The answer to this question depends on the type of long term disability insurance contract you have.
Most employees have disability insurance coverage through a group plan with a private-sector employer. If your employer is large enough, or if you obtained your policy through an employee organization or union, then ERISA rules and regulations come into play. According to ERISA, you must “exhaust” your administrative remedies before you can file a lawsuit. This means you must follow the terms of the insurance policy and go through each step of the appeals process directly with the insurance company. If the insurance policy states that you have the right to file one appeal, then you only have the opportunity to file one appeal. If the insurance policy requires you to file two appeals, then you must go through two appeals before filing a lawsuit. Other insurance policies have one mandatory appeal and one optional appeal.
When You May Not Have to File an Appeal
There may be other situations where you do not have to file an appeal at all before filing a lawsuit. Generally, you do not need to appeal if you have an individual policy purchased directly from an insurance agent or broker, or if your policy is sponsored by a government or church employer directly (in other words, if the policy is not through a union or employee organization). In such situations, you may be entitled to file a lawsuit after your first denial.
How Long Do I Have to File A Long Term Disability Lawsuit?
If there is no mention of a specific time limit to file a legal action (lawsuit) in your LTD policy, then the time limit is the same as that for a breach of contract claim in your state. However, most LTD policies have a specific deadline to file a legal action. This specific language is usually towards the back of an LTD policy. Typical policy deadlines range from 1 to 3 years, but I have seen a deadline as short as 6 months.
Can an Insured Sue for Future Policy Benefits and Attorney Fees?
An insurance company cannot be mandated to pay all future benefits. Now, as for attorney’s fees, it really depends on the type of claim.
You may have questions as to whether you are required to file an appeal, or whether you should participate in the optional appeal process. If you have such questions, you should immediately seek legal advice from an attorney familiar with ERISA disability cases. Please call at (888) 321-8131.