Fortier v. Principal Life Insurance Co., No. 10-1441

Decided: January 11, 2012

Dr. Kenneth Fortier became medically disabled, closed his practice, and applied for disability benefits from defendant Principal Life Insurance Company, which had issued short-term and long-term group disability policies to the practice. The policies provided that an insured who is disabled is entitled to receive 60% of his pre-disability earnings capped at $1,500 per week for short-term benefits and $6,000 per month for long-term benefits; which benefits are reduced by the amount that all disability benefits exceed his pre-disability earnings. Principal Life determined that Fortier was disabled, as defined in the policies, but in view of the fact that he was receiving $15,470 per month in disability benefits on his individual disability policies issued by another company, he was not entitled to any further benefits under Principal Life’s group disability policies. Dr. Fortier commenced this action under ERISA, claiming that the administrator of the Principal Life policies had misconstrued the policies in calculating his pre-disability earnings, and that his pre-disability earnings were far greater than those calculated. More particularly, Dr. Fortier contended that Principal Life erroneously deducted from his gross pre-disability earnings one-time business expenses occurred by him in starting up his practice and pursuing litigation. The Fourth Circuit Court of Appeals affirmed the district court’s judgment in favor of Principal Life, concluding that the administrator’s interpretation of the policies was reasonable. The administrator concluded that because Fortier claimed the one-time expenses as deductions on his federal income tax returns, he thereby represented that they were ordinary and necessary business expenses.

Full Opinion

-Sara I. Salehi

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