When Is a Late ERISA Disability Claim Still Timely? Understanding the Three-Year Contractual Limitations Rule.

When a disability claim is denied as “too late,” many claimants assume they’ve lost their chance to obtain benefits. But as more recent court decisions show, the law provides more protection for claimants than insurers often admit. Let us explore how courts interpret contractual limitations clauses in disability insurance policies (i.e., the most common three-year filing deadline), and why many “late-filed” claims may still be considered timely pursuant to federal and California law.

Understanding the Contractual Limitations Clause

Most long-term disability (LTD) policies, including those governed by ERISA (the Employee Retirement Income Security Act), contain a clause similar to this one:

“No action shall be brought after three years after the time written proof of loss is required to be furnished.”

At first glance, this appears straightforward. Claimants must sue within three years of their claim. But the key phrase is “after the time written proof of loss is required.” The answer to that calculation determines when the clock actually starts ticking. The answer starts by examining the proof of loss provision the policy. Most LTD policies contain language similar to this:

“Written proof of loss must be furnished to the insurer within 90 days after termination of the period for which the insurer is liable.”

In Heimeshoff v. Hartford Life & Acc. Ins. Co., 571 U.S. 99, 107-108 (2013), the Supreme Court explained that “[t]he principle that contractual limitations provisions ordinarily should be enforced as written is especially appropriate when enforcing an ERISA plan” because the written documents of the plan are “the linchpin” of the system. Under Heimeshoff, the Court “must give effect to the Plan’s limitations provision unless [the Court] determine[s] either that the period is unreasonably short, or that a ‘controlling statute’ prevents the limitations provision from taking effect.” Id. at 109.

In California, insurance contracts like these LTD policies, are required to include the following language, defining when written proof of loss is required:

Written proof of loss must be furnished to the insurer at its said office in case of claim for loss for which this policy provides any periodic payment continent upon continuing loss within 90 days after the termination of the period for which the insurer is liable and in case of claim for any other loss within 90 days after the date of such loss. Failure to furnish such proof within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required.

Cal. Ins. Code § 10350.7 (emphasis added). Even assuming the LTD policy at issue contains a different proof of loss provision, the language of Section 10350.7 must be read into it. The question, therefore, is how to interpret the phrase “the period for which the insurer is liable.”

Although the Ninth Circuit has not yet squarely addressed this question, courts in California and across the country have developed a consistent, claimant-friendly interpretation. In Gray v. United of Omaha Life Insurance Co. 251 F. Supp.3d 1317 (C.D. Cal. 2017). the court held that “the period for which the insurer is liable” means the entire period the claimant could receive benefits, and not merely the elimination period or a few months’ worth of coverage. Under this reasoning, the three-year limitations period doesn’t begin to run until that full benefit period concludes, which could extend many years into the future (for example, until the claimant reaches age 67).

In Gray, the plaintiff, unaware of his LTD coverage, filed his claim several years after becoming disabled. The insurer argued his claim was time-barred. The court disagreed, finding the policy language (which was less favorable than required by state law, and thus Section 1350.7 was read into the policy) meant that that proof of loss could be filed any time before the end of the disability period. The claim was deemed timely.

In Entz v. Standard Insurance Co. 2020 WL 5496072 (C.D. Cal. Sept. 11, 2020), a schoolteacher disabled by chronic illness filed suit four years after her claim was denied. The court again found her lawsuit timely, holding that California’s Insurance Code delayed the start of the three-year limitations clock until after the insurer’s entire liability period ended—not when the disability began.

In a more recent case, Reaper v. ACE American Insurance Co., 2022 WL 118412 (N.D. Cal. Jan. 12, 2022), the court applied the similar analysis from Gray and Entz, with a different, yet arguably just result. The court found the claim untimely where a volunteer waited nearly nine years to file. Even applying the liberal Gray interpretation, the claim was still too late because the maximum benefit period had long expired (liability was capped under the policy at $250,000 or 4.17 years of benefits). This shows that while the law allows flexibility, it’s not limitless.

What This Means for Claimants

For individuals whose disability claims were denied or dismissed as “too late,” these cases provide hope. Courts increasingly recognize that:

• Insurers cannot start the clock prematurely.
  The limitations period typically begins after the full benefit period ends—not when the disability starts.
• California law overrides less favorable policy terms.
  Policies that attempt to shorten the timeframe for filing are subject to California Insurance Code § 10350.7, which ensures fairness for policyholders.
• Each case depends on the policy language and timeline.
  Courts examine when proof of loss was truly due, whether the claimant had notice of coverage, and if delays were reasonable.

At Roberts Disability Law, we regularly see insurers use contractual limitation clauses to avoid paying valid claims. But as this growing body of case law confirms, a “late” claim isn’t always too late. If your disability claim was denied as untimely, contact us. We’ll review your policy, timeline, and the relevant case law to determine whether you still have a viable claim.