If you have an ERISA governed long-term disability claim in Chicago, at some point the definition of disabled in your policy has changed to an “any occupation” or “gainful occupation” standard, most often around 24 months into receiving the long-term disability benefits. As an ERISA long-term disability lawyer, this is the most frequent time I see claims: a termination of benefits at the 24-month transitional definition. The insurer will usually rely on one of its own vocational consultants to evaluate your work history and opine what other job you can do and how much money you’d earn doing it. It may surprise you to learn that virtually every insurer has a practice of deeming you can earn the median wage in any occupation the insurer considers you qualified to be hired, even if you would have virtually no chance of earning that wage. This is critical because most long-term disability insurance policies have a required wage for an alternative occupation, typically 60% or more of your pre-disability earnings. Thankfully, one recent case from Washington addressed this practice head on.
In Flaaen v. Principal Life Insurance Co., No. 15-5899, 2017 U.S. Dist. LEXIS 159142 (W.D. Wash. Sept. 27, 2017), Flaaen worked as a truck driver when he became disabled due to a back injury. He qualified for vocational rehabilitation, and went back to school, ultimately earnings a bachelor’s degree in Art/Media/Culture. He listed himself as an owner of an entertainment production company while in school, which the faculty encouraged to use for submission of media projects in school, but he never worked in the field for profit. Just before his graduation, Principal terminated his benefits, stating Flaaen would be able to meet the insurance policy’s required wage in a variety of occupations, including Producer, Public Relations Representative, and Sales-Service Promoter. Each of these occupations’ median wage exceeded the policy’s required wage, though an entry-level wage would not have satisfied it. After Flaaen sued to recover the long-term disability benefits under ERISA § 502(a), Principal defended this practice of relying on the median wage even where the claimant has no experience in the field as standard industry practice. The court, however, ruled that did not make it a credible reason to do so, and held Flaaen would not earn the median wage in all the jobs in which he had no experience.
This result is similar to a case I recently won, Contreras v. United of Omaha Life Insurance Company, No.16-C-3495, 2017 U.S. Dist. LEXIS 62951 (N.D. Ill. Apr. 25, 2017). There, the court explained that given the claimant’s lack of any experience in the field, it was unlikely an employer would be motivated to pay her the median wage within 12 months of starting the new job. If your claim for long-term disability insurance is approaching a new “gainful” or “any” occupation definition, or your claim was terminated at that stage, call an ERISA long-term disability attorney right away.