basically, if the insurer estimates a home’s replacement cost in a given policy, the rules specify how the estimate is to be calculated and communicated to the insured. Additionally, the Commissioner conducted extensive public notice and hearing procedures to adopt the regulation.

Of course, insurance companies challenged the new rules. The trial court agreed and invalidated the regulation. The trial court found that the regulation exceeded the scope of the Commissioner’s authority by adding “estimates” to the Legislature’s defined list of unfair or deceptive practices. The appellate court agreed, affirming the trial court’s decision on review. The appellate court also noted that when the Legislature chose to define only some unfair and deceptive practices, it deliberately decided to exclude others (including such estimates).

The Supreme Court overturned the lower court’s decision on the grounds that UIPA expresses a very broad grant of legislative power to the Commissioner. The Court found that the Commissioner’s exercise of power was within the scope of its authority and consistent with the terms of UIPA. This ruling may signal good news for insureds with denied long-term disability claims, life insurance claims, health insurance claims or homeowner’s claims.

The McKennon Law Group PC periodically publishes articles on its California Insurance Litigation Blog that deal with frequently asked questions in insurance bad faith, life insurance, long-term disability and short-term disability insurance, annuities, accidental death insurance, ERISA, and other areas of the law. To speak with a highly skilled Los Angeles long-term disability insurance lawyer at the McKennon Law Group PC, call(949)387-9595for a free consultation or visit our website atwww.mckennonlawgroup.comand complete a free consultation form.

Are you active on social media? Do you have a Facebook? Snapchat? Twitter? Instagram? LinkedIn? Do you track your daily activity in fitness or health apps? Do you post to a blog hosted by Tumblr or WordPress? If you answered yes to any of these questions, you are not alone. As of September 2016, Facebook reported 1.18 billion daily active users on average. 150 million people use Snapchat a day, while Twitter has 140 million daily active users (Often including our current President, Donald Trump). Further, many people post daily activity on various other social media platforms and each second on the internet sees 6,000 tweets, 40,000 google searches and over 2,000,000 emails.

But, what does this have to do with disability insurance?

This article explains how social media may impact a disability insurance claim. First, we briefly explain some disability insurance basics: what disability insurance is and what insurance companies may typically require for “proof of claim.” Next, we discuss how investigations conducted by insurance companies may include a search and catalog of the insured’s activity on social media. Last, we provide a list of general best practices to follow should the insured choose to be active on social media. The reason this is important: we have seen numerous disability insurance claims denied by an insured’s use of social media.

What is disability insurance?

Disability insurance provides substitute income when, because of an injury or illness, the insured becomes disabled and unable to earn a living. Typically, disability insurance policies cover a portion of the insured’s earnings when he or she becomes “totally disabled.” Under most policies, the insured is totally disabled when he or she is unable to perform the substantial and material duties of the insured’s own occupation. Just like health insurance, you can enroll in disability insurance through an individual policy or, if your employer offers, through an employer-sponsored group plan. Some plans, usually employer-sponsored group plans, will provide income coverage for the insured’s own occupation for one or two years. After one or two years of coverage, the policy’s definition of total disability may change, requiring that the insured be unable to perform the substantial and material duties of any occupation at your level of education and experience.

What is typically required for proof of claim?

When an insured becomes disabled, he or she must submit proof of claim (sometimes called “proof of loss”) under his or her long-term or short-term disability insurance policy to the insurer. What this entails varies, but the proof of claim requirements for a specific plan or policy are usually located in either the plan/policy’s “Definition” section or in the section that outlines the claim process. For example, the following may be proof of claim requirements in a long-term disability insurance policy:

Regular care by a physician;
Proof of monthly earnings;
Date of disability;
Documentation of the disability;
The extent that your disability prevents you from performing your regular occupation; and,
Medical evidence supporting the disability, including the name and address of any treating hospital, institution, or physician.

The insured should always comply with the proof of claim requirements. Failure to comply with the proof of claim provisions may result in the denial of an otherwise valid claim.

How can social media impact the success of a disability insurance claim?

Once you file a “proof of claim,” the insurer begins gathering information, typically referred to as an “investigation” pursuant to its duty to fully investigate all insurance claims. The information collected may include medical records from attending physicians, medication records from pharmacies, a job description from the employer and occasionally a review of the insured’s social media and even surveillance. Surveillance may include what may be considered more traditional “Sherlockian” investigation (i.e., an undercover video recording of the insured’s daily activities for a certain period of time). The insurer may then use this footage to attempt to show that the insured is not actually disabled to the extent that he or she claims. However, given the increase in activity on social media noted above, many insurers are looking to social media as a cheap and easy way to investigate the validity of a claim.

This can harm an insured’s claim for a variety of reasons, including the fact that almost anything can be taken out of context and twisted to look worse than the reality of the situation. What do we mean by this? Imagine that you are a marketing strategist for a large Silicon Valley company. You received a top-notch education and work hard. As a result, you have progressed through the company’s ranks to a senior level position. Because your work requires intense concentration and sitting for long periods of time staring at a computer screen, a debilitating back problem could mean the end of your career. Suddenly, an illness or injury results in your inability to sit or stand for more than fifteen minutes without incapacitating pain. Because of your injury, spending eight-to-ten hours in front of a computer screen, five-to-six days a week, is no longer feasible without pain medication. However, the pain medication makes you incapable of concentrating and you cannot handle the same workload because of it. Further, the usual stress of your job is only heightened by your inability to perform, which in turn, heightens your pain.

Once you file your disability claim, the insurer may order surveillance of your activities. To continue the above example, imagine the social media search shows an image of you attending a holiday event with your former colleagues. In the image, you have a glass of champagne and you are smiling, sometimes sitting and sometimes standing. To you, this image may show that you went out to an event with your old colleagues because you miss them. To the insurer, this looks like someone who can sit and stand for long periods when it suits him. Sitting clearly does not cause you pain because you are smiling. Further, you may not be taking your pain medications.

Best Practices on Social Media

The above hypothetical is representative of similar analogous situations that frequently occur, but illustrates what just one picture on social media can do to a disability insurance claim, and best practices on social media can go a long way. Best practices may include removing, canceling or suspending all social media accounts. However, if the insured wants to stay active on social media we recommend using the strictest privacy settings. We also recommend that the insured be mindful of the potential that his or her personal information, including photographs, posted videos and words, are accessible to the public and the insurer.

The following are precautions to take while filing a claim:

Up the privacy settings on all social media.
Do not post photos, videos or other depictions of yourself.
Refrain from describing activities, especially those outside the home.
Do not connect or “friend” unknown people.
Do not talk about the claim on social media.
Do not make comments about the condition on social media, as these can be used to show inconsistency.
Do not discuss meetings with your lawyers on social media, as this can be used to challenge attorney-client privilege.
Be mindful that any photo posted can be misconstrued and potentially damaging to the claim, including “party” photos like the one in the example above that may be used to show the insured engaging in reckless or irresponsible behavior.
Avoid participating on any blog, chat room, or message board concerning the insurance company or your claim.

In the future, you may have to be cautious regarding a broader spectrum of information released to third party platforms, such as health applications on your phone that track your daily activity or metadata collecting applications that reconstruct information based on all of the available social media sources. For example, the iPhone has an app called “Health” that is preinstalled when you purchase your phone. People use the Health app to track their daily activity, including steps, nutrition, sleep and more. You can also sync the Health app with other products that track daily activity and vitals, like the FitBit. One example of a metadata app is the “Trial Drone” app, which works as a social media aggregator. The Trial Drone app allows you to pick a location and a date, and then Trial Drone aggregates all the social media data tagged to that moment to reconstruct that date and time. Sean McDonald, a trial lawyer and former private investigator, launched Trial Drone in May of 2016 and lawyers are already talking about the implications for insurance disability claims. To see an article discussing Trial Drone in detail, and the potential implications, see http://abovethelaw.com/2016/05/the-view-from-up-north-new-legal-app-trolls-social-media-for-evidence/.

Again, it is generally good to be aware of the above while filing a claim for disability insurance, particularly given the relative ease of access of information online and how much of it is posted voluntarily. Of course, do not be afraid to socialize, but do be aware of how it may be twisted and used against you when you decide to post it to a public forum like Facebook.

The McKennon Law Group PC periodically publishes articles on its California Insurance Litigation Blog that deal with frequently asked questions in the insurance bad faith, life insurance, long term disability insurance, annuities, accidental death insurance, ERISA and other areas of the law. To speak with a highly skilled Los Angeles long-term disability insurance lawyer at the McKennon Law Group PC, call (949) 387-9595 for a free consultation or go to our website at mslawllp.com and complete the free consultation form.

Disability insurance provides you with income in the unfortunate circumstance that your earnings are halted by disability. Employers often offer disability insurance in the benefits packages they provide to their employees, but many employees fail to take advantage of the benefit. The Employment Retirement Income Security Act of 1974, otherwise known as ERISA, governs most employer-sponsored benefit plans, including disability insurance plans. The legislature enacted ERISA to protect employees from abuse of their employer-sponsored benefits. As such, ERISA requires that the plan administrator, which is usually the insurance company, employer, or both, adhere to a strict standards and deadlines. This blog post demystifies the general timeline of a disability insurance claim under ERISA. First, we briefly explain the basics of a disability benefits plan and when a disability benefits plan will be governed by ERISA. Next, we cover the life of a disability insurance claim under ERISA, including some of the important deadlines that apply.

What is a disability insurance plan and when is it governed by ERISA?

First, what is a disability insurance plan? Generally, long-term disability insurance covers a portion of your income when a disability permanently halts your ability to work. Long-term disability insurance pays a portion of your previous monthly salary, subject to certain offsets for state and federal disability benefits. Before the provider pays the benefits, disabled employees must satisfy certain eligibility requirements. For many disabled employees, the following requirements typically apply:

a minimum length of service;
a minimum waiting period before benefits begin; and,
qualifies under the plan’s definition of total disability.

The next question to address is whether the disability insurance plan is governed by ERISA? When making a disability claim, you will first want to determine whether ERISA applies to your claim. Just like health insurance, employers often provide disability insurance as part of an employee’s benefits package. Unlike purchasing an individual plan directly from the insurance company, ERISA usually governs such employer-sponsored benefit plans. However, it is important to keep in mind that ERISA does not apply to some employers, such as government entities or a churches.

Some of the Important Dates and Deadlines in an ERISA Case.

If ERISA applies to your long-term disability or short-term disability insurance plan, the following timeline is generally applicable after you file your initial claim.

The Initial Claim

Within forty-five days of receipt, a claim should be approved or denied. 29 C.F.R. § 2560.503-1 (f)(3).
But, the plan may extend the forty-five-day time frame by up to thirty days. The insurer must inform the insured of its request for an extension within the initial forty-five-day period. That request for an extension must also explain why the insurer needs additional time, what additional time or information is necessary, whether there are unresolved matters, and when a final decision will be made. 29 C.F.R. § 2560.503-1 (f)(3).
If the insurer requests new or additional information, the insured has forty-five days to respond to the request. 29 C.F.R. § 2560.503-1 (f)(3).
Once the insured has provided the requested information, the claim should be decided no later than thirty days or as required by the plan, whichever date comes first. See 29 C.F.R. § 2560.503-1 (f)(3).

Appeal of the Initial Claim

If the insurer rejects your request for disability benefits, you have 180 days following receipt of a notification of an adverse benefit determination to file an appeal. 29 C.F.R. § 2560.503-1 (h)(3)(i). If you fail to adhere to this time limit, you may have no avenue to further pursue your claim.
An appeal should be decided within forty-five days of receipt by the insurer. 29 C.F.R. § 2560.503-1 (i)(3).
In special cases, review of the appeal request may require additional time. The plan may request up to an additional forty-five days, but must provide an explanation of the circumstances and an expected date when the decision will be rendered. 29 C.F.R.§ 2560.503-1 (i)(3). Additionally, some plans may allow for a second appeal.

The Statute of Limitations to File Suit

If your appeal is denied and once you have exhausted all available administrative remedies, you may file suit in court. However, your ability to file suit is also subject to a separate time limit that is important to keep in mind. If you fail to adhere to this time limit, you may have no avenue to pursue your claim.

Prior to the Supreme Court’s decision in Heimeshoff v. Hartford Life & Accident Insurance Co., 134 S. Ct. 604 (2013), California ERISA lawsuits could be brought up to four years after the denial on appeal. After the Supreme Court’s ruling, an ERISA plan may impose a shorter time frame on an ERISA claim so long as the time frame is reasonable and no controlling statute prevents the limitations period from taking effect. For disability insurance claims in California, it is likely that California Insurance Code Section 10350.11’s three-year time limit will apply and override any shorter limitations period. Section 10350.11 applies a statute of limitations of three years after you are required to provide written proof of loss to the insurer.

How the Department of Labor’s New Regulations may affect the timeline

The Department of Labor (the “Department”) regulates disability and health insurance claims subject to ERISA. Recently, the Department finalized new regulations codified at 29 C.F.R. § 2560.503-1 and discussed at 81 Fed. Reg. 92316. The regulations hope to reduce the potential for a conflict of interest in managing an ERISA plan and better inform the insured as to why their disability benefits were denied. As far as the timeline goes, the following four points are important to remember.

The regulations only apply to claims for disability benefits filed on or after January 1, 2018.
Per the new regulations, the insured may file suit when a claim is “deemed denied” even if the administrative remedies have not been exhausted. The regulations outline that a claim is “deemed denied” once the plan fails to comply with the appropriate regulations.
The regulations also outline the insured’s ability to request the administrator’s written rationale for the alleged violation. The administrator must respond to such a request within ten days, including a written explanation addressing the alleged violation.
Finally, the new regulations require that the final denial adequately describe any applicable contractual limitations period, including the specific date that the statute of limitations to file ends.

For a full discussion of the Department’s new regulations, see our article in the Daily Journal, available at https://mslawllp.com/robert-mckennon-and-scott-calvert-publish-article-in-the-los-angeles-daily-journal-new-regulations-will-benefit-claimants-in-disability-insurance-cases/.