ERISA has it’s own set of rules and regulations and is unlike normal insurance that is governed by State laws and the Texas Department of Insurance.
Here is a 2019, opinion from the Eastern District of Texas, Sherman Division, that deals with ERISA and a claim for Long Term Disability (LTD) benefits. The opinion is styled, Xien Huang Napodano v. Ericsson Inc. Short Term Disability Plan.
On August 22, 2017, Napodano resigned from his job by leaving a note on the desk of his boss and a few days later applied for LTD benefits. He was informed that he had to first apply for Short Term Disability (STD) benefits first, before being eligible for LTD benefits. He then filed for STD benefits.
Sedgwick, the claims administrator denied Napodano’s claim for STD because the ERISA Plan in this case provides that “coverage under the Plan ends on the earliest of” four date. These are:
- the date the Plan terminates;
- the date [the claimant] no longer meets the definition of Eligible Employee;
- the last day [the claimant] is Active Employment; and
- the date [the claimant] is no longer in Active Employment due to a Disability that is not covered under the Plan.
This case is being heard by the Court on competing Motions For Summary Judgement.
Sedgwick argues that when Napodano resigned, he was no longer an “Eligible Employee.” Napodano argued that his resignation was not formal and further says the human resource department told him he needed to resign to receive LTD benefits.
This Court stated the law as it relates to ERISA claims, which is that the Plans are looked at to see if the Plan administrator abused their discretion by denying benefits. Thus, the Court looks to see if Sedgwick abused the discretion allowed to them by denying the claim here.
The Court then discussed the law and applied the law to the facts in this case.
The Court stated as follows:
Napodano contends that he did not need to file his claims before his resignation under the Plan’s Proof of Loss Provisions. These provisions state that claims can be submitted at least 90 days after the “Elimination Period,”which was seven (7) days. According to Napodano, this means that he could have waited at least 97 days to file his claim for benefits. But, while the Proof of Loss provisions allow Napodano to file a claim within this time, they do not extend his coverage beyond the last day of his employment. Because Napodano was seeking benefits that would start after August 22, 2017—not payment for his prior use of benefits before his coverage ended—his request was properly denied.
The Court granted summary judgment in favor of the Sedgwick.