The Friday Five: Five Current ERISA Litigation Highlights &#

The Friday Five: Five Current ERISA Litigation Highlights – March 2021 | Saul Ewing Arnstein & Lehr LLP


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This month’s Friday Five discusses cases that address the meaning of “active, full-time employee,” whether remand is required where an improper standard of review was applied, the standard for capacity in reference to a dispute between beneficiaries to a life insurance policy, a successful claim that a “change in condition” warranted termination of benefits and when extra-record discovery may be appropriate to interpret a claimant’s “own occupation.”
1. What does “active, full-time employee” mean? The Tenth Circuit Court of Appeals upheld a district court’s decision, which found that Reliance improperly denied plaintiff’s claim for long-term disability benefits and ordered an award of benefits, attorney’s fees, and costs (instead of remanding). Notably, the merits below turned not on whether the plaintiff was disabled, but on whether he met the plan’s “active, Full-time Employee” requirement. This phrase was at issue because of a time gap between plaintiff’s notice of termination (due to a reduction in force) and his actual termination. During the gap, the plaintiff was diagnosed with disabling prostate cancer and he filed a claim for LTD benefits. Reliance denied the claim on the basis that the plaintiff’s participation in the disability plan had terminated and he was no longer an “active, Full-time Employee.” The district court disagreed and the Tenth Circuit upheld that decision. At both levels, it turned on the word, “active.” That is, although the policy defined “Full-time” to mean “working for [the employer] for a minimum of [thirty] hours during a person’s regular work week,” it did not independently define the word “active.” Indeed, the court rejected the notion that the policy phrases “Actively at Work’ and ‘Active Work” could be used to define “active.” As a result, the court deemed the term “active” ambiguous. It then construed the term in plaintiff’s favor, and concluded that it means a person who is merely employed—which the plaintiff was in this case because his termination was not yet effective. Accordingly, because the plaintiff was deemed active under this definition and because his regular work week prior to termination had involved working at least thirty hours per week, he was entitled to LTD benefits. Additionally, because Reliance did not actually challenge whether the plaintiff was disabled—and, in fact, expressly stated that it did not dispute he was totally disabled—both the district court and the Tenth Circuit found remand was unnecessary. Carlile v. Reliance Standard Life Ins. Co., Nos. 19-4123 & 20-4005, 2021 WL 671582 (10th Cir. Feb. 22, 2021).

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