In rejecting Robert P. DiGiacomo’s arguments that The Prudential violated the terms of its long-term disability policy, the court said that the insurance company relied on the fraud provision, which allows Prudential to deny benefits at any time based upon a claimant’s misrepresentations. “The fraud provision expressly states that a claimant’s material misrepresentations ‘will result in denial or termination of your claim,'” the opinion said.
However, the court denied The Prudential’s cross motion for reimbursement of claims paid to DiGiacomo, saying the Employee Retirement Income Security Act (ERISA) allows a fiduciary to seek restitution of funds belonging to a plan when the funds are clearly in a participant’s or beneficiary’s possession. The court said it was obvious The Prudential was due the money back because of DiGiacomo’s fraudulent claims, but the funds were not identifiable as being in DiGiacomo’s possession.
According to the court document, DiGiacomo suffers from Miniere’s Disease, which can cause extreme vertigo. He worked at the Sands Casino Hotel in Atlantic City, New Jersey, where he was a Floor Manager, required to stand for approximately seven hours per shift and work for a minimum of 40 hours per week. After a particular episode of vertigo and vomiting for which medics were called to his work, DiGiacomo took a medical leave of absence.
Prior to his required return-to-work deadline, DiGiacomo applied for long-term disability benefits through The Prudential’s group policy. He submitted a doctor’s note in support of his claim that indicated he suffered from “episodic vertigo, nausea, vomiting, left aural fullness consistent with left Miniere’s Disease.” DiGiacomo also told The Prudential he was unable to drive.
The Prudential decided to use surveillance to determine the extent of DiGiacomo’s disability. During the surveillance DiGiacomo was observed “walking, standing, entering and exiting a vehicle, driving, sitting and bending.” In addition, he was observed for over two hours on two separate occasions working at a restaurant, walking, standing, bending, taking reservations, managing staff, and performing other host duties.” After the surveillance The Prudential terminated his disability benefits.
DiGiacomo sued The Prudential, claiming it wrongfully terminated his benefits because it did not find proof that he could not stand for seven hours as required by his job at The Sands and because it did not wait 24 months to evaluate whether he was capable of doing any type job, as required by the disability policy.
The case is DiGiacomo v. Prudential Insurance Co. of America, D.N.J., No. 06-cv-4558 (JEI), 8/10/07.