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Even lawyers struggle with ERISA legal challenges

On Behalf of | Jun 21, 2024 | Long-Term Care

Buckle up. This story’s three-part court saga is a bit of a journey, but the destination is worth it.

Part 1: A familiar scene

In Aisenberg v. Reliance Standard Life Ins. Co., the plaintiff applied for long-term disability benefits after major open-heart surgery prevented him from returning to work as an attorney. Reliance Standard Life Insurance Company disagreed with that conclusion. Though the court record provided no evidence or line of reasoning for this decision, regular readers of this blog already know that denying benefits for no discernable reason is a common strategy in insurance provider playbooks. Since few people bother to challenge benefits denials, this disingenuous play works often enough for it to be a financially shrewd tactic.

In any case, the court sided with the plaintiff. It characterized the denial of benefits as “arbitrary and capricious,” the legal equivalent of “What were you thinking?,” as Reliance had not given due consideration to the risk of future cardiovascular harm had the plaintiff resumed his legal work. The court ordered Reliance to reconsider its decision.

Part 2: Déjà vu

“The definition of insanity is doing the same thing over and over and expecting different results.”

In an apparent moment of temporary insanity, Reliance again denied the plaintiff’s long-term disability benefits. The court, you won’t be surprised to hear, once again ruled against Reliance and this time ordered them to start payments.

Part 3: Penny pinching

Still in search of a way to circumvent the court’s orders, Reliance tried a new ploy. They classified the plaintiff’s earned-income Social Security payments as “other income” related to his disability, then used this interpretation to offset their payments to the plaintiff.

However, as the name suggests, earned-income Social Security payments have nothing to do with disability payments. As the court put it, “Defendant’s Plan is unambiguous; it does not permit offsetting Plaintiff’s Social Security benefits, as they result from his earned income, rather than his disability, and Defendant’s plan permits offsetting only those Social Security benefits ‘resulting from the same Total Disability for which a Monthly Benefit is payable.”

In short, Reliance was trying to classify Social Security payments as Social Security Disability payments, a tactic it had tried previously in federal court. It didn’t work then, and it didn’t work this time, either.

Having now seen this case three times, the court instructed Reliance to pay full benefits, and knock off the funny business.

The takeaways

People coping with long-term benefits denials should know that these denials are often bogus, based on weak evidence and occasionally no evidence at all. Appealing these decisions in court may seem like huge undertakings, especially for people suffering from long-term disabilities, but slam-dunk appeals like the one above are proof that the effort is worthwhile.