Here is a case wherein one of the issues was whether or not an employee was eligible for Long Term Disability (LTD) based on the definition in the policy of “full time” employee.
This is a 2022, case is from the 5th Circuit Court of Appeals. It is an appeal from the Northern District of Texas. The opinion in the case is styled, James W. Newsom v. Reliance Standard Life Insurance Company.
Newsome had a policy that, among other things, provided short term disability (STD) benefits and LTD benefits. The plan is governed by the Employee Retirement Income Security Act of 1974 (ERISA).
Lawyers who handle long-term disability (LTD) claims that are governed by the Employee Retirement Income Security Act of 1974 (ERISA), will want to read this opinion. The opinion is titled, Enrique Talamantes v. Metropolitan Life Insurance Company. It is a 2021, opinion from the United States Fifth Circuit. It is a ruling that is favorable to the insured, which is unusual in cases governed by ERISA.
Plaintiff, was an engineer for him employer, BD. BD provided its employees LTD coverage through plans governed by ERISA. During the relevant time period, BD used two insurers, Standard Insurance Co. (“Standard”) for the 2016 calendar year and MetLife Insurance Co. (“MetLife”) for the 2017 calendar year, to fund LTD payments under the Plan.
On November 9, 2016, Plaintiff became disabled due to trigeminal neuralgia and underwent microvascular decompression surgery. In light of this disability, Plaintiff was approved for and paid short-term disability(“STD”) benefits for 34 days under the Plan from November 18, 2016 through December 22, 2016. The Plan’s STD benefits were paid by BD and administered by Sedgwick Claims Management Services (“Sedgwick”) and did not involve Standard or MetLife. On December 23, 2016, Plaintiff returned to full-time active work. Standard’s policy terminated on December 31, 2016, and MetLife’s policy became effective on January 1, 2017. On January 12, 2017, Plaintiff stopped working and again became disabled because of a relapse in his trigeminal neuralgia symptoms.
Long Term Disability (LTD) claims are not uncommon in the insurance world. Some of these claims are easy to see and understand, such as an amputation. Other LTD claims are less easy to see and understand, such as chronic conditions and conditions that do not show up easily on tests and can be very subjective. It is the other type of LTD claims that end up being denied by insurance companies.
While many denied claims can be contested by hiring an insurance lawyer, many are complicated legal battles. What makes too many of these LTD claims even harder to contest if denied, is when the plan is through a person’s employer and governed by the Employee Retirement Income Security Act (ERISA).
A 2021 opinion from the Southern District of Texas, Houston Division, deals with an LTD claim that is governed by ERISA. The opinion is styled, Mark Calkin v. United States Life Insurance Company In The City Of New York.
What is FEGLI? FEGLI stands for Federal Employee’s Group Life Insurance and is a life insurance program for Federal and Postal employees and annuitants. The law related to FEGLI is authorized by law and can be found in Chapter 87 of Title 5, United States Code. The Office of Personnel Management (OPM) administers the Program and sets the premiums. The FEGLI regulations are in Title 5 of the Code of Federal Regulations, Part 870.
FEGLI is group term life insurance. It does not build up cash value. You cannot take a loan out against your FEGLI insurance.
OPM has a contract with the Metropolitan Life Insurance Company (MetLife) to provide this life insurance. MetLife has an administrative office called the Office of Federal Employees’ Group Life Insurance (OFEGLI). OFEGLI is the contractor that adjudicates claims under the FEGLI Program.
Here is a somewhat lengthy opinion in a case involving the Employee Retirement Income Security Act (ERISA) and a disability claim. The opinion is from the Western District of Texas, Austin Division, and is styled, Jason Thomas Young v. Reliance Standard Life Insurance Company and Matrix Absence Management, Inc.
Plaintiff, Young, was insured by way of an ERISA disability plan through his employer when he was injured in an automobile accident. He applied for and received disability benefits. At a later date is recovered a substantial settlement from the insurance company of the person with whom he had the accident. The disability plan administrator then attempted to offset the monies Young received from payments Young was receiving for disability pay.
Young filed suit and the plan administrator rescinded their earlier decision to offset payments. After agreeing to make regular payments for disability without taking into account any offsets, the plan administrator filed a Rule 12(b)(1) and Rule 12(b)(6) motions to dismiss Young’s claim based on the assertion that the matter was now moot and that Young has no standing to continue the lawsuit.
What is a First Party claim versus a Third Party claim?
A “first party” policy typically involves insurance that provides policy benefits directly to the insured or beneficiary in the event of a loss. The Texas Insurance Code, Section 541.051(2) defines “first party claim” as a claim “by an insured or policyholder under an insurance policy or contract or by a beneficiary named in the policy or contract that must be paid by insurer directly to the insured or beneficiary. These types of policies generally include health insurance, life insurance, disability insurance, auto policy insurance, homeowner’s property insurance, and commercial property insurance.
In contrast, “third party coverage” is generally considered to include all forms of liability insurance. This type of insurance is designed to insure against loss to third parties caused by the insured or another covered person for whom the covered person may be legally responsible.
Here is yet another ERISA claim being denied by the Federal Courts. This case is from the United States Fifth Circuit Court of Appeals and is styled, Deo G. Shanker v. United Omaha Life Insurance Company.
The District Court granted United’s summary judgment motion and this appeal followed.
Shanker was President of a company called Intracare and United was the insurer under an ERISA plan which provided for long-term-disability (LTD) benefits. To qualify for LTD benefits, Shanker had to become “Disabled due to an Injury or Sickness, while insured under the Policy.” Disabled is defined to mean: “Because of Injury or Sickness, a significant change in Your mental or physical functional capacity has occurred in which you are prevented from performing at least one of the Material Duties of Your Regular Occupation on a part-time or full-time basis ….” Material Duties is defined as “the essential tasks, functions, and operations relating to an occupation that cannot reasonably omitted or modified” and includes “the ability to work for an employer on a full-time bases.” Regular Occupation is defined as “the occupation You are routinely performing when Your Disability begins.” The definition in the policy also notes:
The law office of Mark S. Humphreys, P.C. is pleased to announce a settlement in a case involving a disability policy.
In this case the insured lady had purchased a disability policy through an advertisement she had received in the mail. The lady paid on the policy for a number of years when one day she was involved in a one vehicle automobile accident. This lady was severely injured and was in a hospital for about a week. Her injuries among other things included paralysis to one side of her body. This paralysis to one side of the body is called hemiplegia. Another term used to describe this condition is hemiparesis. However, from a medical perspective, these two terms have distinct meanings.
Hemiplegia is total paralysis to one side of the body, while hemiparesis is a partial paralysis to one side of the body.
Insurance attorney who handle denied claims and in particular insurance attorneys who are willing to take on an insurance claim governed by ERISA claim which has been denied, needs to read this opinion from the Eastern District of Texas, Sherman Division. The case is styled, Gina Pike v. Hartford Life And Accident Insurance Company.
Pike had received long term disability (LTD) benefits from Hartford from April 24, 2008 through December 14, 2016, the period of time when Hartford determined Pike met the definition of disability in the LTD policy. Later, after determining Pike was unable to prove she continued to be disabled under the policy, the benefits ceased on December 15, 2016.
This case resulted in a 51 page opinion which is not going to be discussed at any length here. What is relevant is that it is rare for beneficiaries of these employer sponsored benefit plans and as a result needs to be carefully read to determine what the Court saw that separated this case from other ERISA cases.