Court Rules on Disability Insurance Abuse Suit

June 5, 2002 ( - A US district court in North Carolina has ruled that an employer did not interfere with an employee's right to employee benefits when it terminated his employment after discovering the employee was working another job while receiving short-term disability benefits.

According to BNA, the court ruled that the employer did not violate the Civil Rights Act in firing the employee, who is African-American. The court based its decision on information provided by the company detailing four cases involving white employees who had been investigated for allegedly working while receiving disability benefits. Two of these employees had been discharged.

Case Notes

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From 1994 to 2000, Harvey Brewer worked at Dana Corp. in the Spicer Heavy Axle Division. After being involved in an automobile accident, Brewer applied for and received short-term disability benefits.

While on leave from March 2000 to April 2000, Brewer was spotted providing transportation services for his family-owned transportation company and several Dana Corp. employees claimed to have seen Brewer working. Dana Corp. hired an investigator who verified that Brewer was indeed working while receiving benefits. Brewer was fired.

Brewer sued, asserting that by terminating his benefits while he was on disability leave, Dana had interfered with his right to benefits, violating Section 510 of the Employee Retirement Income Security.

Brewer alleged that he was “subjected to an adverse employment decision, that is, surveillance and/or threats of surveillance on account of his having asserted his right to benefits under an ERISA covered plan, for the purpose of interfering with benefits to which he had become or would become entitled.”


By ruling for Dana and dismissing Brewer’s action, the district court found that Brewer’s own deposition testimony was “antithetical to” his ERISA Section 510 claim. The court said, “He testified that he had no reason to believe that anyone terminated him with the intent of depriving him of disability benefits, medical leave benefits, or future benefits under defendants’ ERISA plan, or for any other motive relating to the ERISA plan/benefits”.

The court added that even without Brewer’s deposition testimony, Brewer’s Section 510 claim still failed because he did not first exhaust his administrative remedies before filing the lawsuit.