California Court Rules Against Unum for Miscalculating Salesperson's Earnings
A California Court rules against Unum for miscalculating a salesperson’s earnings after approving disability insurance benefits. A former sales representative earned her wages through salary, commission, quarterly bonuses, sales compensation, sales award and advance commission pay. However, Unum did not properly take into consideration all the earnings, and thus underpaid the benefit.
Unum argued that for a commission employee, it only needs to consider certain eligible commission and the base salary. Plaintiff argued that the plan is ambiguous as to what Monthly Earnings should include. As a result of the ambiguous language, she argued that all her earnings should be considered in calculating her benefits.
In analyzing the two positions, the court looked at the policy language, plan language, and, specifically, the definition of Monthly Earnings. In one section, the plan limited the definition of monthly earnings to include only some commissions. In another section it defined monthly earnings to include all commissions.
In defining Monthly Earnings, the plan and policy also only excluded annual bonuses. It was unclear whether monthly and quarterly bonuses should be included in Monthly Earnings. The Court found that the conflicting and unclear definition of Monthly Earnings render the plan ambiguous. The Court noted that if a claimant has to search the policy and plan to clarify definitions that should be clear in the glossary, it is contradictory to having a glossary.
To resolve the issue, the Court then has to look to the plain meaning of the language in question. In this case, that means what is included in monthly earnings. The Court concluded that was reasonable for the Plaintiff to assume her gross monthly earnings means the income earned before taxes, that included all commissions. It also concluded that since the language was unclear as to whether monthly and quarterly bonuses, it is interpreted in favor of the Plaintiff. Her monthly and quarterly bonuses should be included. In sum, the Monthly Earnings should be calculated to include all commissions and quarterly bonuses.
The Court ordered the case go back to Unum for a full and fair review to include a proper calculation of Monthly Earnings with all commissions and quarterly and monthly benefits.
This case is a perfect example of how disability insurance is not just about medical records. Insurance companies often miscalculate earnings and benefits. Unfortunately, most people would not know to look at the calculations. Or that it can be challenged.
Insurance companies should not be allowed to get away this kind of behavior. If you believe that you are being underpaid, you should contact an experienced attorney who can help determine whether you are getting everything you are entitled to.
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