An administrator must give notice of its decision on the appeal, setting forth the basis for a denial, again with 45 days, or 45 plus 30 if necessary for reasons beyond its control. Once the administrator makes a final determination and the claimant has ‘exhausted’ all remedies available under the policy, the claimant can bring an action in federal court to challenge the administrator’s decision. Most ERISA disability policies contain a statute of limitations in the policy itself, which gives a claimant a certain amount of time, often two years, within which to bring suit after proof of disability is required. Absent a policy limitation, courts impose the statute of limitations for bringing a breach of contract suit in the state where the action is brought. Please note that limitations issues in ERISA disability claims are complex and tricky, even for attorneys: you must consult an attorney for a full analysis of any question of the limitation of actions in an ERISA disability matter.
ERISA federal litigation is challenging and time consuming, often taking a year or more before a case is resolved. However, unlike in virtually any other case in which one party alleges that another has failed to fulfill its obligations under a contract, there is no discovery process or trial in most federal courts. Instead, after the claimant files a complaint and the administrator answers it, the parties certify a record consisting of the documents and other information in the claim file and submit briefs asking the judge to make a determination based on the record.
If the disability policy contains a clause giving deference to the administrator in construing the terms of the plan and determining disability, then a judge will only find against the administrator if the decision was unreasonable, or ‘arbitrary and capricious.’ The judge does not get to decide the ultimate question of whether the claimant was disabled, but only the much more narrow question of whether the administrator’s decision was reasonable. If there is no discretionary clause, then the judge will make a decision ‘de novo,’ that is to say, without regard to the administrator’s decision. The judge will in that case decide the ultimate question of whether or not the claimant is disabled within the meaning of the policy based on the record submitted.