Cynthia Cheney is an Arizona attorney who applied for long-term disability benefits through her insurer, United States Life Insurance Company (“U.S. Life”). She had uncontrolled diabetes and other related health conditions, including limitations due to arthritis.

As her medical conditions worsened, she became unable to focus and concentrate on her legal work, including at trials. She became extremely fatigued, and her conditions made her confuse cases and generally become unable to keep up with the extreme demands of being a medical malpractice trial attorney.

Although Cheney became a part-time attorney in 2006, she did not apply for LTD until 2014. She became totally unable to work as of July 1, 2012, but she stated that her period of disability actually began much earlier because she had to drop down to doing only part-time work in 2006 and 2007. Her last trial was in November 2005, and Cheney spent most of 2006 transitioning her cases to other attorneys and winding down her practice. She still worked part-time, but she did not go to trial again after her last five-day trial in 2005.

Cheney stated that she should receive benefits as of January 1, 2007, but U.S. Life denied her claim. Cheney appealed their decision.

What is Total Disability?

Every long-term disability insurance policy has its own definition of what it means to be disabled. However, many policies have very similar language, particularly those under ERISA. Chaney’s policy used the following definition for “total disability”:

“During the waiting period and the next 60 months, the complete inability of the member to perform the material duties of [her] regular job to include [her] specialty in the practice of law; “specialty in the practice of law” means the specialty in the practice of law which the member was performing on the day before the total disability began.

After such 60 months, the complete inability of the member to perform the material duties of any gainful job for which [she] is reasonably fit by training, education or experience.“

Cheney was a trial lawyer. She practiced in the area of medical malpractice, which means that. medical malpractice would be considered her “specialty” for this definition.  Her “regular job” is defined as “that which [she] was performing on the day before total disability began.”

When Cheney’s application was denied, she appealed the denial. The Court issued a ruling that discussed the meaning of “total disability” both as it is set out in the policy and from a legal perspective in Arizona.

Arizona has two major cases that talk about the meaning of “total disability.” Although the policy language defines it by stating that it is the “complete inability” to work, it actually is not as extensive as it sounds under Arizona law.

Instead, based on a 1986 court case, Arizona defines total disability as a condition that

“prevents the insured from performing the substantial and material duties of his occupation in the usual or customary way.“

Another case took it one step further and defined total disability as

“disability that renders the insured unable to perform the substantial and material acts of his own occupation in the usual or customary way.“

That means that even if you can work part-time or on a more limited basis, you might still be considered totally disabled under this definition. The court concluded, based on these cases, that the question of whether a total disability exists is really a question of:

“whether the insured can perform the substantial and material duties of her occupation in the usual or customary way.“

Putting These Definitions into Practice

U.S. Life, Cheney’s long-term disability carrier, argued that because Chaney was still able to practice as a lawyer on a part-time basis, then she should not be considered “totally disabled.” They argued that since she could work part-time, there was no “complete inability” to carry out the material duties of her job. However, based on the definitions of total disability under Arizona law, the Court disagreed with that argument.

Cheney was no longer able to go to trial by 2007. She worked only part-time, sometimes only billing clients for 12 hours per month. She went from working 40-plus hours per week to barely working 10 hours most weeks in 2006. The Court determined that this significant difference met the “true” definition of totally disabled, despite the policy language, because Chaney was not able to carry out her work duties in the usual and customary way.

The Importance of the Date of Disability

Although Cheney won on this issue of whether she was totally disabled, her date of disability created a problem for her. The policy and the Court use the date of disability to determine what an insured person was doing as their “regular job” and to determine whether that person can no longer do their regular job.

In her original application, Cheney stated that she became disabled as of January 1, 2007. However, her last trial was in 2005, and she spent most of 2006 working part-time and transitioning her law practice to other lawyers.

The Court examined the difference between the day before her date of disability and what she was doing the day of her disability. As of December 31, 2006, Cheney was working as a part-time lawyer. She was not working as a medical malpractice trial lawyer – she stopped doing that kind of work in 2005. On January 1, 2007, the date she used for her disability benefits application, Cheney was still working as a part-time attorney.

That meant that there was no difference in the work that Cheney was doing as of the date of her disability and the day before her disability started. Had Cheney used the last day of her trial in 2005, the Court likely would have reached a different result. Cheney’s situation shows the importance of having the right date on your LTD application.

This case was not handled by our office. However, the general principles in this case apply to many similar situations. If you have questions about this case or any other issues regarding disability claims and definition of “totally disabled” that applies to you, contact one of the attorneys at Dell & Schaefer for a free consultation.