Appeals Judges Uphold LTD Benefits Cutoff

March 28, 2005 ( - A federal appeals court has upheld the ruling of a lower court that a long-term disability (LTD) insurance provider did not act improperly in terminating the benefits of a Morgan Stanley research analyst and managing director.

>The US 2 nd Circuit Court of Appeals decision in the suit filed by plaintiff Norman Rosenthal agreed with US District Judge Lawrence McKenna that First Unum Life Insurance Co. had every right to cut off Rosenthal’s LTD benefits after a year. The LTD provider made the move after physicians’ reports and a vocational assessment showed that Rosenthal could hold a stressful job. Rosenthal qualified for the benefits after suffering a heart attack, according to the appeals court ruling.

The company’s benefits determination “was supported by multiple medical opinions that Rosenthal’s health was sufficiently improved to allow him to perform the material duties of his regular occupation,” the appeals court ruled.

The 2 nd Circuit also upheld McKenna’s ruling to throw out First Unum’s countersuit against Rosenthal to recover the LTD benefits. First Unum contended that Rosenthal had not revealed that he worked a similar job to the one he held at Morgan Stanley during the eleven months he received benefits. In addition, First Unum alleged that Rosenthal misrepresented that he was totally disabled and had received other income benefits which could have reduced entitlement to benefits from First Unum.

According to McKenna, even if Rosenthal had reported his earnings while on disability, his benefits would not have been reduced under the plan. The court found that Rosenthal’s earnings did not exceed 80% of his disability earnings, as required under the plan for termination of benefits.

The case is Rosenthal v. First Unum Life Insurance Co., 2d Cir., No. 02-7661