Opinion ID: 808364
Heading Depth: 5
Heading Rank: 2

Heading: for the period of your employment with

Text: your Employer if you have been employed less than two (2) full calendar years prior to your date of disability. Average gross monthly income is your total income before taxes. It is prior to any deductions made for pre-tax contributions to a qualified deferred compensation plan, Section 125 plan, or flexible spending account. It does not include income received from car, housing or moving allowances, Employer contributions to a qualified deferred compensation plan, or income received from sources other than your Employer. As Stephan worked for less than a year before becoming disabled, his Plan benefit was to be calculated based on his “average gross monthly income . . . for the period of [his] employment” at TWP. As noted above, in the letter offering Stephan employment, TWP provided: 11108 STEPHAN v. UNUM LIFE INSURANCE Your salary rate will be $200,000 annually. . . . You will be eligible to participate in Thomas Weisel Partners’ discretionary bonus program. Although bonuses are generally discretionary, you will be guaranteed [a] $300,000 bonus for your first 12 months of employment, provided you perform at the level both you and we anticipate and that you have not voluntarily terminated your employment or been terminated for cause prior to the relevant payment dates. The Plan is silent as to whether and how such a bonus ought to be included in Stephan’s gross monthly earnings if he is disabled before the bonus is received.7 Unum insists that the “monthly earnings” upon which disability benefits are based must be limited to “earnings received up to the date of disability.” But the language limiting earnings to income already “received” appears in section (a) of the definition, applicable after two years of employment, not in section (b), which applies to employees disabled after fewer than two years of work. As Stephan had worked for less than a year before becoming disabled, it is section (b) that applies to him. Section (b) contains no reference to when income is received. Unum’s reliance on the term “received” to interpret section (b) is therefore misplaced. Furthermore, Unum’s interpretation would make arbitrary distinctions based on an insured’s length of employment, dis- 7 Citing Arnold v. Unum Life Insurance Co. of America, 726 F. Supp. 2d 1063 (N.D. Cal. 2009), Stephan notes that other insurance plans issued by Unum explicitly excluded bonuses from the definition of monthly earnings, and argues therefore that Unum’s failure to do so here indicates that they are included. However, Unum also issued plans that explicitly included bonuses in the definition of monthly earnings. See Hemenway v. Unum Life Ins. Co. of Am., 89 F. App’x 630, 631 (9th Cir. 2004). We therefore cannot draw any inference from the Plan’s silence on how bonuses ought to be treated. STEPHAN v. UNUM LIFE INSURANCE 11109 tinctions not supported by the text of the Plan. For example, if Stephan had become disabled the day he received his bonus, it would be included in the earnings upon which Unum’s disability payments were based. But if he had become disabled one day before his first bonus was received, it would not be so included, even if he had worked for twelve months at an adequate level and his bonus was, therefore, guaranteed. In addition, the Plan’s definitions of “monthly earnings” and “gross monthly income” are the same — “total income before taxes” — regardless of how long an insured has been employed. Such earnings are not defined differently based on length of employment, but merely “figured” differently (emphasis added). On Unum’s interpretation, however, for those employees who have received their bonuses, “total income” would include salary and bonuses. For those whose bonuses are guaranteed but have yet to be paid, such income would include salary only. This result is at odds with the policy’s language, which defines monthly earnings without regard to length of employment. Finally, interpreting “gross monthly income” to include only income actually received would mean that employees who became disabled before receiving their first paycheck would receive no disability payments at all. Similarly, the disability payments for an employee whose paycheck was incorrect — for example someone who had been accidentally underpaid due to a payroll error or intentionally underpaid due to discrimination — would be calculated based on this erroneous figure. The district court “expresse[d] no opinion on these matters, and limit[ed] its holding to the facts of this action.” But the Plan applies to all TWP employees, not merely Stephan, and Unum is required by law to ensure that “the plan provisions” are “applied consistently with respect to similarly situated claimants.” 29 C.F.R. § 2560.503-1(b)(5). Unum’s interpreta11110 STEPHAN v. UNUM LIFE INSURANCE tion of the Plan as limiting monthly earnings to income actually received either disregards this obligation or reaches an unsupportable result.