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Reliance Standard Disability Insurance Denial Upheld by California Court

Sometimes, a disability claim is doomed from the start because of specific policy language. As California disability insurance lawyers we would like to think that every disability denial is wrongful, but sometime the insurance company is correct in their decision. Our California disability attorneys are not going to accept your case if we don’t think we can win your case. Disability insurance policies contain very specific language documenting all of the criteria that must be satisfied in order to be eligible for benefits. Let’s take a look at a recent case in which the claimant failed to prove he was disabled at the time he was terminated from his job.

Did Reliance Standard Act Unreasonably or was this Claimant Wrong?

In Fenberg v. Cowden Automotive Long Term Disability Plan, a federal court agreed with Reliance Standard Life Insurance Company’s (“Reliance”) decision to deny long-term disability benefits. The plaintiff was the general manager of an automotive company from 1995 until February 2002. As an employee, he was covered under the company’s long-term disability plan. In February 2002, the company fired the plaintiff for not “following company policies.” After being fired, he applied for long-term disability benefits based on clinical depression. Reliance Standard denied his claim because he became disabled after his firing when he was no longer eligible for benefits.

The plaintiff sued, claiming that he was still entitled to the disability benefits. He offered medical evidence to show that he suffered from depression at the time he lost his job, including:

  • a phone conversation after the termination between the plaintiff and a doctor, who wrote in his notes that the plaintiff had been sleeping poorly, couldn’t think or eat, and was suicidal;
  • a note from a doctor visit after the termination that the plaintiff was experiencing depression, fear, and having difficulty concentrating; and
  • a diagnosis that the plaintiff suffered from major recurrent depressive disorder and dementia months after the termination.

The plaintiff argued that this evidence showed he deserved benefits under the company’s plan because he was, in fact, suffering from depression. But none of his medical evidence pre-dated the time in which he was fired. As a result, the court found that Reliance Standard could deny the plaintiff’s claim because, under the policy, the insurance company was allowed to decide that the plaintiff’s eligibility for benefits ended before he became disabled. Most group disability policies require a disability claimant to be an eligible and working employee at the time they become disabled.

Fenberg v. Cowden Auto. Long Term Disability Plan, No. C03-3898 SI, 2008 WL 4559732 (N.D. Cal. Oct. 11, 2008).



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