ERISA – Long Term Disability Benefits

Here is a case worthy of all attorneys handling Employee Retirement Income Security Act (ERISA) cases should read and take note about.  The opinion is from the Northern District of Texas, Dallas Division.  It is styled, James W. Newsom v. Reliance Standard Life Ins. Co.

The most noteworthy aspect of this case is that it is a win for the employee.  A win for an employee in an ERISA case is extremely rare.

The Facts of the case are somewhat complicated and convoluted.  The focus here will be the Court’s interpretation of the policy language.

Newsom, his employer being a company called Lereta, experienced continuing medical problems from an auto wreck many years previous to his claim for short term disability (STD) benefits and then, long term disability (LTD) benefits.  His hours of working would vary greatly.  Based on his work hours, the plan administrator had denied Newsom’s claim for LTD benefits.

The LTD policy makes “each active Full-time employee” of Lereta eligible for LTD benefits.  “Full-time” means working for Lereta for a minimum of 30 hours during a person’s regular work week.”  The Court must interpret the contract language in an ordinary and popular sense as would a person of average intelligence and experience, such that the language is given its generally accepted meaning if there is one.  But if the policy language is ambiguous, it is construed strictly against the insurer and liberally in favor of the insured.

Reliance seizes on the work “working,” arguing that it means the hours the person actually worked.  Newsom, on the other hand, focuses on the phrase “regular work week,” arguing that the modifier “regular” indicates something other than actual hours worked.  On balance, the Court finds Newsom’s argument more persuasive.

The most pertinent definition of “regular” from the Oxford English Dictionary is: “Having the usual, typical, or expected attributes, qualities, qualities, parts, etc.; normal, ordinary, standard.  The most pertinent definition of “regular” from the Merriam-Webster Disctionary is: “normal, standard.”  The Court thus holds that “regular work week” as used in the LTD Policy means “normal, ordinary, standard work week,” or the scheduled work week.

This construction has several advantages over Reliance’s proposed construction.  First, it removes minor variations in actual hours worked from the eligibility determination and makes eligibility more predictable and ascertainable.  Reliance’s proposed construction, in contrast, results in “Newsom falling in and out of eligibility frequently.”  Also, Reliance apparently contends eligibility is determined on a week-by-week basis.  Second, Newsom’s construction leaves the employer in control over which employees are full time and which are part time.  It seems appropriate for the employer to determine which of its employees are full time and which are part time, rather than the vagaries of individual work weeks.  Here, Lereta scheduled Newsom for 32 hours per week so that he would retain his STD and LTD benefits.  The Court is reluctant to a construction that would deny an employee a benefit the employer intended the employee to retain.  Finally, if Reliance had wanted to base eligibility on the hours actually worked the week preceding the partial or total disability, it certainly could have done so more clearly, for example: “Full-time” means actually working for Lereta a minimum of 30 hours the work week before the date of disability.

As a result, the Court holds that the plain meaning of “regular work week” is equivalent under these facts to “scheduled work week.”  In the alternative, Newsom’s construction is, at minimum, a plausible construction.  In that case, this Court must “apply the rule of contra proferentum and construe the terms strictly in favor of the insured.”  Either way, the Court ends up construing “regular work week” as equivalent to “scheduled work week.”


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