Appeals court sides with Reliance Life on flutist’s COVID disability claim

A renowned flutist for the Indianapolis Symphony Orchestra lost another appeal Tuesday for disability benefits covering time she spent recovering from COVID-19 symptoms.

Karen Moratz filed a claim in December 2020 for long-term disability benefits from Reliance Standard Life Insurance Co. On her application, Moratz indicated that she last worked in March 2020. Because she was not employed at the time of her claim, Reliance denied the benefits.

The U.S. Court of Appeals for the Seventh Circuit agreed.

Moratz appealed the denial and amended her claim to show that she was rehired in September 2021, but that her continued illness made it impossible to practice or perform. Reliance affirmed its denial, "determining that the information about her return to work constituted a fundamentally different request for benefits," court documents say.

Robert E. Saint, Moratz's attorney, did not respond to a request for comment. A Reliance spokesman said the insurer does not comment on litigation.

"While an employee benefit plan must consider additional or corrected information on appeal, it need not consider completely inconsistent information," Judge Joshua P. Kolar wrote. "Moratz’s new information changed the nature of her claim and meant that she needed to submit a new application for benefits."

'World-class musician'

Moratz, then 27, joined the Indianapolis Symphony Orchestra in 1989, according to her biography on the ISO website. She is the associate professor of flute and artist-in-residence at Butler University’s Jordan College of the Arts.

Among her numerous accomplishments, Moratz authored "Flute for Dummies" in 2009. Now in its second printing, the book has been translated into Portuguese and Persian and was called “a must have for anyone who owns a flute” by Sir James Galway.

The ISO placed its musicians, including Moratz, on furlough in mid-March 2020, court documents say. In December 2020, Moratz’s husband tested positive for COVID-19 and Moratz "began to experience a cough, chills, vertigo, ear pain, fatigue, and brain fog," court documents state.

The symphony eventually recalled its musicians in September 2021, court documents say, but Moratz was unable to rejoin them due to lingering tinnitus, a ringing in the ears. She was placed on sick leave on Sept. 15, 2021.

In February 2022, Moratz applied for long-term disability from Reliance under a policy purchased by the ISO and provided to Moratz as part of her employment benefits.

On her claim application, Moratz listed her last day worked before her disability as March 13, 2020 and she had not returned to work since then. Moratz gave Dec. 11, 2020 as the first date she could not work on a full-time basis, court documents state. In the portion of the application the employer had to complete, the ISO gave Moratz’s last day of work as March 18, 2020, although it noted that she had been “furloughed due to pandemic.”

Recent studies show an alarming rise in long-term disability claims in the years following the pandemic.

Quick disability denial

Reliance denied Moratz's disability claim within a week, court documents state. Specifically, the insurer noted the requirement that eligible beneficiaries be “active, full-time employee[s].”

Moratz was not an “active, full-time employee” when her disability commenced in December 2020, so she was ineligible for coverage. While Reliance extended long-term disability coverage for 90 days due to the COVID-19 pandemic, that extension ended in June 2020, so the December 2020 date fell outside of the term.

About six months later, Moratz appealed the denial with detailed medical records, a lengthy letter and declarations from her colleagues. Moratz noted that she went on sick leave on Sept. 15, 2021. Her sick leave expired in March 2022, so she attempted to return to work but was unable to do so and had to take additional time off, according to court documents.

Moratz argued that she was eligible for coverage as of Sept. 1, 2021.

Reliance again denied the claim and sent Moratz's information packet to an independent physician for review, who "opined that the medical information provided did not support finding that Moratz was unable to work from March 2020 to January 2023," Kolar noted.

Moratz then sued, claiming violations of the Employee Retirement Income Security Act of 1974. The district court awarded summary judgment to Reliance. 

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