July 23, 2019

Tenth Circuit: ERISA Case on Calculation of Long-Term and Short-Term Disability Benefits

The Tenth Circuit issued its opinion in Cardoza v. United of Omaha Life Insurance Company on Wednesday, February 27, 2013.

Jose Cardoza brought this lawsuit pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 to § 1461 (“ERISA”), challenging United of Omaha Life Insurance Company’s (“United of Omaha”) calculation of his long-term disability benefits (“LTD benefits”). United of Omaha answered, asserting its calculation was appropriate, and counterclaimed, demanding that Cardoza reimburse it for payments of short-term disability benefits (“STD benefits”), which it claimed were miscalculated. On cross-motions, the district court granted Cardoza’s motion for summary judgment and denied United of Omaha’s motion, concluding United of Omaha’s decision to calculate Cardoza’s LTD benefits and recalculate his STD benefits as it did was arbitrary and capricious. This appeal followed.

LTD Benefits Calculations

The terms of the LTD policy and the evidence in the administrative record showed United of Omaha’s calculation of Cardoza’s LTD benefits was reasonable and made in good faith. Courts review ERISA claims as they “would any other contract claim by looking to the terms of the plan and other evidence of the parties’ intent. If plan documents are reviewed and found not to be ambiguous, then they may be construed as a matter of law.” Hickman v. GEM Ins. Co., 299 F.3d 1208, 1212 (10th Cir. 2002).

The Tenth Circuit held that the district court erred in granting Cardoza’s motion for summary judgment with respect to United of Omaha’s LTD benefits calculation. The plain language of the long-term disability benefits policy (“LTD policy”) instructed United of Omaha to base its calculation of Cardoza’s LTD benefits on his earnings as verified by the premium it received, so United of Omaha’s calculation was reasonable and made in good faith.

STD Benefits Calculations

The district court did not err, however, in granting Cardoza’s motion for summary judgment with respect to United of Omaha’s recalculation of his STD benefits and demand for reimbursement. The plain language of the short-term disability benefits policy (“STD policy”) instructed United of Omaha to base its calculation of Cardoza’s STD benefits on his earnings. Thus, United of Omaha’s decision to recalculate Cardoza’s STD benefits based on his earnings verified by premium rather than his actual earnings was not reasonable.

REVERSED in part, AFFIRMED in part, and REMANDED to the district court with instructions to conduct further proceedings consistent with this opinion.

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