Employees in Chicago have called me asking if they should claim long term disability while they feel their job is in jeopardy, or are on a performance improvement plan. That is never an easy decision to make, and often goes beyond legal advice. I most often advise people that my role is not to tell you to claim disability, but to advocate for you if you decide you need to make the claim. But the timing issue is one of legal importance.
Most group long term disability insurance policies, enforced under ERISA § 502(a), require you be actively at work for the employer sponsoring the coverage at the time of becoming disabled. Individual disability insurance policies, on the other hand, are not tied to a particular place of employment because you own the policy. But does actively at work include a period in which an employer has notified you of a termination in two weeks? A recent court thought so.
In Carlile v. Reliance Standard Life Insurance Co., No. 19-4123, 2021 WL 671582 (10th Cir. Feb. 22, 2021), Carlie received a notice of employment termination. After getting the notice, but before his last date with the employer, Carlie was diagnosed with advanced prostate cancer. Reliance Standard Life Insurance Company denied the long term disability claim, arguing Carlie was no longer actively at work because he already received notice of employment termination. The Court disagreed with that position, and awarded Carlie his benefits, plus attorney’s fees and costs. What may have also motivated Reliance Standard’s position is that frequently the group life insurance policy will continue coverage with premiums waived due to total disability, and Carlie got diagnosed with cancer. It is highly likely Reliance Standard equally wanted out of insuring a cancer patient’s life as it did out of paying the disability benefit. For more information on a waiver of premium rider in life insurance, see this article.
If you have a disabling illness or injury and suspect your employment will terminate, contact a knowledgeable long term disability lawyer. You may qualify for benefits while you still have coverage.