Fourth Circuit Finds Life Insurance Policy Benefits Payable Where Insured Was Not Totally Disabled for 180 Days Before Policy’s Effective Date

In Morris v. Lincoln National Life Ins. Co., No. 19-1546, __F.App’x__, 2021 WL 1199005 (4th Cir. Mar. 30, 2021), Plaintiff-Appellant Stephanie Morris was the beneficiary of a life insurance policy offered to her husband, Stephen Morris, through his employment. Mr. Morris was diagnosed with acute myeloid leukemia in October 2014 and did not return to work until his death in September 2015.  Mr. Morris was covered by a group policy insured by Reliance Standard Life Insurance Company through December 31, 2014. The employer switched carriers to Lincoln National Life Insurance Company effective January 1, 2015. Mr. Morris purchased coverage under a Lincoln basic life insurance policy and supplemental policy. The Lincoln policies had an active at work requirement which Mr. Morris did not meet but the policies were retroactively amended to include a Prior Insurance Credit (PIC) provision that would cover Mr. Morris if he were not totally disabled on January 1, 2015.

The Fourth Circuit affirmed the district court’s decision to grant summary judgment to Lincoln with respect to the basic policy on the grounds that Mr. Morris was totally disabled as of January 1, 2015. But with respect to the supplemental life insurance policy, the court reversed the district court’s decision in favor of Lincoln. The supplemental life insurance policy has a different definition of disability than the basic policy. The supplemental policy requires that the employee must be unable to perform the material and substantial duties of any employment or occupation for which he is or becomes qualified by reason of education, training, or experience and have this status for a least 180 days prior to the January 1, 2015 policy effective date. The court held that Morris was entitled to summary judgment on this claim because Lincoln abused its discretion in denying benefits. Mr. Morris stopped working in October 2014, thus he was not unable to work for a period of at least 180 days before the policy took effect (the date of disability would have to have been as of July 5, 2014). The court found the policy’s language unambiguous, and Lincoln’s contrary interpretation was not entitled to deference. The court remanded the case to the district court for entry of summary judgment in favor of Morris on the supplemental policy claim.

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