District Court Adopts Interpretation of ERISA Plan Requiring First Unum to Pay Higher Amount of Long-Term Disability Benefits

In Glickman v. First Unum Life Insurance Company, No. 19-CV-5908 (VSB), 2023 WL 3868519 (S.D.N.Y. June 7, 2023), New York Southern District Judge Vernon S. Broderick granted judgment to Plaintiff, finding under a de novo standard of review that Plaintiff’s reading of the ERISA Plan language was correct. The Plan requires Plaintiff to have experienced a 20% or more loss in indexed monthly income during the 90-day elimination period before he became eligible for disability benefits, which in turn affects how much money Plaintiff was due under the policy.

Plaintiff is a physician who experienced limitations in his ability to do his work after cancer surgery. He submitted a claim for disability benefits, which First Unum approved. The dispute, however, arises from the manner in which Plaintiff’s monthly benefit is calculated. The parties agreed that the only question in this case is whether, as a matter of law, the Plan requires Plaintiff to have experienced “a 20% or more loss in … indexed monthly income” during the 90-day elimination period before he became eligible for disability benefits. If the answer is yes, then Plaintiff did not become eligible for disability payments until 2017, which would lead to benefit payments tied to his 2016 income. If the answer is no, then Plaintiff became eligible for disability payments in 2016, which would lead to benefit payments tied to his lower 2015 income.

The Plan defines “disability” as necessitating that a covered physician must be (1) limited from performing the material and substantial duties of his regular occupation due to his sickness or injury; and (2) he must have a 20% or more loss in indexed monthly earnings due to the same sickness or injury. The Court found that reading the Plan to this point, it appears that the elimination period requires one to “continuously” satisfy both requirements for the elimination period’s 90-day duration.

However, First Unum contends that a qualifying clause which states that a covered physician is not required to have a 20% or more loss in indexed monthly earnings due to the same injury or sickness to be considered disabled during the elimination period meant that the elimination period is calculated from the time the claimant is first limited from performing material and substantial duties, regardless of whether the claimant has yet suffered a 20% loss of earnings.

The Court found that Plaintiff’s reading of the Plan language was proper, stating that the Plan’s elimination period requires a loss of earnings, and noted that this reading does the most to “give effect to all of” the Plan’s “provisions” and render them consistent with each other, especially when taking into account how the Plan is structured.

The Court found that First Unum’s reading nullified the loss of income requirement’s relevance to the elimination period, which did not make sense given that the Plan also states that a covered physician “must be continuously disabled” to satisfy the elimination period. Whereas Frist Unum argued that the qualifying clause should be read as excising the loss of income requirement from the disability definition during the elimination period, Plaintiff’s reading requires no such deletions.

According to Plaintiff’s explanation, a covered physician is disabled where a single “sickness or injury” is the cause of both the first and second prongs of the disability definition. Thus, the qualifying clause merely provides an exception during the elimination period from the more restrictive requirement in the definition of disability—that the 20% loss must be “due to the same sickness or injury.”

The Court concluded that Plaintiff’s reading does not require that it ignore or write certain words out of the Plan and therefore was preferable. The Court further noted that even if one were to find both parties’ readings reasonable, the Plan as drafted is ambiguous, and that ambiguity should be construed against the party that drafted the language.

Plaintiff in this case was represented by Riemer Hess LLC in New York. As this case demonstrates, the amount of benefits awarded to a claimant is dependent upon a proper interpretation of the Plan language. If First Unum has improperly calculated your disability benefits or denied your insurance claim, contact us for assistance.