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Termination of employment may impact your long-term disability claim

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Many employees dealing with a disability also face the risk of unemployment because they are unable to continue fulfilling the requirements of their jobs. If you are considering accepting a severance package from your employer, but have a significant and debilitating health condition, you should first review your company’s long-term disability policy before making the decision to accept a severance package.  If you terminate employment, you may be prevented from receiving disability benefits from your former company’s policy.

This is what happened to the plaintiff in the matter of Perez-Jones v. Liberty Life Ass’n Co. of Boston, No. 14-55455, __F.App’x___, 2016 WL 1320516 (9th Cir. Apr. 5, 2016).  The Ninth Circuit Court of Appeals affirmed the district court’s determination that the plaintiff waived her right to receive long-term disability benefits by signing a severance agreement and accepting a severance package provided by her then-employer.  The court affirmed the district court’s decision on the basis that the plaintiff was not a “participant” in the long-term disability plan entitled to bring an ERISA claim.  This is because the plaintiff no longer worked for the long-term disability plan’s sponsor at the time she sought long-term disability benefits since she had already signed a severance agreement and terminated her employment.  The court found that she was not a “Covered Person” under the terms of the plan entitled to claim benefits.

At Kantor & Kantor LLP, we advise our clients about their right to benefits in order to ensure that they do not waive valuable long-term disability benefits.  If you have questions about your long-term disability benefit policy, contact us.

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