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Click here for the full text of this decision FACTS:Walter House was a trial attorney and founding partner of his firm, earning approximately $350,000 a year. In October 1999, at age 49, House suffered a heart attack. In that same month, House’s firm sought competitive proposals from several insurers to provide more affordable life and disability insurance for the entire firm, including attorneys and staff. The firm entered into a subscription agreement for group life and disability coverage with American United Life (AUL) Insurance Co., providing for one class of life insurance coverage and three classes of disability coverage: Class 3 covering non-attorney employees, Class 2 covering non-partner attorneys, and Class 1 covering partners. The disability coverage for partners and non-partner attorneys was identical, except that: 1. partners would contribute 100 percent of their premiums and their pre-disability earnings would be calculated using K-1 forms rather than W-2s; and 2. the definition of total disability for the partner and non-partner attorneys (classes 1 and 2) differed slightly from that applicable to the other non-attorney employees (Class 3). For attorneys, that term meant that “because of Injury or Sickness the Person cannot perform the material and substantial duties of his regular occupation.” For the other employees, totally disabled meant that he or she “cannot perform the material and substantial duties of any gainful occupation for which the Person is reasonably fitted by training, education, or experience.” Under the agreement, total disability benefits for all classes would replace the covered person’s pre-disability monthly income up to $10,000, but subject to dollar-for-dollar reduction for other employment earnings. Partial disability benefits would be calculated through a stated formula, which yielded a percentage of the covered person’s pre-disability income as reduced by other income and not to exceed a maximum $10,000 per month. Partial disability benefits would be subject to discontinuation upon the firm’s termination as a “Participating Unit” in AUL’s insurance trust in other words, when the firm no longer maintained insurance through AUL. The firm provided AUL with enrollment materials for all participants in the life and insurance coverage. On his enrollment form, House filled in his occupation as “Attorney.” Because of House’s cardiac problems, AUL required a letter from his doctor stating that he was able to return to work full-time with no restrictions before it would approve the group coverage. House’s physician provided AUL a letter stating that House’s prognosis was excellent and that he could return to work without any limitations. AUL notified the firm that the insurance application for the group had been approved and provided a rate exhibit stating the premium rates for all the coverage made available through the group policy. There was no distinction in rates between partners, associates or staff but rather a per-coverage-dollar rate for the entire group. AUL provided certificates of insurance for delivery to the insured individuals, including House. The certificate House received, like the certificates all other firm participants received, describes the disability coverage he was provided but references the group policy as the source of all rights and benefits, that policy being subject to cancellation or termination by the firm or AUL. Under the group policy, the firm undertook responsibility for certain administrative tasks including determining eligibility for participation, enrollment of participants, calculation of premiums and payment of premiums. The firm submitted a single premium check to AUL each month, deducting the partners’ disability premiums from their draw accounts. About a month after his October 1999 heart attack, House returned to his trial practice, but a year later he failed stress tests and subsequently underwent quadruple bypass surgery. He briefly returned to work in November 2000 but only to wind up his trial practice and reassign his clients, after which he left the firm. In October 2001, House accepted a position as executive counsel to the Louisiana Department of Economic Development, a nonlitigation position that paid him $100,000 per year. House initially applied for benefits under the AUL policy in November of 2000, contending that he was totally disabled, because his doctor advised that returning to the stress of trial work could cause severe medical repercussions, including death. AUL paid nine months’ of total disability payments to House from January to September 2001, apparently while evaluating his claim. Initially, AUL told House it would need an independent medical examination to assess his disability claim but did not ultimately obtain one. Instead, in November 2001 and relying on its policy interpretation, AUL denied House’s claim on grounds that, given his postoperative activities and current employment, he appeared to be “capable of performing the sedentary occupation of an Attorney as it is normally performed in the national economy.” House sued, seeking full benefits and, under state law, penalties related to bad faith, refusal to pay and misrepresentation, and attorneys’ fees. The parties filed a series of partial summary judgment motions debating ERISA pre-emption and policy terms. The district court held in part that: House’s state law claims were not pre-empted, because the policy was not an ERISA plan; House was totally disabled based on policy language despite his ability to earn substantial income as an attorney; House also qualified as partially disabled under the policy language, such status being not mutually exclusive with total disability as written; and therefore House was entitled to the greater of the maximum monthly total disability benefit of $10,000 per month, but subject to offset by his earnings from the Louisiana agency, or the partial disability benefit as calculated under the policy formula. Neither party was fully satisfied with the outcome, and both appealed. House argued that he was entitled to additional penalties and either offset-free total disability benefits or continuing partial disability benefits. AUL argued that the disability policy under which House claimed benefits is governed by ERISA, state law penalties being therefore pre-empted, and challenged the district court’s finding that House was simultaneously totally as well as partially disabled under the policy. HOLDING:Reversed and remanded. First, after finding that the Labor Department’s “safe harbor” for voluntary benefit plans did not cover the long-term disability plan, the court concluded that the disability policy covering House was part of a plan covered under the Employee Retirement Income Security Act of 1974, 29 U.S.C. �1001 et seq. Thus, the court held that ERISA pre-empted House’s state law claims for penalties and attorneys’ fees. The court then turned to the issue of whether the district court erred in finding that House was “totally disabled” under the policy and that House could be deemed simultaneously both “totally disabled” and “partially disabled” under the policy. The court found that the definitions of total and partial disability under the AUL policy were mutually exclusive. The court also found the district court’s distinction between “trial lawyer” and “lawyer” too fine under a commonsense interpretation of “regular occupation.” A number of courts, the court stated, have upheld an interpretation of “regular occupation” as meaning a general occupation rather than a particular position with a particular employer. House’s regular occupation, the court found, was as an attorney, not restricted to his own specific job as a litigation attorney with a uniquely stressful practice but rather referencing the activities that constitute the material duties of an attorney as they are found in the general economy. Even crediting the opinion of House’s doctor that House’s heart condition precludes him from resuming his stressful trial practice, the court found House “clearly able to perform some of the material aspects of his occupation as an attorney, as evidenced by his post-surgery activities with his firm and his current legal employment with the Louisiana agency.” Under the policy, the court stated, House was therefore partially disabled. OPINION:Reavley, J.; Reavley and Garza, JJ. DISSENT:Dennis, J. “Because the majority opinion (1) disregards our holding in Robertson v. Alexander Grant & Co., 798 F.2d 868 (5th Cir. 1986) to find that the insurance policy is governed by ERISA and (2) ignores the provisions of Louisiana Revised Statute section 22:230 and Louisiana jurisprudence on total disability policy definitions to conclude that Walter House does not qualify as totally disabled under the policy language, I respectfully dissent.”

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