Understanding “Gainful Occupation” in Disability Insurance Policies

The overwhelming majority of employer provided group long term disability insurance policies governed by ERISA contain two definitions of disability depending on what stage your claim is in. As discussed in depth throughout our website the two definitions of disability are what are commonly known as the “Own Occupation” and “Any Occupation” definition of disability. As they imply, the former is an evaluation as to one’s ability to perform their pre-disability occupation and the latter their ability to perform some alternate occupation. Although the period that each definition of disability lasts (12, 24, 36 or 60 months, etc.) and the exact term used (Regular Occupation, Gainful Occupation, etc.) and definition of that term may vary depending on the insurance company they essentially embody the same general idea of “occupation.”

A large number of long term disability claims are denied during the transition between the Own Occupation and Any Occupation stage for the simple reason that the insurance company no longer has to consider how your disabling medical condition prevents you from performing your pre-disability occupation, but rather how your condition prevents you from performing an alternate occupation that is based upon your training, education and experience. These alternate occupations are typically less demanding than one’s original occupation. What can vary dramatically across disability insurance policies is the presence in an earnings requirement/qualified in an “any occupation” definition of disability. Policies that do contain an earnings requirement/qualifier in the definition of “any occupation” contain language along the lines of “an occupation that would pay you 60% of your indexed pre-disability earnings.” However, based on your particular policy language these earning requirements and what they actually mean can vary greatly and improve or hamper your chances of successfully being approved into the “any occupation” period.

So what constitutes the ability to perform an identified occupation under an “any occupation” standard of review?

A recent Federal Court decision from the Northern District of Illinois addressed this issue in the case of Contreras v. United of Omaha Life Insurance Company. In the Contreras case the Court was tasked with determining whether United of Omaha’s denial of benefits to Ms. Contreras was appropriate in light of the Policy’s definition of “gainful occupation.” The Policy defined gainful occupation to mean,

“[A]n occupation, for which You are reasonably fitted by training, education or experience, [and] is or can be expected to provide You with Current Earnings at least equal to 85% of Basic Monthly Earnings within 12 months of Your return to work.”

First and foremost, this is a very specifically worded definition of “gainful occupation” that is not often seen in disability insurance policies. However, the specificity of the language would work to Contreras’s benefit.

During the course of United of Omaha’s review of Contreras’s eligibility for continued disability benefits under the “gainful occupation” definition of disability, United of Omaha conducted a Transferable Skills Analysis (TSA). Based on the results of the TSA, United of Omaha’s vocational consultant determined Contreras would be capable of working as an “Order Clerk.” To refute this assertion Contreras had her own vocational assessment performed that concluded she lacked the requisite training and experience with computer use required of an Order Clerk as set forth by the Dictionary of Occupational Titles. Contreras argued that her limitations related to computer use would preclude employment as an Order Clerk all together or necessitate her having to start in an entry level position that would not meet the required 85% wage requirement in the Policy, and that in light of same she would be disabled under the Policy’s “gainful occupation” definition of disability.

The Court agreed. The Court determined that the administrative record failed to support a finding from United of Omaha’s vocational review that Contreras would be able to meet the wage requirement in the Policy within 12 months of her potential return to work. Instead the Court agreed with the vocational assessment provided by Contreras that established she would not be able to meet the 85% wage requirements within her first year of working as an Order Clerk, and therefore, she was disabled under the “gainful occupation” standard contained in the United of Omaha policy.

Contreras’s case hinged on the “12 month” requirement. The Court noted in its opinion that if the 12 month time requirement had not been in the policy it would have reached the conclusion set forth in established case precedent that absent a time limit in the policy on when the target wage needed to be earned, a TSA identifying a qualifying job would have been sufficient. So if the United of Omaha policy had defined Gainful Occupation to mean, “[A]n occupation, for which You are reasonably fitted by training, education or experience, [and] is or can be expected to provide You with Current Earnings at least equal to 85% of Basic Monthly Earnings,” the Court would have upheld United of Omaha’s denial of benefits.

The Contreras case has very specific facts, but it does shine light on how Courts evaluate “any occupation” standards of disability in light of earnings requirements and how to combat an insurance company’s Transferrable Skills Analysis. In appealing a denial of benefits under an “any occupation” definition of disability it may be advantageous to conduct your own vocational review to establish additional evidence of disability.