Compliance March 9, 2002

Absence No Leave to Deny Disability Payments

September 3, 2002 (PLANSPONSOR.com) - A long-term disability insurance administrator was out-of-bounds when it denied coverage to a Minnesota internist physician who was working part time while getting treatment for depression, a judge ruled.

Reported by

Fred Schneyer

According to a story from New York legal publisher BNA, US District Judge Paul Magnuson ruled that Susanne Pearce was right when she claimed the long-term disability policy from her employer, the Duluth Clinic, covered employees on a leave of absence.

Magnuson said clinic officials considered Pearce to be on a paid leave of absence after returning from a vacation in 1996. She continued to get a salary and benefits through June 1999, the BNA story said.

In April 2000, Pearce filed for disability benefits with Paul Revere, the disability administrator, which denied the initial claim and a subsequent appeal. Pearce then filed the lawsuit, Magnuson’s ruling said.

Magnuson found that the language of the policy clearly stated that coverage continued in the case of absence due to a leave of absence.

Since it was undisputed that Duluth Clinic considered Pearce to be on a paid leave of absence during the time Pearce claims she became disabled, the court said, “Paul Revere’s argument that Dr. Pearce was not an employee eligible for benefits under the policy is disingenuous.”

The decision is Pearce v. Paul Revere Life Insurance Co., D. Minn., No. 01-665 (PAM/RLE), 8/23/02.