Disability insurer was arbitrary and capricious in determining date of disability — 10th Circuit, ERISA

Disability insurer was arbitrary and capricious in determining date of disability — 10th Circuit, ERISA

In Owings v. United Omaha Life, Owings got disability benefits from United but claimed the amount was too low. Summary judgment in favor of United was reversed. The Tenth Circuit found that United was arbitrary and capricious in determining the date that Owings became disabled and, in turn, in calculating the amount of his disability benefits. The Tenth Circuit then reversed summary judgment in favor of United and remanded with directions to enter summary judgment in favor of Owings.

Owings was the maintenance director on June 30, making $80,000 + a year. On July 1, he hurt his back. Later that same day, Owings was told he was going from maintenance director to Maintenance Supervisor, and his annual salary was being reduced to $55,000 a year. July 1 was his last day of work. United based his disability payments on the lower salary.

When United processed and approved Owings’ claim for long-term disability benefits, United construed the term “Disability” as requiring him to be unable “to perform all material duties of [his] regular occupation.” But in the district court proceedings, United argued that Owings’ “disability did not begin until July 3” because “Owings admit[ted] performing at least one job duty on July 2.” These interpretations are inconsistent with the plain language of the Policy, which requires only that the injury or sickness prevent the employee from being able to perform one material duty of his or her regular occupation, and are thus arbitrary and capricious.

In addition, the Tenth Circuit rejected United’s claim that the date of “Disability” cannot be the same as the employee’s last day worked. There is nothing in the policy stating this and it cannot reasonably be inferred from the Policy’s definition of “Disability” or its other provisions.

United’s investigation focused solely on determining whether Owings “worked” on a particular day, rather than determining when the injury he sustained on July 1, 2013, prevented him from performing one or more material duties of his position.

For all of these reasons, we conclude that United acted arbitrarily and capriciously in interpreting and applying the Policy language—in particular the definition of “Disability”—to Owings’ case. Under the plain and ordinary meaning of the Policy language, it is clear, based upon the undisputed record before us, that Owings became disabled on July 1, 2013, when he sustained a back injury while at work and was thereafter unable to perform one or more of the material duties of his regular occupation. Consequently, we conclude that the proper remedy is to reverse the district court’s grant of summary judgment in favor of United and remand with directions to enter summary judgment in favor of Owings.