Disabled employees who are fortunate enough to have private disability insurance often find themselves fighting with their insurance companies over whether they are entitled to benefits. The fight is usually over whether the employee qualifies as disabled under an insurance plan's special definition of that term. Courts generally defer to an insurance company's interpretation of the policy. Hence, it is unusual for a Court to overturn a insurance company's determination.
But that is exactly what the Fourth Circuit did in Singelton v. Temporary Disability Benefits Plan, 05-1341 (4th Cir. May 19, 2006)(unpublished per curiam). There, the insurance plan issued inconsistent decisions for denying an executive's claim for benefits. (The executive claimed he was disabled due to depression). The plan first denied benefits because it claimed the executive, Dean Singleton, was not disabled when he was an employee. After an internal appeal, the plan switched gears and denied benefits because it claimed Mr. Singelton was not an active employee when he requested benefits. After Mr. Singelton filed suit, the plan switched back and claimed Mr. Singelton was not disabled while an active employee.
For his part, the Court observed, Mr. Singelton was not diligent in pursuing his claim for benefit. For example, he waited two years to respond to the plan's request for documents.
Faced with a confused administrative record, the Fourth Circuit stated that both Mr. Singleton and the plan "mishandled resolution of his claim." As such it directed the District Court to remand the case back to the plan to start from "square one."