Court: Disability Plan Participant's Work in Prison Does Not Disqualify Him

January 20, 2005 (PLANSPONSOR.com) - Reversing a lower court's ruling, the US 6th Circuit Court of Appeals has ruled that a long-term disability benefit plan participant who worked in prison is still eligible for such benefits.

>Circuit Judge Boyce Martin Jr. ruled that the plan administrator – Metropolitan Life Insurance Co. – acted arbitrarily and capriciously in terminating the benefits of Donald Dover because the inmate’s work in prison did not indicate that he was able to perform duties of a gainful occupation, according to BNA.

>Dover, an employee of IBM, began receiving benefits in 1994 due to a disability, a result of multiple psychiatric disorders. In May 1997, he was arrested for writing bad checks, as well as for loan application fraud, and was sentenced to 78 months in prison. While incarcerated, Dover¬†was employed for a short time in the prison’s machine shop and then as a janitor.

>Metropolitan Life informed Dover in 2000 that it was terminating his benefits retroactive to 1998, when Dover began working in the prison, citing his employment as reason for the discontinuation of benefits. When he was released in May 2001, Dover took the company to court in the US District Court for the Eastern District of Michigan, alleging that the company acted unreasonably is terminating the benefits. The court ruled that the insurance provider was correct in denying Dover benefits for the time that he was employed, but awarded him benefits effective May 2001, the date he was released.

>On appeal, the appeals court reversed the lower court’s ruling, saying that the termination was not a rational act. “In our view, Dover’s limited work as an inmate simply does not indicate that he was able to perform the duties of a gainful occupation ‘for which [he was] reasonably fit by [his] education, training, or experience,’ ” Martin wrote, according to BNA.

“[W]e simply do not think that this type of highly structured and supervised work in a prison, dramatically limited by Dover’s continuing treatments for his mental disability, could rationally by considered sufficient evidence of an ability to perform the duties of gainful employment,” Martin added. In its ruling, the court granted Dover retroactive benefits starting May 1, 1998.

>In her dissenting opinion in the 2-1 case, Judge Julia Gibbons argued that the only issue before the court was whether the district court should have retroactively reinstated the benefits to when Dover was released from prison.

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