The Tenth Circuit Court of Appeals recently decided Carlile v. Reliance Standard Life Ins. Co., No. 19-4123, __F.3d__, 2021 WL 671582 (10th Cir. Feb. 22, 2021). This case presents a dispute over the interpretation of eligibility requirements in a long-term disability (“LTD”) policy governed by the Employee Retirement Income Security Act of 1974 (“ERISA”).
Defendant-Appellant Reliance Standard Life Insurance Company (“Reliance”) insured the disability plan provided by Lighthouse Resources, Inc. (“LRI”) to its employees, including Plaintiff-Appellee David Carlile. LRI implemented a reduction in force and gave Carlile notice of his impending termination of employment. On March 31, 2016, LRI paid Carlile for the notice period from March 21, 2016 to June 20, 2016 in one lump-sum payment. However, Carlile continued to do work, including attending three conferences. LRI informed Reliance that Carlile did other work during the notice period but his time was not tracked because he was an exempt employee. On June 7, Carlile stopped working due to disability caused by prostate cancer. Reliance paid his short-term disability benefits but denied his claim for LTD benefits. The reason: Carlile was no longer eligible for LTD coverage as of March 31, 2016 because he was no longer working full-time for LRI.
The LTD policy terminates individual insurance the last day of the Policy month in which an Insured ceases to meet Eligibility Requirements. Eligible Classes is defined as: Each active, Full-time Employee, except any person employed on a temporary or seasonal basis. The policy also contains the following definitions:
“Actively at Work” and “Active Work” mean actually performing on a Full-time basis the material duties pertaining to his/her job in the place where and the manner in which the job is normally performed. This includes approved time off such as vacation, jury duty[,] and funeral leave, but does not include time off as a result of an Injury or Sickness.
“Full-time” means working for [LRI] for a minimum of [thirty] hours during a person’s regular work week.
Carlile unsuccessfully appealed the denial of benefits to Reliance Standard and then filed suit in the United States District Court for the District of Utah. District Judge Robert Shelby granted summary judgment for Carlile. The issue is whether Carlile was an “active, Full-time employee” when his disability arose. On de novo review, the district court found that the policy terms were ambiguous and construed the ambiguity against Reliance Standard. Carlile v. Reliance Standard Ins. Co., 385 F. Supp. 3d 1180 (D. Utah 2019). Judge Shelby found that Carlile met the condition of being an “active, Full-time employee” where Carlile performed his job responsibilities and LRI considered him a full-time employee during the month that his disability arose. The district court declined to remand the claim to Reliance to re-evaluate the claim based on rationale not raised during the appeal process. The district court also awarded Carlile attorneys’ fees and costs. Carlile v. Reliance Standard Life Ins. Co., No. 2:17-CV-01049, 2019 WL 8128544 (D. Utah Oct. 18, 2019).
Reliance appealed the district court’s orders on the merits of the LTD claim, on the district court’s refusal to remand the claim to Reliance to decide whether Carlile is disabled, and on the award of attorneys’ fees and costs.
The Tenth Circuit agreed with the district court that the term “active” is ambiguous. It is not a term defined in the LTD policy. The court found that its ambiguity “is not resolved by dictionary definitions, precedent, or context.” Applying contra proferentem, the court construed the term in Carlile’s favor to mean that an employee is currently employed. The court declined to adopt Reliance’s interpretation that active means an employee must have been working at least thirty hours per week. With respect to “Full-time,” the Tenth Circuit explained that an employee’s “regular work week is something established by employment terms and routine practice, not as something that must be re-established with each passing month.” See Weber v. GE Grp. Life Assur. Co., 541 F.3d 1002, 1012 (10th Cir. 2008). The LTD policy does not state that an employee must work thirty hours every week, or even at least one week per month. Because the Plan only requires that an employee be “active” and “Full-time,” Carlile meets these requirements because he was then currently employed (his termination was not yet effective) and there is no dispute that his regular work week at LRI involved working at least thirty hours per week.
With respect to the remand, the court found that the district court did not err by refusing to remand the claim to Reliance to determine whether Carlile was disabled. In denying Carlile’s appeal, Reliance stated that it did “not disput[e] the fact that as of June 9, 2016, [Mr. Carlile] would have been deemed Totally Disabled under the Policy.” The issue of Carlile’s duration of disability or the benefit amount were not issues in this case so a remand is not necessary for Reliance to consider the duration or exact amount of the benefit payments. Because the district court correctly determined Carlile was an eligible employee and entitled to benefits, the district court did not exceed its discretion in awarding Carlile attorneys’ fees and costs.
If Reliance Standard Life Insurance Company has denied your claim for long-term disability benefits, contact us for assistance with your appeal. We have helped numerous clients insured by Reliance Standard.
LEAVE YOUR MESSAGE
We know how to get your insurance claim paid. Call today at: