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STD Denied, LTD Not Exhausted – N.D. Iowa

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  • STD Denied, LTD Not Exhausted – N.D. Iowa

    Here’s a new case out of the Northern District of Iowa, Brandy J. Sievers v. United of Omaha Life Insurance Company; et al. In this case, the defendant moves to dismiss the plaintiff’s LTD claim for failure to exhaust administrative remedies. The plaintiff claims that because her STD was denied attempts to exhaust administrative remedies on the LTD would be futile. The court disagrees.

    Plaintiff’s argument against dismissal is limited to the notion that “any attempts to undergo administrative procedures regarding the long-term disability portion of [the plan] would have been futile.” (Doc. 1, at 6). In support, plaintiff argues that when defendant Mutual of Omaha found that plaintiff was not “disabled” within the meaning of the short-term disability policy, defendant Mutual of Omaha necessarily determined that plaintiff was not “disabled” within the meaning of the long-term disability policy as well. (Doc. 11, at 4).

    The long-term disability policy permits a claimant to receive long-term disability benefits upon the satisfaction of one of two conditions: 1) the lapse of 180 calendar days; or 2) the end of short-term disability benefits being provided. (Doc. 4-2, at 12, 22). Plaintiff asserts that she cannot satisfy either condition, and any attempts to do so would be futile. (Doc. 11, at 4). The Court need only address whether the first condition is capable of satisfaction.

    In calculating the 180-day period, days that a claimant is deemed to be “not Disabled” are not counted. (Doc. 4-2, at 12 (“For accumulating days of Disability to satisfy the Elimination Period, . . . days You are not Disabled will not be used to satisfy the Elimination Period.”)). Based on plaintiff having been found not “disabled” under the terms of the short-term disability policy, plaintiff argues that she will never be able to satisfy the first condition. (Doc. 11, at 4). Plaintiff’s argument, however, assumes that the definition and construction of “disabled” are the same under both the short and long-term policies. Such is not the case. The long-term disability policy defines “disability and disabled,” in relevant part, to mean a claimant is “prevented from performing at least one of the Material Duties of Your Regular Occupation on a part-time or full-time basis . . ..” (Doc. 4-2, at 37 (emphasis added)). The short-term disability policy, however, defines “disability and disabled,” in relevant part, to mean a claimant is “prevented from performing the Material Duties of Your Regular Job (on a part-time or full-time basis) or are unable to work Full-Time . . ..” (Doc. 4-3, at 29 (emphasis added)).

    The key difference between the quoted portions is whether a claimant must be prevented from performing at least one material duty of his or her occupation versus whether a claimant must be prevented of performing the material duties of his or her occupation without exclusion. The standard for proving long-term disability benefits is the lesser of the two standards. Thus, even though plaintiff was denied short-term disability benefits, it is conceivable that plaintiff could still be awarded long-term disability benefits, if she is able to meet the lesser standard of showing that she is prevented from performing at least one material duty of her regular job. This is consistent with defendant United of Omaha having denied short-term benefits because “‘the clinical findings do not support any condition(s) that would result in functional impairment or require work restrictions and/or limitation that would preclude you performing the material duties of your regular job . . ..’” (Doc. 1, at 5 (quoting letter issued by Defendant United of Omaha that informed plaintiff of the rejection of her appeal of the denial of short-term disability benefits)). The Court therefore rejects plaintiff’s argument that any attempt to administratively pursue long-term disability benefits would have been futile. Because defendants have shown that plaintiff cannot show “that it is certain that [her] claim [would have been] denied on appeal,” defendants’ motion is granted. Brown, 586 F.3d at 1085 (first alteration in original)
    The court believes that because there is a different definition of “disability” on the LTD, the LTD could be approved. While it is possible and I have had that happen in certain circumstances, I frequently run into this problem. Very often I’m running into issues where my client is not even allowed to apply for LTD benefits if the STD has been denied. I think the court, while their reasoning is solid, needs to take a more nuance approach to it. The opinion is attached below.
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