Appeals Court Rules Against Reliance Standard in Disability Case

By Cyril Tuohy
InsuranceNewsNet

A U.S. appeals court in New Orleans has found in favor of a former Army helicopter pilot who was denied disability benefits by a life insurer on the grounds that the pilot was still capable of working, even at a lower salary, and therefore was not totally disabled.

In a 2-1 ruling, the 5th U.S. Circuit Court of Appeals found that Reliance Standard Life ignored a “similar income requirement” clause in the policy when it chose to deny long-term disability benefits to pilot Robert George.

Writing for the majority, U.S. Circuit Judge Edith Brown Clement wrote in Robert George v. Reliance Standard Life Insurance Co. that, “RSL’s refusal to consider George’s evidence also suggests that RSL preferred to ignore the similar income requirement,” according to court documents.

The decision, issued last month, reverses a lower court’s finding in favor of the insurance carrier.

George, who suffered an amputation at the knee in a 1985 helicopter crash while working for the Army, filed for benefits in 2008 while working for a civilian helicopter company after experiencing severe pain, which prevented him from wearing his prosthetic limb.

Unable to reach the pedals in the cockpit without the limb, George’s piloting career effectively was over, court documents indicate.

In determining whether to award or deny benefits, the insurance carrier found that George was capable of other work with PHI, a private helicopter company based in Lafayette, La., in capacities as a signal operator, a crew scheduler or aircraft log clerk.

But since the positions listed the average salary for such work ranging from $28,000 to $40,000 a year, George argued that there was no way for him to find work with a similar annual salary of the $75,495 he was making as a pilot for PHI serving the offshore oil and gas industry.

RSL also argued that George’s depression and post-traumatic stress disorder contributed to his disability and as a result, RSL was required only to pay out benefits for a maximum of two years under the policy’s exclusion clause.

Clement, however, found that RSL had known George’s physical disabilities were sufficient to render him totally disabled under the terms of the policy, court documents show.

The court found “no rational connection between the fact that George’s mental disabilities may have impaired his ability to hold down a sedentary job, and the conclusion that his mental disabilities caused or contributed to his total disability.”

In a dissenting opinion, U.S. Circuit Judge Carolyn Dineen King said it was reasonable for the carrier to conclude that the former pilot’s mental conditions contributed to his disability, thus triggering the exclusion.

“Accordingly, I would hold that RSL did not abuse its discretion in applying the mental disorder exclusion to George’s claim,” the judge wrote.

The case was sent back to the lower court to determine the amount in disability benefits to award the pilot, according to court documents.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.