The Office of General Counsel issued the following opinion on May 21, 2003, representing the position of the New York State Insurance Department.
Re: Group Disability Income Policy, Definition of Disability
Did the insurer act reasonably in determining that a public health nurse was capable of functioning in another nursing position?
Based upon all the facts, in this particular situation, it does not appear that the insurers determination was reasonable.
The insured is a Registered Nurse with a BA and had been employed for 25 years by a visiting nurse service (VNS). She was insured under a group disability income policy issued by a life insurer to the Federation of Nurses/UFT under the Select Group Insurance Trust. The policy, for other than airline pilots and crew, defines
Disability and disabled mean that because of injury or sickness: (1) The insured cannot perform each of the material duties of his regular occupation; and (2) after benefits have been paid for 24 months, the insured cannot perform each of the material duties of any gainful occupation for which he is reasonably fitted by training, education or experience.
On or about July 23, 2001, the complainant ceased working for VNS, primarily because of Chronic Obstructive Pulmonary Disease caused by long-standing asthma and applied for benefits under the policy. Her medical history indicates mild obesity, a mild myocardial infarction (heart attack) some 4 years previously, carpal tunnel syndrome, Raynauds Syndrome (a vascular disorder of the extremities exacerbated by cold weather), and residual muscle weakness from post polymyositis (a muscular inflammation of unknown etiology).
The insurer initially conceded that the insured was unable to function in her former employment with VNS because that job requires "medium" work, but asserted that she could function in a job that requires "light" or sedentary" work, such as a school nurse, a nurse in a physicians office, a utilization review coordinator for an insurer, and several other sedentary jobs open to nurses. Accordingly, the insurer denied her claim. While the insured did not contest that she could engage in some gainful employment (which ability is a medical question), she contended that her occupation is public health nurse and that the proposed alternative positions are not within her occupation. After she exhausted all internal appeals provided by the insurer, she complained to this Department.
Based upon the available information, it appears that the policy was issued to the policyholder in accordance with New York Insurance Law § 4235(c)(1)(D) (McKinney 2000 and 2002 Supplement):
A policy issued to a trustee or trustees of a fund established, or participated in, . . . by one or more labor unions . . . which trustee or trustees shall be deemed the policyholder, to insure . . . members of the unions for the benefit of persons other than . . . the unions, subject to the following requirements: (i) The persons eligible for insurance shall be . . . all of the members of the unions, or all of any class or classes thereof determined by conditions pertaining to . . . membership in the unions . . . . (ii) The premium for the policy shall be paid by the trustee or trustees either wholly from funds contributed by the . . . union or unions, . . . or jointly from such funds and funds contributed by the insured persons specifically for their insurance or from contributions by the insured persons. . . .
It is presumed that the Federation of Nurses/UFT is the collective bargaining agent for nurses employed by VNS, that the policy is "sponsored" by the Federation of Nurses/UFT, and that the entire premium is paid by the individual insureds.
An employee welfare benefit plan is defined in the Employee Retirement Income Security Act (ERISA), 29 U.S.C.A. § 1001 et seq. (West 1998 and 2002 Supplement) as, 29 U.S.C.A. § 1002(1) (West 1998):
The terms employee welfare benefit plan and welfare plan mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) . . . benefits in the event of sickness, accident, disability . . . .
Based upon the facts as presented, it appeared that the policy would qualify as an employee welfare benefit plan under ERISA.
The insured cited an unpublished decision, Kappel v. Guardian Life Insurance Company of America (Sup. Ct. Queens County 1999), in support of her position. Kappel was a decision by the court that a factual issue existed as to whether a nurse for a home health care agency forfeits her policy benefits by becoming employed as a nurse-educator at a hospital. The insurer in that case filed a Notice of Appeal, but never perfected the appeal since the matter was settled.
A "regular occupation" is a position of the same general character as the insureds previous job, requiring similar skills and training, and involving comparable duties. Dawes v. First UNUM Life Insurance Company, 851 F. Supp. 118 (S.D.N.Y. 1994). The Dawes definition has been held to be applicable to nurses. Dionida v. Reliance Standard Life Insurance Company, 50 F. Supp. 2d 934 (N.D. Calif. 1999). See also Nickoson v. Provident Life and Accident Insurance Company, 202 F.3d 269 (6th Circ. 2000) (unpublished opinion).
In Dionida, the insured was a "staff nurse" in a general hospital who was unable to function in her regular position because of shoulder and back problems. The insurer did not dispute that the insured was disabled from her regular position, which required "medium" work, because of an inability to handle and lift patients, but asserted that she could function in nursing positions that involved sedentary work or light exertion, such as school nurse or nurse in a physicians office. The court utilized the definition of "regular occupation" set forth in Dawes and held that the positions suggested by the insurer were not within the same classification in the United States Department of Labors Dictionary of Occupational Titles as was the position held by the insured. (50 F. Supp at 939).
In Nickoson, the insured worked as a flight nurse for an airborne ambulance service and injured his back while transferring a patient. The insurer did not dispute that the insured was disabled from his regular position, but asserted that he could function in administrative positions utilizing his education as a nurse. The court held:
To interpret registered nurse as a single occupation while at the same time acknowledging the plethora of distinct jobs that registered nurses can be employed to perform strains common usage to a high degree.
2000 US. App Lexis 538.
This Office did not believe that the insurer had sufficiently demonstrated that the duties of the insured as a public health nurse for a VNS were sufficiently similar to the prospective duties of the various positions proposed by insurer so that they would be within her "regular occupation."
For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.