I recently blogged about a case in which a plan had established a shorter period of time (one year deadline) for filing a lawsuit, rather than relying on the state statute of limitation (six years) which would otherwise have applied. As I said in that blog, although courts have generally upheld reasonable plan deadlines, those deadlines will not be upheld unless the plans remind the participants of the deadline in claim denial letters.

In a recent federal district court decision, a court prohibited a fully insured plan from establishing a deadline shorter than the state imposed deadline. The plan was a long term disability plan that was insured under Wisconsin law. The plan attempted to impose a shorter deadline for bringing claims than the three year period allowed under Wisconsin insurance law. The court held that because Wisconsin law precluded an insurance company from using a shorter limitations period, the three year time limit applied.

Employers may know that ERISA, the federal statute that governs many employee benefit plans, generally preempts state laws that apply to ERISA-governed benefit plans. However, there is an exception to preemption for state insurance laws. Therefore, employers whose plans are fully insured might not be permitted to shorten state established statutes of limitation.