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Home > Blog > Fifth Circuit Finds Standard Insurance Company Did Not Waive Right to Decide “Any Occupation” Disability Benefit Claim

Fifth Circuit Finds Standard Insurance Company Did Not Waive Right to Decide “Any Occupation” Disability Benefit Claim

Martinez v. Standard Ins. Co., No. 20-10475, 2021 WL 4592430 (5th Cir. Oct. 5, 2021) involves a claim for long-term disability benefits under an ERISA-governed benefit plan. Defendant Standard Insurance Company appealed the district court’s determination that Standard waived its right to decide in the first instance whether the plaintiff, Jose Chavez, was disabled under a long-term disability policy’s “any occupation” definition of disability. The policy at issue has two definitions of disability. The first is disability from one’s “own occupation” which is the standard that applies during the first 24 months of disability. The second is disability from “any occupation,” which applies after the first 24 months of disability. Here, Standard initially determined that Chavez was disabled from his own occupation, but before 24 months had passed, Standard determined that a 12-month limitation for “Other Limited Conditions” (“OLC Limitation”) applied to his claim and stopped paying his benefits. Because Standard denied his claim before the end of 24 months, it did not decide Chavez’s eligibility for “any occupation” benefits.

The district court determined that the OLC Limitation did not apply to Chavez’s claim. It further determined that Chavez was entitled to any occupation disability benefits through the month of final judgment, holding that Standard waived its right to request evidence of any occupation disability since it did not initiate any administrative action by the time of judgment. However, the court found that Standard would not be precluded from requesting ongoing evidence of disability. On appeal, Standard argued that the district court, after determining the OLC Limitation did not apply, should have remanded the disability claim to Standard so that it could decide whether Chavez was entitled to any occupation disability benefits.

The Fifth Circuit agreed with Standard. It found persuasive a Seventh Circuit decision in Pakovich v. Broadspire Servs., Inc., 535 F.3d 601 (7th Cir. 2008) where the court rejected a rule that would require ERISA administrators who deny benefits under an own occupation standard to spend their resources evaluating participants under the any occupation standard solely in anticipation of a possible reversal of the own occupation issue on appeal. The court in Pakovich held that when an administrator has not issued a decision on a claim that is before the court, the matter must be sent back to the administrator to address the issue in the first instance. The court found that Standard’s OLC Limitation determination made the analysis of any occupation benefits unnecessary. Because the district court found that the OLC Limitation was erroneous, and Standard did not appeal that decision, the Fifth Circuit remanded the claim to Standard to decide Chavez’s eligibility for any occupation benefits.

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