In Michael G. Miller v. Reliance Standard Insurance Company (Reliance), Plaintiff worked for Lake Charles Pilots, Inc. (LCP) as a riverboat pilot when he quit working due to a disability. At the time his employer provided short-term disability (STD) and long-term disability (LTD) coverage through Prudential Life Insurance Company.
Prudential paid Plaintiff short-term disability benefits up until it terminated its policy with LCP on August 31, 2015. On September 1, 2015, Reliance began providing disability coverage to LCP.
Plaintiff’s doctor provided him a release to return to work with no restrictions effective October 23, 2015. On that very day, Plaintiff was on call, but he was not called in to work. He planned on returning to full-time work on November 4, 2015.
On October 23, 2015, Plaintiff fell down some stairs causing him to injure his left hand and exacerbate the pain in his knee. He did not return to work as planned and instead applied for STD benefits which he received. He also applied for LTD benefits and on June 7, 2016, that claim was denied.
Reliance reasoned that, according to the terms of the disability insurance policy, in order to be eligible for LTD benefits Plaintiff would have had to return to “Active Work” between September 1, 2015, and October 23, 2015. He did not do so. His status on October 23 as “on call” did not meet the definition of “Active Work.”
On July 26, 2016, Plaintiff returned to work and once again became insured on August 1, 2016. He stopped working on August 10, 2016, when he almost fell off a Jacob’s ladder while he was attempting to climb onto a ship. Again, Plaintiff filed for STD benefits and again, Reliance approved the request.
When the STD benefits expired, Plaintiff applied for LTD benefits. That claim was denied as barred by the policy’s pre-existing conditions limitations. When Plaintiff exhausted his administrative remedies, he filed this ERISA lawsuit in the U.S. District Court for the Eastern District of Louisiana. The Court analyzed the terms of the policy and upheld Reliance’s denial of LTD benefits on the grounds that he was not “actively at work” on October 23, 2015, and his claim for LTD benefits was barred due to his pre-existing medical conditions.
Plaintiff was Not Actively at Work on October 23, 2015
In order to be covered by the Reliance disability policy and eligible for LTD benefits when he was injured on October 23, 2015, he must have been “Actively at Work.” The policy defined that phrase as “actually performing on a Full-time basis the material duties pertaining to his/her job in the place where and the manner in which the job is normally performed. This includes approved time off such as vacation, jury duty and funeral leave, but does not include time off as a result of an Injury or Sickness.”
The policy defined full-time as meaning “working for you for a minimum of 30 hours during a person’s regular work week.”
Plaintiff stopped working on June 30, 2015, due to an injury. He was released to return to work on October 23, 2015, but did not return to work since he was injured on that date. Being “on call” did not meet the requirement of working the minimum 30-hour regular work week.
He finally returned to active work on July 27, 2016, and according to the terms of the policy, his “coverage became effective on August 1, 2016, the first day of the month following the day he became eligible.”
Plaintiff Was Not Covered Under the Transfer of Insurance Coverage Provision
Plaintiff argued that the time he spent working for LCP should give him credit toward the pre-existing period under the “Transfer of Insurance Coverage Provision.” In order for this provision to apply, the employee must:
- Have been insured with the prior carrier on the date of the transfer; and
- Premiums must be paid; and
- Total disability must begin on or after the Policy’s effective date.
The Court found that Plaintiff had not paid premiums and was not “Actively at Work” until July 2016. Therefore, he was not an “Eligible Person on the effective date of the policy.”
Plaintiff’s Pre-Existing Conditions Made Him Ineligible for LTD Benefits
Reliance argued that Plaintiff was not eligible for LTD benefits for his claim of being disabled on August 11, 2016, due to his pre-existing condition. He could only be eligible if he was treatment free from May 1, 2016, through August 1, 2016, the effective date of his policy.
Medical records showed Plaintiff had been treated for his knee and wrist injuries several times in the previous 12 months. He contended that he had not been treated for back and neck pain during that time, but the administrative record showed that his claim had not included a request for benefits due to back and neck pain.
After this thorough analysis, the Court held that “Plaintiff is not eligible under the policy based on the pre-existing conditions limitation.”
This case was not handled by our office, but we believe it can be instructive to those who are struggling with coverage issues and possible pre-existing condition exclusions. For questions about this case or any question about your STD or LTD benefits, contact one of our disability attorneys at Dell & Schaefer for a free consultation.
Read more about Reliance Standard disability insurance claims and lawsuits.