4th Circuit Finds Retired Insured Is Not Entitled to Benefits Under Disability Policy

Retired Insured Was Not Regularly Engaged in Occupation for Gain or Profit

A disability income policy does not provide benefits to someone already retired, according to a July 2013, unpublished opinion of the Fourth Circuit Court of Appeals. Finding the policy definitions of “your regular occupation” and “total disability” were unambiguous, the Fourth Circuit affirmed the decision of the U.S. District Court for the District of South Carolina. 

Post by Logan Wells

In Linton v. AXA Equitable Life Insurance Co., Linton purchased a disability income policy from AXA in 1985. The relevant language of the policy stated:

TOTAL DISABILITY INCOME. If disability (1) starts while this policy is in force; and (2) continues beyond the Elimination Period: we will pay the Monthly Income for each month of the period of disability that extends beyond the Elimination period. . . .

The following definitions applied in determining eligibility for total disability income benefits under the policy:

DISABLED or DISABILITY means Total Disability.

YOUR REGULAR OCCUPATION means the occupation (or occupations, if more than one) in which you are regularly engaged for gain or profit at the time you become disabled.

TOTAL DISABILITY means your inability due to injury or sickness to engage in the substantial and material duties of your regular occupation. It will not be considered to exist for any time you are not under the regular care and attendance of a doctor.

In 2010, Linton was injured from accidental exposure to formaldehyde during a mold remediation to his home, leading him to make a claim for benefits under the AXA policy. AXA denied the claim on the grounds that Linton was ineligible for benefits because he was retired. Linton filed suit, seeking coverage and alleging bad faith. AXA moved for summary judgment, which the district court granted.

On appeal, Linton argued (1) the language of the policy created a question of fact with respect to whether it provided benefits to a retired policyholder; and (2) the district court erred in denying Linton the opportunity to conduct discovery into AXA’s handling of similar claims.

Policy language: Relying on dictionary definitions for “gain,” “profit,” and “occupation,” Linton argued the policy’s language should have been construed in his favor. The court rejected the contention: “It strains credulity to accept that broadly construing the words gain and profit, given their plain and ordinary meaning, results in the conclusion that Linton’s pre-disability activities as a retired person were for his gain or profit from a monetary, social, and personal standpoint.” (Internal quotations omitted). Thus, the court found gain or profit could not have a plain meaning other than “traditional monetary compensation.”

The court further noted Linton’s argument would fail even if it accepted Linton’s dictionary definitions because, if “your regular occupation” was meant to include retired individuals, then there would be no need to include the phrase “for gain or profit” to further explain the term “occupation.” “Reading the definition as a whole only allow[ed] for an interpretation that the policyholder [was] required to hold an occupation for which he receives compensation, rather than merely the pursuit of pleasure.” (Internal quotations omitted). Accordingly, the court found the terms of the policy were unambiguous and Linton was ineligible for benefits.

Similar claims: Linton also argued the district court erred in refusing further discovery as to how AXA handled comparable claims. The court found this argument without merit, noting the request for discovery regarding other claims was intended to support his bad faith allegations. Because an insured must first demonstrate he is entitled to benefits before pursuing allegations of bad faith, and Linton was not entitled to such benefits, the court found further discovery was unnecessary.