The Fifth Circuit Court of Appeals, on appeal from the Federal District Court in Texas (a very conservative Court), has reversed a decision in favor of an insurer, Reliance Standard Life Insurance Company, and has granted benefits to a claimant, where it determined that the claim decision was an abuse of discretion, as it was not supported by substantial evidence.
Reliance Standard had determined that no further benefits were payable to claimant, on two separate grounds. First, it determined that the claimant had both a physical and mental impairment, and relying upon policy language which noted a limited pay period where a mental health impairment either caused or contributed to a disability, Reliance Standard ceased paying benefits. Reliance Standard claimed that it had paid the maximum benefit of 24 months for such conditions.
Second, Reliance Standard determined that the claimant no longer met the definition of disability, as it determined the claimant could perform sedentary work, and was thus disqualified from further benefits.
As to the issue of whether the limited benefit period applied for the mental health impairment, the Court of Appeals determined that because the claimant’s physical condition rendered him totally disabled, the language of the policy stating contributing to was not sufficient to cause a termination of benefits.
This is quite significant, as many claimants who are suffering from a myriad of health conditions often have secondary depression or anxiety, and a determination could often be made by insurers that the broad “caused or contributed” to language could act as a bar to benefits beyond the limited benefit period.
As to the issue of the ability to work in some occupation, the Court of Appeals determined that it was improper for Reliance Standard to reject the claimant’s evidence on the basis that it was not supported by any vocational expert.
The Court of Appeals also determined that Reliance Standard attempted to ignore the policy language which required the claimant to be able to earn a similar income to his prior earnings. Simply determining that the claimant had sedentary functional capacity was not sufficient, per the Court of Appeals.
Thus, the Court of Appeals concluded that “there is no rational connection between the fact that [he] could do sedentary work, including the alternative occupations, and the conclusion that [he] could earn a substantially similar salary in any alternative position.”
Accordingly, and despite a dissent from one Judge, the Court granted benefits to the claimant, and permitted the claimant to seek prejudgment interest and attorney’s fees and expenses.
George v. Reliance Standard Life Insurance Company