How to Interpret Undefined Terms in Long-Term Disability Insurance Policies

Individuals in Chicago claiming long-term disability insurance benefits often do not read the insurance policy or certificate of insurance when making a claim. The policy and certificate define many terms, including Totally Disabled, Regular Occupation, Active Employment, Material and Substantial Duties, etc. But they often also use terms the policy or certificate does not define, such as “full-time” when limiting benefits to only full-time employees. So people often wonder how the insurer defines these undefined terms. Courts use a number of principles of contract interpretation to define undefined terms, such as defining terms as they are used in their ordinary and popular sense, and construing them in light of the policy as a whole. A court recently used the latter to determine full-time meant working at least 30 hours per week, and not 40 hours per week.

In Connor v. Unum Life Insurance Co. of America, No. 21-15034, 2023 WL 417903 (9^th Cir. Jan. 26, 2023), Connor worked over 30 hours per week, but not 40 hours per week. Unum denied her claim, contending she was not a full-time active employee because she did not work 40 hours per week, and the policy limited benefits to “full-time active employees.” The policy did not define “full-time,” but it did define “active employees” as those regularly working at least 30 hours per week. Connor sued for benefits under ERISA § 502(a).

The district court and court of appeals both disagreed with Unum and awarded Connor benefits and attorney’s fees under ERISA § 1132(g). The appellate court explained it would be nonsensical to in one place limit benefits to active employees, defined as working at least 30 hours per week, but then elsewhere limit benefit to only those working at least 40 hours per week under an undefined term. It would result in those employees working between 30 and 40 hours per week paying premiums for non-existent coverage under the policy.

If your claim for long-term disability insurance has been denied or terminated, contact a long-term disability benefits lawyer today to learn about your rights.