Opinion ID: 3028801
Heading Depth: 3
Heading Rank: 1

Heading: Disability Policies

Text: Liberty Life Insurance Company of Boston (Liberty) insured and administered the STD plan, pursuant to a Liberty policy purchased by IKON, and provided claims administration services for the LTD plan, which was self-funded by IKON. When an IKON employee applied for STD benefits, Liberty both evaluated the claim and paid the benefits with its own funds. Liberty’s decisions regarding claims brought under the STD plan were conclusive and binding. In contrast, IKON was the sponsor, insurer, and administrator of the LTD plan. Liberty was responsible for processing LTD claims, but IKON retained the authority to overrule Liberty’s determinations. Benefits were paid by IKON, not Liberty. Under both policies, a claimant was required to make the same showing to establish disability. When Liberty or IKON, as relevant, received proof that a covered person was disabled due to injury or sickness and required the regular attendance of a physician, Liberty or IKON would pay the covered person periodic benefits upon conclusion of an elimination 3 period during which disability had to be established but no benefits would be paid. “Disability” was defined under both policies to mean that the covered person had to be unable to perform all of the material and substantial duties of his or her occupation on an active employment basis because of an injury or sickness. The proof furnished had to establish the date on which the disability started, as well as the cause and degree of the disability. Under the STD policy, Liberty had sole authority to interpret the terms of the policy, and its decisions regarding the construction of the contract were conclusive and binding. Under the LTD policy, Liberty’s determinations could be overruled by IKON. As the names suggest, the main difference between the two policies (besides the role of IKON) was the duration of coverage. STD claims were for short-term benefits, up to 26 weeks, with an elimination period of two weeks. LTD claims were for long-term benefits, with the standard for proving disability heightening after 24 months, and an elimination period of six months. The difference between the lengths of the elimination periods meant that a covered person seeking STD benefits had to prove disability within a narrow two-week window, whereas a covered person seeking LTD benefits could prove disability lasting over a six-month period.