Summary
Plaintiff Joseph Sevely sued under ERISA, 29 U.S.C. § 1132(a)(1)(B), after his long-term disability benefits claim was denied. The Second Circuit affirmed dismissal under Rule 12(b)(6), holding that Sevely failed to plead a causal connection between his disability and a 20% earnings loss as required by the plain language of the plan, where he was terminated in a reduction in force and his pay was never reduced. The court also rejected arguments that a Social Security disability award or alleged ambiguities in plan definitions could salvage the claim. This unpublished summary order is citable under FRAP 32.1 and Second Circuit Local Rule 32.1.1.
Topics
Practice areas
Questions Presented
- Whether the district court erred in dismissing the complaint for failure to state a claim because Sevely did not satisfy the Plan's definition of disability, specifically the requirement of a 20% loss in monthly earnings causally connected to his disability.
- Whether the SSA disability determination should bind the Plan.
- Whether the Plan's definitions of 'monthly earnings' and 'active employment' are ambiguous.
Holdings
- Sevely was not disabled because he failed to show a 20% loss in monthly earnings due to his disability (required causal connection). His pay was never reduced and his termination was due to a reduction in force, not his disability.
- The SSA determination is not binding on the Plan or the court because the Plan's standards may differ.
- The definitions are not ambiguous, and even under Sevely's proposed interpretation, he cannot prevail because he concedes he did not cease work due to disability.
Key quotations
“For a person to be 'disabled' for plan purposes, he must: (1) be 'unable to perform the material and substantial duties of [his] regular occupation due to [his] sickness or injury'; (2) be 'under the regular care of a doctor'; and (3) 'have a 20% or more loss in [his] monthly earnings due to that sickness or injury.'” (3)
“We agree with the district court's determination that Sevely was not 'disabled' within the Plan's definition because under his complaint's allegations, he failed to satisfy the third prong.” (3)
“In order for Sevely to qualify as 'disabled,' the Plan required both a reduction in pay and a causal connection between that reduction and his disability. Sevely has not shown either.” (4)
“SSA awards may be considered when determining whether a claimant is disabled under a plan, but a plan administrator is not bound by such an award and is not required to accord deference to that determination because the plan's governing standards may be different.” (4)
“Even Sevely's proposed interpretation does not help him, however, since he concedes that he did not cease working because of his disability, but rather because of a reduction in force.” (5)
“We have considered all of Sevely's remaining arguments and conclude that they are without merit.” (6)
Factual background
Sevely was employed by BNY and his position was terminated as part of a reduction in force effective August 31, 2015. He applied for disability benefits under the Plan, but the Plan denied his claim. The Plan defined disability requiring (1) inability to perform duties due to sickness/injury, (2) regular doctor care, and (3) a 20% or more loss in monthly earnings due to that sickness or injury. Sevely conceded that his pay was never reduced and that he was terminated due to a reduction in force, not his disability.
Procedural history
Sevely sued the Bank of New York Mellon Corporation Long Term Disability Plan and Prudential for violation of ERISA, alleging unlawful denial of disability benefits. The district court granted the motion to dismiss, finding that the plain language of the Plan and allegations established that Sevely was not entitled to benefits. Sevely appealed.