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In a Disability Benefits Case, How Should the Insurance Company Determine the Date Disability Started?

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In Owings v. United of Omaha Life Insurance Company, No. 16-3128, (10th Cir., 2017) the United States Court of Appeals for the Tenth Circuit overturned a lower court’s ruling about when a disability began.

Plaintiff Greggory Owings (“Owings”) sustained a disabling injury on the job and was granted long-term disability benefits by defendant United of Omaha Life Insurance Company (“United”), under the terms of a group insurance policy issued by United to Owings’ employer.

Owings worked for Grene Vision Group (“Grene”) in Wichita, Kansas, from 2001 until October 8, 2013. Grene was covered by a group insurance policy (“Policy”). The Policy funded a welfare benefit plan (“the Plan”) that provided long-term disability benefits to qualifying employees of Grene.  By June 30, 2013, Owings’ title at Grene was Maintenance Director and his annual salary was $83,150.00. On the morning of Monday, July 1, 2013, Owings seriously injured his back at work while moving a surgical chair and cabinet.  Later that same day, Owings met with Grene’s Director of Human Resources. He was informed that he was being demoted and his salary was being cut to $54,995.00 a year. At that meeting, Owings informed HR about his back injury. Because of the demotion and back injury, He never returned to Grene company premises.

On July 20, 2013, Owings applied for short-term disability benefits with United. On his application form, Owings listed July 1st 2013 as the Date of Disability. He submitted supporting documents from his physician. HR said his injury was a re-injury of a prior injury. On July 29, 2013, Owings submitted a written application for long-term disability benefits with United. On October 31, 2013, United informed Owings by letter that his claim for long-term disability benefits had been approved. Owings said, in all documentation, that his disability began on July 1st. HR said it began on July 2nd. United said it began on July 3rd. A year later, an attorney representing Owings sent a letter to United asking that Owings’ date of disability be corrected to July 1, 2013. United and Owings’ attorney went back and forth, arguing over the first day of Owings’ disability. Ultimately, United refused to correct it.

On March 4, 2015, Owings filed suit against United in Kansas state court. Owings requested United pay long-term disability benefits based upon an annual salary of $83,150.00 in accordance with the terms of the Policy. The court granted summary judgment in favor of United.

Owings appealed, saying the lower court erred in its interpretation of the criteria in the Policy.  According to the Policy, a significant change in the employee’s mental or physical functional capacity must have occurred because of an injury. Second, this must have prevented the employee from performing the duties of regular occupation on a part-time or full-time basis. The duties under the Policy are the essential tasks, functions, and operations and includes the ability to work for an employer on a full-time basis. Third, the employee must be unable to generate current earnings which exceed 99% of basic monthly earnings due to that same injury.

This Court rejected the lower court’s acceptance of United’s interpretation of the language in the Policy. It said United was inconsistent with the plain language of the Policy. Also, United was wrong in asserting that Owing’s disability could not be considered beginning on the same day the injury happened. There is no language in the Policy to support that assertion.

Owings asserts that United erred in relying on Grene’s human resource director. This Court agrees.  Without question, the record establishes that United rejected Owings’ initial request to correct his disability date, on the basis of HR’s statements regarding Owings’ last day worked at Grene, which HR said was July 2, 2013.

Owings argues that had United applied the actual Policy language, . . . it would have arrived at the correct conclusion that became disabled on July 1st when he suffered an incapacitating back injury. This Court agrees. IOwings’ injury happened partway through his work day on July 1, 2013, and that Owings informed HR of his injury during a meeting later that same day. Further, the records from Owings’ treating physician identify July 1, 2013, as the date that Owings was first unable to work.

For these reasons, this Court concluded that United acted arbitrarily and capriciously in interpreting and applying the Policy language to Owings’ case. Under the plain and ordinary meaning of the Policy language, it is clear Owings became disabled on July 1, 2013. Consequently, 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.

The Metier Law Firm is committed to assisting people with personal injury claims throughout Colorado, Wyoming and Nebraska, and we frequently serve as co-counsel to law firms nationwide. Tom Metier recently secured the largest personal injury verdict in Colorado

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