When Dr. Nicholas Grosso, a highly accomplished orthopedic surgeon, could no longer perform surgeries due to debilitating osteoarthritis, he turned to his disability insurance policy with Unum for the support he believed he had paid for. Instead, he was met with delayed payments, reduced benefits, and a dispute over how his income should be calculated. Unum used Dr. Grosso’s pandemic-depressed 2020 earnings to determine his benefits, despite his claim that his actual pre-disability income was significantly higher in 2021.
This case raises critical questions about fair benefit calculations and whether the policy is governed by ERISA or protected by a safe harbor exemption. A recent federal court ruling denied Unum’s motion to dismiss the lawsuit, allowing Dr. Grosso’s claims to move forward.
Key Takeaways from Grosso v. Unum Life Insurance Company of America
- Dr. Nicholas Grosso, a Maryland orthopedic surgeon, sued Unum for underpaying his long-term disability benefits after becoming unable to perform surgery due to osteoarthritis.
- The core dispute centers on Unum’s calculation of Grosso’s pre-disability income using 2020 COVID-depressed earnings rather than 2021 income.
- Unum tried to dismiss the lawsuit by claiming the disability policy was governed by ERISA and preempted state law claims—but the court denied that motion.
- At Dabdoub Law Firm, we focus exclusively on disability and life insurance claims. We have extensive experience helping high-earning professionals challenge improper benefit calculations and hold insurance companies accountable.
Background: Career Surgeon Faces Life-Altering Diagnosis
Dr. Nicholas Grosso spent over 25 years as an orthopedic surgeon and served as President of the Center for Advanced Orthopedics (CAO). In 2021 and early 2022, he underwent surgery on both wrists due to severe bilateral osteoarthritis. Medical advice confirmed he would never be able to perform surgeries again—a devastating blow to someone whose career and income depended entirely on surgical duties.
Dr. Grosso held a disability insurance policy with Unum, marketed as an “own occupation” policy, meaning it should pay benefits when an insured cannot perform the duties of their specific occupation. He reasonably expected the policy to compensate him based on his pre-disability earnings as a surgeon.
Unum’s Controversial Calculation: Using 2020 Pandemic-Income
Instead of using Grosso’s 2021 earnings to calculate monthly benefits, as he thought Unum would based on policy terms, Unum used his significantly lower 2020 income. His income that year had plummeted due to government-mandated suspensions of elective surgeries amid the COVID-19 pandemic. This resulted in a significantly decreased monthly benefit as opposed to the amount Dr. Grosso believes he was owed based on his usual earnings, before and after the pandemic.
Legal Action: Breach of Contract and Bad Faith Allegations
Dr. Grosso filed a lawsuit in Maryland state court raising two legal issues, although it was later removed to federal court. His claims included:
- Breach of Contract – for miscalculating his pre-disability earnings and failing to pay benefits based on his actual occupation and income.
- Failure to Act in Good Faith – alleging Unum delayed explaining its benefit calculations, failed to base benefits on pre-disability earnings, and continued refusing payments even after administrative appeals.
Unum moved to dismiss, arguing that Grosso’s claims were preempted by the Employee Retirement Income Security Act of 1974 (ERISA), which limits remedies and precludes state-law bad faith claims. In other words, Unum claimed that Dr. Grosso’s disability coverage was governed by ERISA and thus state bad faith law does not apply.
The Court's Decision: ERISA Preemption Too Early to Call
The court denied Unum’s motion to dismiss, finding that it was too early in the case to determine whether the disability policy is governed by ERISA (the Employee Retirement Income Security Act of 1974). At the center of this issue is how Dr. Grosso obtained the policy. Although the policy was offered through his employer, Center for Advanced Orthopaedics (CAO), he alleges that he purchased it independently through a private insurance broker and paid all premiums himself with after-tax dollars.
This matters because ERISA only applies if an employer establishes or maintains the benefit plan. However, a Department of Labor regulation—known as the “safe harbor” provision—excludes certain plans from ERISA if:
- The employer makes no contributions to the plan,
- Participation is completely voluntary,
- The employer’s role is limited to ministerial functions (like collecting premiums), and
- The employer receives no compensation or profit from the arrangement.
Dr. Grosso claims that CAO had no real involvement beyond permitting Unum to market the policy, and that all decisions and payments were made directly between him and the insurer. Unum argued that CAO played a larger role by helping define eligibility and negotiating group rates.
Still, the court found that these factual disputes could not be resolved at the motion-to-dismiss stage and ruled that discovery must move forward to determine whether the policy is subject to ERISA or falls under the safe harbor exception.
Why This Case Matters for Professionals with Disability Insurance
Dr. Grosso’s case highlights a recurring issue in long-term disability (LTD) claims wherein insurance companies manipulate policy language or earnings definitions to underpay or deny benefits. Unum’s reliance on a pandemic-era income year that was clearly unrepresentative of Dr. Grosso’s typical earnings demonstrates how insurers can exploit extraordinary circumstances to reduce payouts.
For high-income professionals, especially surgeons, dentists, attorneys, and executives, this tactic can result in hundreds of thousands of dollars in lost benefits. Insurers often:
- Use the lowest possible earnings year to calculate benefits,
- Claim income from non-disabled roles offsets disability payments,
- Misclassify policies as ERISA-governed to avoid state law bad faith claims,
- Delay responses and communication to wear down claimants.
How Dabdoub Law Firm Can Help
Dabdoub Law Firm has a national reputation for taking on and winning disability insurance cases against big companies like Unum. We know their tactics. We understand how to:
- Challenge improper earnings calculations,
- Demonstrate when a policy should be governed by state law, not ERISA,
- Prove occupational disability based on a claimant’s true job duties,
- Recover underpaid benefits and pursue bad faith damages when available.
Our team is made up of experts who exclusively handle disability and life insurance claims. We are a litigation powerhouse with a proven track record of success in federal court.
Contact us today to discuss your case. We represent clients nationwide, and fighting insurance companies is all we do.