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Will My Long-Term Disability Coverage End if my Employment is Terminated While I’m Out on Disability?

By A. Christopher Wieber (Law Office of Mark Scherzer)

“Will my long-term disability coverage end, disqualifying me for disability benefits, if my company terminates my employment before my claim is approved?” This is a question that I am frequently asked by clients who are in the process of filing a claim under their company-sponsored long term disability (“LTD”) plan. A recent case from the District Court of New Jersey, Mucciacciaro v. Hartford Life and Accident Ins. Co., 2023 U.S. Dist. LEXIS 104081 (D.N.J. June 15, 2023), illustrates when a disabled employee’s LTD plan coverage may (or may not) end as a result of the termination of employment. It also underscores that having legal advice before filing a disability claim, for even such simple and seemingly obvious decisions as choosing the disability “start” date, may avoid a prolonged dispute with the long term disability insurance carrier.

~Ms. Mucciacciaro’s Disability Claim and Hartford’s Claim Denial

In Mucciacciaro, the disability claimant was employed by Dimensional Dental Holdings, LLC (“DDH”), as a dental hygienist. In 2017, she began experiencing and reporting back pain to her treatment providers. In December, 2019, she also reported her back pain to DDH and requested a reduced schedule work accommodation of working 30 hours per week. DDH refused this request, and Ms. Mucciacciaro continued to work full-time. On June 3, 2020, she gave two weeks’ notice of her resignation, but requested disability claim forms on June 14, 2020, just before her last day of work on June 17, 2020. She worked full-time throughout her employment, up to and including her last day of work on June 17, 2020. She thereafter filed disability claim forms with The Hartford Life and Accident Insurance Company (“Hartford”), the long term disability insurance carrier.

Ms. Mucciacciaro listed June 18, 2020, as the first day she was unable to work. This was unfortunate because this date opened the door for Hartford to seize on a technical legal argument to deny her claim. Hartford found that Ms. Mucciacciaro’s coverage terminated on June 18th, so that a disability starting on that date was not covered. Under most long term disability plans, coverage ends when an employee is no longer “actively at work.” Although most employees believe coverage will continue as long as they are employed, most plans contain provisions that terminate coverage as soon as the employee is no longer actively at work (regardless of whether the employee remains in employment status or the employer continues to pay premiums for the coverage). The DDH LTD Plan contained just such a provision: “Your coverage will end on the earliest of the following: … the date You cease to be a Full-time Active Employee in an eligible class for any reason; unless continued in accordance with any of the Continuation Provisions.” Most plans include some form of Continuation Provision, which may allow coverage to continue (while an employee is not actively at work) for certain defined periods, e.g., an approved FMLA leave, during disability or sick leave, during a routine vacation, etc. In the case of Ms. Mucciacciaro, the DDH LTD Plan did allow for continuation of coverage during a disability: “If You are Disabled and You cease to be an Active Employee, Your insurance will be continued: 1) during the Elimination Period while You remain Disabled by the same Disability; and 2) after the Elimination Period for as long as You are entitled to benefits under the Policy.”

Hartford argued, however, that this did not apply because Ms. Mucciacciaro’s disability started after she ceased to be an active employee, not at the same time (or before):

Hartford had to establish what your date of Disability was. In doing so, we determined that your date of Disability was 06/18/2020…. In order to be considered Disabled, we select the date for which you first would be unable to perform the “Essential Duty” of Your Occupation…. Per your employer, you performed your full “Essential Duty” on 06/17/2020 to include working Your Occupation, unmodified, for the duration of time expected for your shift. As such, you do not meet the policy definition of Disability as of 06/17/2020 as you were able to perform all of your “Essential Duty” for this day. Thus, the first potential day that you could be considered for Disability from Your Own occupation would be 06/18/2020. As of this date, per your employer, you were no longer an Active Employee under the policy.

Hartford’s argument undoubtedly arose from Ms. Mucciacciaro’s selection of June 18th as her disability start date. As reflected in the above passage, it also rested, in part, on the notion that because Ms. Mucciacciaro worked full time through her last day of June 17th, she could not have possibly been disabled prior to the termination of coverage on June 18th. Ms. Mucciacciaro appealed, asserting that she inadvertently used June 18th as her first day of disability, that her disability in fact started in 2019, that her disability caused her to seek a work accommodation, and, that her employer’s failure to grant that accommodation is what led her to resign from her job. In its appeal determination, Hartford doubled down on its denial rationale, concluding that “you could not be Disabled prior to 06/18/2020 as you were performing the Essential Duties of Your Occupation and you did not have coverage under this Policy on 6/18/20 as you had resigned on 6/17/2020.”

Ms. Mucciacciaro’s claim was complicated by her choice to resign rather than simply initiate a disability leave (without resigning). Most employees initiate a disability leave by stopping work and giving notice of the disability. It is unclear why Ms. Mucciacciaro chose to announce her resignation first and then initiate her disability claim. Perhaps she was trying to give her employer DDH advance notice of her stop-work date, so that it could make alternative arrangements for her position. Perhaps she became aware of her potential entitlement to long term disability benefits only after she initiated her two-week resignation notice. However, had she not resigned and simply initiated a disability leave, her claim would have more clearly fallen under the Continuation Provision for disabled employees, and Hartford may have felt compelled to address the merits of her medical disability.

~New Jersey District Court Decision in Favor of Ms. Mucciacciaro

Nonetheless, the New Jersey District Court (Judge Christine P. O’Hearn) found in Ms. Mucciacciaro’s favor, concluding that Hartford’s reading of the applicable plan provisions was so technical, crabbed, and blindered to the facts, that it was arbitrary and capricious. Unfortunately, because of the parties’ focus on Hartford’s technical non-coverage defense, the Court also concluded that the medical facts of Ms. Mucciacciaro’s disability had not been adequately addressed. Consequently, benefits could not be awarded and the claim was remanded to Hartford for a more fulsome evaluation of Ms. Mucciacciaro’s medical disability.

Judge O’Hearn first concluded that “the ability to work full-time should not automatically in and of itself prohibit a finding of disability,” reciting a string of decisions from the Circuit Courts of Appeal to that effect:

Levinson v. Reliance Standard Life Ins. Co., 245 F.3d 1321, 1326 n.6 (11th Cir. 2001) (“We doubt that Levinson’s status as a full-time employee constitutes evidence that he was able to perform the material duties of his occupation on a full-time basis”); Perlman v. Swiss Bank Corp. Comprehensive Disability Protection Plan, 195 F.3d 975, 983 (7th Cir. 1999) (“Some people manage to work [with a disability] for months, if not years, only as a result of superhuman effort, which cannot be sustained . . . . Reality eventually prevails, however, and limitations that have been present all along overtake even the most determined effort to keep working”); Wuollet v. Short-Term Disability Plan of RSKCo, 360 F. Supp. 2d 994, 1009 (D. Minn. 2005) (“It is doubtful that Wuollet’s status as a full-time employee up to June 2002 is evidence that she was able to perform the material and substantial duties of her regular occupation after June 2002”). The 11th Circuit has even expressly rejected an argument that a plaintiff was not disabled because she was able to maintain full attendance for two days in an attempt to return to work despite her disability. Marecek v. BellSouth Telecommunications, Inc., 49 F.3d 702, 706 (11th Cir. 1995) (“BellSouth focused on Marecek’s attendance on September 19 and 20, 1988 as evidence that she could work. However, Marecek ‘gave it a go’ and her attempt to work does not forever bar her collection of sickness disability benefits”).

Having rejected the argument that Ms. Mucciacciaro’s full-time employment necessarily precluded her from claiming disability prior to June 18th, Judge O’Hearn next held that because of its faulty reasoning, Hartford failed to properly address the entire factual record of Ms. Mucciacciaro’s disability. Instead of relying on her job attendance as the sole basis for denying her claim, Hartford should have “evaluated the medical evidence provided, using job attendance as one of many considerations in their decision.” Judge O’Hearn cited Hartford’s faulty interpretation of Ms. Mucciacciaro’s accommodations request as emanating directly from its improper exclusive focus on her job attendance. Hartford argued that “Plaintiff’s ability to continue to work full-time after her [accommodations] request was denied demonstrates that she was in fact capable of working full-time.” Judge O’Hearn flatly rejected this argument:

It is illogical to suggest that a request for accommodation – and subsequent continuation of work despite the denial of that request – could weigh against a finding of disability or per se preclude a finding of disability. To the contrary, such evidence substantiates Plaintiff’s claim that she was in fact struggling to continue to work despite her disabilities and the employer’s denial of the accommodation she requested. At a minimum, it casts serious doubt on Defendant’s decision which relied exclusively on Plaintiff’s ability to work full-time….  Defendant’s decision, finding Plaintiff was not disabled before June 18, 2020, for the sole reason that she was working full-time without conducting a substantive review of the medical evidence provided in her claim was arbitrary and capricious. To find otherwise would fail to recognize the ability of many persons with disabilities to persevere despite their disability, often at great cost to their physical and mental health. There are innumerable reasons a person would attempt to maintain their employment despite these costs, one very obvious one being the continuance of health insurance. This “superhuman effort” cannot serve as the sole reason for the denial of disability benefits. This is especially true where individuals like Plaintiff request accommodations to allow them to continue their employment.

Judge O’Hearn also found Hartford’s position “irreconcilable with the language of the Policy as written which requires the disability to arise while an employee is a ‘Full-time Active Employee.’” According to the court, this presented Ms. Mucciacciaro with “a catch-22: continue working full-time and never be able to prove herself disabled under the Policy or stop working and lose coverage. Under Hartford’s interpretation of the long term disability plan, “no employee could qualify for disability and that simply cannot be how the Policy is interpreted.” The Second Circuit Court of Appeals rejected a similar non-coverage argument asserted by Unum Life Insurance Company against an employee who voluntarily resigned on April 3, 1993 – citing a decision to “move on” rather than a disabling illness – but who later filed a disability claim in July, 1993, after receiving a clarifying diagnosis from a treating specialist. The Court held that “the argument pressed by UNUM would essentially put disability claimants in a ‘Catch 22’ because those claimants who were working could not be considered disabled and yet claimants who had stopped working would not be covered under the Plan.” Locher v. UNUM Life Ins. Co. of Am., 389 F.3d 288, 297 (2d Cir. 2004).

Judge O’Hearn might also have pointed to the definition of disability, which required that Ms. Mucciaccaro be “prevented from performing one or more of the Essential Duties of [Her] Occupation during the Elimination Period,” but thereafter required as a result of the disability, her “Current Monthly Earnings are less than 80% of [Her] Pre-disability Earnings.” Thus, the long term disability plan specifically contemplated – during the Elimination Period (the 180 day waiting period before which benefits were payable) – that Ms. Mucciacciaro could be disabled while earning her full salary. It is hard to imagine an employer continuing to pay full salary except where an employee was at least attempting to work full time and to perform all their occupational duties. Thus, the LTD Plan envisioned that someone working full-time and receiving full pay could nonetheless be eligible and covered for long term disability benefits.

~Ms. Mucciacciaro Must Nonetheless Face Further Claim Handling by Hartford to Obtain Actual Disability Benefits

Due to the peculiarities of ERISA and because Hartford’s reliance on a technical non-coverage defense meant that it never addressed the medical substance of Ms. Mucciacciaro’s disability, Judge O’Hearn declined to reach the underlying merits of the disability claim:  “Both parties focused their Motions substantially on the question of whether Defendant could rely on Plaintiff’s full-time work status to deny her claim and spent little to no time addressing the merits of Plaintiff’s medical evidence,” and, consequently, “[t]his Court … finds that remand is appropriate so that Defendant may conduct an appropriate analysis and substantively consider Plaintiff’s claim, including all relevant medical evidence submitted, and provide a well-reasoned decision.”

Had Ms. Mucciaccaro initially chosen a disability date that coincided with (or preceded) her last day worked (rather than the day after she stopped working), or had she chosen to take a disability leave (rather than characterizing her departure as a resignation), she might have avoided Hartford’s denial of her claim on the basis of non-coverage. Hartford might still have denied her claim, but at least it would more likely have been on the substantive merits of her medical disability. And, had Ms. Mucciacciaro appealed that denial unsuccessfully, the Court would have been in a position to review that denial and award benefits. Instead, having pursued and won a lawsuit on the non-coverage defense (nearly 3 years after she first filed her disability claim), Ms. Mucciacciaro must return to Hartford, where she may now face another denial, another appeal, and another court proceeding on the underlying merits of her medical disability (a process that could take another year or more).

Hopefully, Hartford will be guided by Judge O’Hearn’s directions and will focus on Ms. Mucciacciaro’s medical condition – rather than the fact that she continued to work full-time through June 17, 2020. However, it would not be surprising if Hartford continued to give undue importance to this fact (or to the fact of Ms. Mucciacciaro’s “voluntary” resignation), despite the court’s instruction, and those of many other courts facing similar arguments from disability insurance carriers. See, e.g., Tekmen v. Reliance Standard Life Ins. Co., 2022 U.S. App. LEXIS 34818, at *30-31 (4th Cir. Dec. 16, 2022) (“As the district court implicitly recognized, the fact that Tekmen was able to work for a period despite her symptoms does not necessarily mean that she was not disabled”); Kaviani v. Reliance Std. Life Ins. Co., 2019 U.S. Dist. LEXIS 69062, *18-21 (M.D. Fla. Mar. 27, 2019) (Reliance Standard’s determination that plaintiff could not be disabled because “Plaintiff worked for three years after the motor vehicle collision and that he gave thirty days’ notice of his resignation” was unreasonable where “the uncontradicted evidence submitted by his dental assistants supports the conclusion that Plaintiff was likely disabled and practicing dentistry in a potentially unsafe manner” and where “Plaintiff’s reluctance to resign from his career – which helps explain his efforts to continue working despite the pain – is also supported by” the same evidence), aff’d, 2020 U.S. App. LEXIS 3006 (11th Cir. Jan. 31, 2020); O’Hara v. Nat’l Union Fire Ins. Co., 642 F.3d 110, 118-119 (2d Cir. 2011) (“One may be at one’s place of employment but not able to work. An employee’s continued presence at her place of employment does not preclude a finding of disability when there is evidence that the employee is incapable of performing her job”); Chandhok v. Companion Life Ins. Co., 2020 U.S. Dist. LEXIS 145347, at *53-55 (D.N.M. Aug. 13, 2020) (“Other courts confronting a similar argument have rejected — with noted disdain — insurance companies’ contentions that working categorically means that a claimant was not injured”; “To the extent that Companion Life relies on the fact that Chandhok worked from January, 2016, until early March, 2016, to conclude that Chandhok was not disabled when he stopped working, its decision was arbitrary and capricious”); Hipple v. Matrix Absence Mgmt., 2014 U.S. Dist. LEXIS 80444 ( E.D. Mich. June 13, 2014) (“Rochow precludes Defendants from assuming that Hipple was not disabled before his termination simply because he showed up for work; it requires Defendants to examine the medical evidence to determine whether Hipple was, in fact, disabled before his termination — while he was still a participant in the Program…”; “Matrix’s failure to review the medical evidence to determine whether Hipple was, in fact, disabled prior to his termination renders its denial of his claim arbitrary and capricious”); Bray v. Sun Life & Health Ins. Co., 2012 U.S. Dist. LEXIS 24131 (D. Colo. Feb. 27, 2012) (“A claimant’s attempt to continue working past the claimed date of disability does not necessarily preclude a finding that the claimant was totally disabled before ceasing to work entirely”; “A bright line test of that sort would unfairly penalize the individual who tries to work, notwithstanding a disabling condition, and would essentially mean that he is ‘damned if he does (try to continue to work)’ and ‘damned if he doesn’t’”).

Ms. Mucciacciaro, in turn, would be well-advised during the remand to present all medical evidence of her deterioration during the time frame leading up to her last day of work on June 17, 2020 (increased treatment, increased medication, worsening symptoms, advancement of her back condition as reflected by x-rays, MRIs, EMGs, or NCV studies, etc.). It would also be a good idea to supplement this with evidence of her decreased functionality at work and/or at home (increased use of vacation, sick or personal days; reliance on others to cover her work; increased use of naps or breaks; decreased productivity or other performance issues; extending her work hours to get caught up on decreased performance during regular hours; inability to take care of household tasks due to increased need to recuperate from work; decreased functionality and/or inability with regard to household tasks; etc.). She will want to show that her decision to stop work was dictated by her condition and DDH’s refusal to provide any work accommodation. For example, she may want to show that her only choice to continue working on a full-time schedule would have been increased pain management that was either impossible (e.g., she was already receiving the maximum allowed number of epidural steroid injections, radiofrequency ablations, or other pain relief office procedures), or unhealthy or dangerous (e.g., increasing pain medications to levels with potential deleterious side effects, or to levels that would impair cognitive function, complex decision-making, stress-tolerance or other capabilities required for safe/proper performance of her job).

~Seeking Legal Assistance When Filing for Short and Long Term Disability

As the Mucciacciaro case makes clear, decisions regarding how to initiate a disability claim – including even such seemingly simple matters as selecting the disability start date – can have profound effects on how a long term disability claim is handled (and may provide the disability insurance carrier with a non-coverage defense that might otherwise have been avoided). Moreover, long term disability plans are not identical. Continuation Provisions may be more (or less) generous with regard to the circumstances during which coverage may continue despite the cessation of an employee’s “actively at work” employment. Definitions of disability are quite variable from one long term disability policy to another, and slight variations in that definition (and whether, or not, and when, a loss of income is required) can be an important factor in determining when (and if) a disability can be said to start. This tends to be particularly true in disabilities resulting from a chronic/progressive medical condition (in contrast to those caused by a sudden/severe illness, accident or injury), where the question of “when” the disability started can be far more subjective and murky. This can be further complicated in situations where an employee characterizes her cessation of employment as a resignation or retirement, or where the employer has initiated a lay-off, reduction-in-force, or other termination of employment before the employee has filed for disability. This can sometimes lead insurance carriers (and courts following their lead) to determine (improperly, I believe), that a loss of income is “due to” the termination of employment (and not the disability). E.g., Sevely v. Bank of N.Y. Mellon Corp. Long Term Disability Coverage Plan, 794 Fed. Appx. 34 (2d Cir. 2019) (unpublished opinion) (Where employee who suffered from an inherited degenerative disease of the macula was laid off, and the LTD Plan defined disability to include a loss of income, the Court affirmed Prudential’s denial of his claim – despite the Social Security Administration’s finding of disability – because “his pay was never reduced during his employment with BNY and that there was no causal connection between his disability and the termination of his employment”; “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”). I believe the Sevely Court’s decision was poorly reasoned. As I’ve written:

When an employer selects an employee for layoff because of comparatively lower work quality or productivity, and that lower work performance, in turn, is directly attributable to a chronic-progressive disability, it is the disability that is the true underlying cause of the earnings loss. “But for” the disability and decreased performance, the employee would have survived the layoff/reduction-in-force….  [Moreover, a] non-disabled employee can find a new job with a new employer and thereby maintain continuous earnings. The disabled employee’s earnings loss is thus not caused by the termination, itself, but by the inability (due to illness and injury) to seek out, obtain, and maintain competitive employment with a new employer in a comparable job.

These complexities are discussed at greater length in my blog post, “Lay-Offs, Severance Packages and Long-Term Disability Claims: Compatible or Mutually Exclusive?,” and, in particular, in the section addressing Chronic Progressive Disability.

If you’re struggling at work with a chronic progressive illness and are considering whether to file a disability claim, there will be important decisions to make about when to file, how to present your cessation of work, and what disability start date you and your physicians should write in on your claim forms. The decisions you make can have profound effects on the later handling of your claim, and the defenses that may be raised against the claim by your disability insurance carrier. Our attorneys can assist with these decisions and work closely with you to ensure that you consider all your options and fully protect your rights.  See “Get Your Disability Claim Off to the Right Start.”


Chris Wieber is a New York Long Term Disability Attorney at the Law Office of Mark Scherzer with over 30 years’ experience in employer-sponsored (ERISA) short- and long-term disability claims.


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