By: Luke Nelson*
Abstract
Long-term disability benefit plans, which are governed by the Employee Retirement Income Security Act (“ERISA”), pay employees monthly benefits when an accident or illness prevents them from working. Nationwide, insurers market long-term disability policies that purport to protect workers when they can no longer perform their “regular occupation.” Nevertheless, as soon as the employee is no longer able to work, insurers routinely deny benefits. In doing so, insurers frequently consider a generic description of a claimant’s “regular occupation” rather than the actual work that the claimant performs. Thus, claimants oftentimes find themselves without long-term disability benefits, despite their inability to work.
The circuit courts of appeals have long grappled with the issue of whether an insurer may define a claimant’s “regular occupation” generically. This conundrum has resulted in a circuit split. Two circuits initially held that an insurer must consider a claimant’s specific duties to determine their “regular occupation.” However, since then, three circuits have held that an insurer may define a claimant’s “regular occupation” in general terms. The Fourth Circuit lies between these two positions, holding that an insurer may define a claimant’s “regular occupation” generically, at least where a general description mirrors the work that the claimant actually performs.
Despite long-term disability insurance’s purpose of protecting disabled workers, applicable law allows insurers to define a claimant’s “regular occupation” generically. Principally, the Supreme Court’s ERISA jurisprudence has created a standard of review that is highly deferential to an insurer’s denial of long-term disability benefits. Furthermore, when a policy uses a general description of a claimant’s job to define “regular occupation,” an insurer’s decision to ignore a claimant’s specific duties is warranted. Notwithstanding applicable law, Congress or the Department of Labor should act to solve the problems
that the phrase “regular occupation” presents.
*J.D. Candidate, The Pennsylvania State University, Penn State Law, 2023. A special thank-you to Professor French.