You know that claimants have the burden to establish eligibility for ERISA-governed disability benefits.
Sometimes gaps in coverage can occur when, for example, a claimant alleges disability while using accrued vacation. These gaps can result in denial of a disability claim.
Here’s the case of Cheney v. Standard Insurance, __ F.3d __, (7th Cir. July 27, 2016) (Under de novo review, the court “should not resolve doubts or gaps in the evidence in [the claimant’s] favor, because she had the burden to demonstrate policy coverage.”)
FACTS: Cheney, a 20-year attorney at Kirkland & Ellis, had C-5 neck surgery in 2012. She last worked December 9, 2011, and claimed disability starting December 20, 2011 onward. When she went out on disability she first used two weeks of accrued vacation through to January 3, 2012. Then, she was granted six month leave to July 2012.
She submitted a claim for Long Term Disability benefits under the firm’s ERISA plan in 2012. Under the policy, coverage ended when the employee ceased to be a “Member.” To be a “Member” the claimant has to be “Actively at Work.” This definition required the claimant to be capable of Active Work even during vacations. Standard argued she was not eligible for disability benefits because she could not meet the “Actively at Work” definition.
ISSUE: Whether Claimant was ineligible for benefits when she declared she was disabled and took vacation time?
TRIAL COURT HELD: Claimant was eligible for benefits because she continued employment when she took accrued vacation.
SEVENTH CIRCUIT HELD: REVERSED—Claimant NOT Eligible for Benefits.
- Under de novo review, the court “should not resolve doubts or gaps in the evidence in [the claimant’s] favor, because she had the burden to demonstrate policy coverage.” Op. at 10.
- To be covered under this ERISA plan, the claimant must meet the definition of “Member, Active Work”. This definition required the claimant to be capable of Active Work even during vacations. Plaintiff had a two week gap (December 20, 2011-January 3, 2012) when she admits she was not able to perform “Active Work.” Under this policy she lost eligibility because she was disabled while taking vacation, and disability leave did not bridge the eligibility gap. Op. at 10.
- The inability to perform a single material job task does not demonstrate disability within the meaning of the policy. Op. at 13.
- Under ERISA, a claimant’s “reasonable expectation” of coverage requires “actual reliance by the employee.” Op. at 15.