Carlile v. Reliance Standard
Federal Appellate Court Agrees Utah Marketing Executive with Prostate Cancer is Entitled to Long-term Disability Benefits from Reliance Standard Life Insurance Company
A federal appellate court agreed that a Utah marketing executive with prostate cancer was entitled to long-term disability (“LTD”) benefits from Reliance Standard Life Insurance Company (“RSL”).
Before his disability, Mr. Carlile was working as a marketing executive. His job was allowed to end his employment without cause as long as it gave him 90 days notice. When business was going poorly and the company needed to downsize, in March it gave Mr. Carlile 90 days notice of his termination. His termination would be effective on June 20.
Mr. Carlile was paid for the 90 days and although he was not required to work, he still came into the office occasionally and went on several business trips. In May, Mr. Carlile was diagnosed with prostate cancer. Because of the intense treatment for the cancer, Mr. Carlile’s last day with the company was June 7.
The Claim and Denial
Mr. Carlile applied for LTD benefits with RSL. His job confirmed his last day was June 7. However, RSL denied his claim because as of the March notice of termination, Mr. Carlile was not eligible for benefits because he was no longer a full-time employee.
Mr. Carlile appealed the claim denial but RSL also denied his appeal. RSL claimed that even though he worked some hours and went on business trips during the 90 day notice period, it did not appear that he was an “active, full-time employee” who worked the 30 hours per week as required by the LTD policy in order to qualify for coverage.
After RSL denied his appeal, Mr. Carlile filed a lawsuit in federal court against RSL for all benefits owed. The trial court ruled in favor of Mr. Carlile because it found that the term “active” in the policy was unclear in its meaning.
RSL appealed the decision. On appeal, the court had to decide whether Mr. Carlile was an “active, full-time employee” on his last day on June 7. In examining the policy language, the appellate court observed that the term “active” was never defined in the policy.
Since the term has several different definitions, the court interpreted it in favor of Mr. Carlile to mean that he was currently employed. Because his termination was not effective until June 20, Mr. Carlile was currently employed on June 7. In addition, there was no dispute he was “full-time” because he was working and performing his job duties. Thus, Mr. Carlile was eligible for coverage and entitled to benefits.
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