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Can I submit a long-term disability claim if my employment has been terminated?

Attorney Cesar GavidiaAuthor: Attorney Cesar Gavidia

It is not uncommon for employees to struggle and suffer through sickness or injury and work, even if working is counter-intuitive to their own health and effective productivity at their occupation. Unfortunately, these employees often find themselves as targets of work-force reduction or layoff, because despite their best efforts they are unable to keep up with their employer’s expectations and requirements. Regardless of the legality of this type of employer termination strategy, it leaves the sick employee in a terrifying predicament. It is often at this point that the employee decides to apply for long-term disability benefits under their employer sponsored long-term disability plan. However, depending on the circumstances, they can expect significant challenges and even the possibility of the disability insurer arguing that the employee lacked coverage. In most cases, the employee will be told by the disability insurer that their coverage ended on their last date of work, and that the employee lacked coverage for any subsequent claim of disability. However, the employee could prevail in their claim even if their employment was terminated prior to the submission of their disability claim.

Such was the case for Eduardo Nieves, who had worked as a satellite communications technician prior to his disability. After undergoing spinal surgery Mr. Nieves returned to work, however, continued suffering from spine and shoulder pain. Despite his unwavering work ethic and commitment, Mr. Nieves found himself among other fellow co-workers who were terminated following a decision by the employer to reduce its work force.

Mr. Nieves submitted a request to his employer to be allowed to apply for short-term and long-term disability insurance benefits through the employer sponsored long-term disability plan with Prudential Life Insurance Company of America (Prudential), however, the employer refused to provide Mr. Nieves with the necessary application forms. Notwithstanding, Mr. Nieves contacted Prudential directly and applied for benefits. Not long after applying Prudential informed Mr. Nieves that his claim was being denied on account of lacking coverage on the date following his last day of work. In other words, Prudential deemed him covered only through his last date worked, and since, according to Prudential, he had performed all of the duties of his occupation through his last date worked, his date of disability would be the following day, the first day he did not perform any of the duties of his occupation.

Mr. Nieves appealed Prudential’s denial, however, his appeals were denied and he was forced to sue Prudential in U.S. District Court in Arizona.

In an interesting decision, the court found that Prudential had arbitrarily selected the date following Mr. Nieves last day worked, March 11, 2015, as his date of disability, since no where in the record had Mr. Nieves claimed March 11th to be his date of disability. Prudential attempted to argue that it was impossible for Mr. Nieves to be disabled from his last date worked since he had effectively working performing his occupational duties through that day and therefore would not meet the definition of disability.

The Court, citing to the 7th Circuit Court in Hawkins v. First Union Corporation Long-Term Disability Plan, 326 F.3d 914, 918 (7th Cir. 2003), reasoned that there is no “logical incompatibility between working full time and being disabled from working full time” as “a desperate person might force himself to work despite an illness that everyone agreed was totally disabling.”

In the case of Mr. Nieves, because he had attempted to submit his disability claim prior to his employment being termination and he had the necessary doctor support, he was successful in establishing that he was a covered employee under the disability plan. This is distinguishable from a case where someone attempts to establish a disability claim with a date of disability following the termination of employment. In such a case the claimant would likely not succeed in establishing their claim for disability.

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