In 2017, Newsom worked as a software architect, where he had been employed for 23 years. He had health problems dating back to 1999, including chronic fatigue syndrome, fibromyalgia, depression, and attention deficit hyperactivity disorder. By September 2017, his health deteriorated to the point that he could no longer work a 40-hour week. Lereta reduced Newsom’s scheduled work week to 32 hours (eight hours per day, Monday through Thursday), which was still considered full time. But Newsom was unable consistently to work even a full 32-hour week. He was last scheduled to work 32 hours the week of October 16–20, 2017. Thereafter, Lereta placed Newsom on part-time status, scheduling him for less than 30 hours per week. Newsom continued to work part time until January 30, 2018, when he became unable to work at all.
Long-term disability benefits were denied by Reliance based on the determination that Newsom’s date of disability was January 31, 2018, and because Newsom did not work at least a 30-hour week (i.e. full time) in the weeks prior to that date, he was ineligible.
Newsom filed suit, contending that Reliance’s interpretation of the “full-time” provision in its LTD policy was unreasonable because an employee would fall in and out of coverage based on the number of hours that employee actually worked each week. The parties agreed to a trial upon submission of documentary evidence, and the district court ruled for Newsom, concluding that Reliance erroneously denied Newsom LTD benefits.
The U.S. Fifth Circuit Court of Appeals affirmed: “We again reject Reliance’s assertion that ‘regular work week’ has an unambiguous, narrow meaning: namely, the ‘hours actually worked’. And, mindful of the rule that ambiguous language must be construed in favor of the insured, we conclude that the district court did not err by interpreting the term ‘full time’ and its reference to a ‘regular work week’ to mean the ‘scheduled work week’ set by Lereta for Newsom.”
The Court also affirmed the district court’s determination that the date of disability was October 23, 2017. “The district court concluded that Newsom was Partially Disabled as of October 23, 2017, the date Lereta cut Newsom’s hours to 28 hours per week, because he was unable to perform the ‘material duties’ of his job on a ‘full-time basis’. The court also concluded that the Elimination Period started on October 23, 2017, and that Newsom was thus Partially Disabled during the Elimination Period. Finally, the court concluded that Newsom had a Residual Disability, and therefore a Total Disability, as of October 23, 2017, making that date Newsom’s date of alleged disability.” The Court of Appeal found no error in this determination.
The Court of Appeal did, however, remand to Reliance to develop a full factual record and make the initial decision on whether to award benefits, and in what amount. Newsom, relying largely on Vega v. National Life, 188 F.3d 287 (5th Cir. 1999) (en banc) (overruled, in part, on other grounds by Metro. Life Ins. v. Glenn, 554 U.S. 105 (2008)), argued that remand would amount to an impermissible second bite at the denial apple and is unnecessary due to the district court’s de novo standard of review. Here, however, “unlike in Vega, a remand to the administrator would not be to make ‘a more complete record’ on whether Newsom was eligible for LTD benefits. Rather, a remand would be for a merits determination about Newsom’s entitlement to LTD benefits – a separate issue, and one on which Reliance did not develop a record after finding Newsom ineligible for LTD benefits…. Although that factual record contains medical records Newsom submitted during Reliance’s evaluation of his claim, the merits evidence is at best incomplete and thus undermines the district court’s benefits determination. But even if that were not the case, the court’s benefits determination does not fully square with the record…. At the end of the day, however, squaring these circles is secondary to the question of whether Newsom was disabled ‘as a result of an Injury or Sickness’ as defined by the LTD policy, and therefore entitled to LTD benefits. An administrative record answering these questions was simply not before the district court, irrespective of its de novo review. Once it determined that Newsom was not eligible for LTD benefits, Reliance stopped. Once the district court determined that Newsom was in fact eligible for LTD benefits, and the date on which his eligibility began, it should have stopped as well and remanded the case for Reliance to make the separate disability determination.”
Newsom v. Reliance Standard Life, 26 F.4th 329 (5th Cir. 2022).