Recently, the U.S. Supreme Court ruled in Heimeshoff v. Hartford Life & Accident Insurance Co. that a disability plan’s three year statute of limitations was lawful. The plan’s statute of limitations began to run when a proof of loss was due. Thus, the administrative review would take place after the proof of loss was due, meaning a claim that took a long time to consider might foreclose the possibility of suit, as was the case in Heimeshoff. The plaintiff and the U.S. Department of Labor argued the result was unfair, particularly given the possibility a matter being strung out by the plan administrator to cause the statute of limitations to expire. The Court noted that a typical matter took a year to fully prosecute through appeals, and further stated that legal protection existed for participants via potential actions for stalling, etc. (through potential causes of action) by the plan administrator.
It would seem that a plan’s statute of limitations (assuming a plan has one) should start to run when the appeals process is complete. Then, there can be no advantage to stalling, other than perhaps weaker memories, etc. It would also seem that a relatively short period of time (e.g., one year) would be reasonable under such circumstances. In any event, it appears that a three-year statute of limitations that begins to run when a proof of claim was due is a safe harbor.
