Owings v. United of Omaha Life Insurance Co.
2017 U.S. App. LEXIS 20228
| 10th Cir. | 2017Background
- Greggory Owings, a Grene Vision Group employee, injured his back at work on July 1, 2013; employer altered his title and pay that day and he stopped performing job duties thereafter.
- Owings applied for short- and long-term disability with United of Omaha Life Insurance Company (United); his physician and employer forms listed July 1, 2013 as the date symptoms first appeared and the date he was first unable to work.
- United approved long-term benefits but set Owings’ date of disability as July 3, 2013 and calculated benefits based on a reduced salary ($54,995.20), producing a lower monthly benefit.
- Owings sought an administrative adjustment to a July 1, 2013 disability date; United relied on the employer HR director’s statements (initially inconsistent) that Owings’ last day worked was July 2, 2013 and denied the adjustment and an appeal.
- Owings sued; United removed to federal court under ERISA. The district court granted summary judgment to United. On appeal the Tenth Circuit reviewed under the arbitrary-and-capricious standard because the plan vested discretionary authority in United.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper interpretation of “Disability” in Policy (whether it requires inability to perform at least one material duty or all material duties) | Owings: Policy requires inability to perform at least one material duty; United misread it to require inability to perform all material duties | United: Interpreted “material duties” as requiring inability to perform the material acts of the job (effectively all duties) | Court: United’s interpretation was inconsistent with plain policy language and therefore arbitrary and capricious |
| Whether an employee can become “Disabled” on their last day worked | Owings: Date of disability can coincide with last day worked if injury immediately prevents performance of a material duty | United: Disability cannot begin on the last day worked if the employee performed some duties that day; thus disability date earliest the following day | Court: United’s conclusion (that disability cannot coincide with last day worked) is not supported by policy language and is unreasonable |
| Reliance on employer’s statements to determine disability date | Owings: United improperly relied exclusively on HR statements about last day worked instead of medical/functional evidence | United: Employer verification of last day worked was reasonable investigation | Court: United’s exclusive focus on whether Owings “worked” (per employer statements) rather than when injury prevented material duties was arbitrary and capricious |
| Remedy and entitlement to benefits/calculation basis | Owings: If disability date is July 1, 2013, benefits should be calculated using pre-change salary ($83,150) | United: Maintained July 3, 2013 date and used reduced salary for benefit calc | Court: Reversed district court and remanded with direction to enter summary judgment for Owings (holding disability began July 1, 2013) |
Key Cases Cited
- Pioneer Centres Holding Co. Emp. Stock Ownership Plan v. Alerus Fin., N.A., 858 F.3d 1324 (10th Cir. 2017) (standard of review for summary judgment)
- Williams v. FedEx Corp. Serv., 849 F.3d 889 (10th Cir. 2017) (summary judgment standard and view of evidence)
- Eugene S. v. Horizon Blue Cross Blue Shield of New Jersey, 663 F.3d 1124 (10th Cir. 2011) (deferential review when plan vests discretion in administrator)
- Foster v. PPG Indus., Inc., 693 F.3d 1226 (10th Cir. 2012) (conflict-of-interest factor when insurer both evaluates and pays claims)