“When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”

“The question is,” said Alice, “whether you can make words mean so many different things.”

“The question is,” said Humpty Dumpty, “which is to be master — that’s all.”

Lewis Carroll, Through the Looking Glass.

Disputes over the meaning of a word or phrase in an insured benefit plan almost always end up with the litigants feeling like they have gone through the looking glass to a place where the words you thought you understood all your life suddenly mean something entirely different.

The most recent example of this phenomenon is Carlile v. Reliance Std. Life Ins. Co., — F.3d –, 2021 WL 671582 (10th Cir, Feb. 22, 2021), where the dispute revolved around whether Mr. Carlile was an “active, Full-time Employee” when he became disabled.

Mr. Carlile had worked for the disability plan sponsor for about four years when he was given notice in March 2016, that he was being laid off as part of a reduction in force effective June 20, 2016. Accompanying the notice was a lump-sum payment of his wages for the notice period, and the confirmation that he no longer needed to come into work. Apparently, though, he continued to visit the office “at his convenience” until he was diagnosed with prostate cancer on May 31, 2016. Apparently his “last day of work” (whatever that means) was June 7, 2016. He filed a claim for LTD benefits, which Reliance Standard denied, finding that Mr. Carlile’s participation in the disability plan had terminated before June 7, because he was no longer an “active, Full-time Employee.”

Follow us through the looking glass as we watch the Tenth Circuit explore: why the meaning of “active, Full-time Employee” is not influenced at all by the plan’s definitions of “Actively at Work” or “Active Work;” why the court’s own prior decision defining “actively at work full time” in a similar context supported Reliance only “at first glance”; and why determining how much an employee worked during his “regular work week” apparently does not require proof of how much the employee ever really worked at all. At the end of the journey, it turns out that “active” really means nothing, because an “active, Full-time Employee” is exactly the same as a “Full-time Employee.”

The plan at issue stated that, to be eligible to participate in the plan, one must be an “active, Full-time, Employee,” and confirmed that coverage terminated on “the last day of the Policy month in which the Insured ceases to meet the Eligibility Requirements.” The plan defined “Actively at Work” and “Active Work” to “mean actually performing on a Full-time basis the material duties pertaining to his/her job in the place where and the manner in which the job is normally performed. This includes approved time off such as vacation, jury duty[,] and funeral leave, but does not include time off as a result of an Injury or Sickness.” And the plan defined “Full-time” to mean “working for [the employer] for a minimum of [thirty] hours during a person’s regular work week.”

Readers who are particularly perceptive will note, as did the Tenth Circuit, that “active,” as written in “active, Full-time Employee,” is not identical to “Actively at Work” or “Active Work.” There’s the lack of a capital “A,” for starters.  Thus, the court noted, one certainly cannot look to those defined terms – which include the word “active” – to attempt to understand what the word “active” means. Id. at *5 (“We agree with Mr. Carlile that the word ‘active’ must mean something different than the defined terms ‘Actively at Work’ and ‘Active Work.’”).

Reliance argued that the Tenth Circuit had long ago determined the meaning of “active, Full-time Employee” when it held that “‘[a]ctively at work on full time’ means actually on the job and performing the employee’s customary work. Being on the payroll is not enough.” Id., at *6, quoting Elsey v. Prudential Ins. Co. of America, 262 F.3d 432, 435 (10th Cir. 1958). But the Tenth Circuit circa 2021 held that the decision by the Tenth Circuit circa 1958 only “appear[ed], at first glance, to support [Reliance’s] position.” Id. The court’s second glance showed it that Elsey was talking about whether an employee’s coverage ever began, not whether it ended, and that, as they say, is a horse of a different color. It is not clear why the same word used in the same provision should have different meanings depending on whether it is used at the beginning or end of participation, but apparently it does.

Soldiering on, Reliance argued that, even if “active” might be ambiguous on its own, it is not when used in the phrase “active, Full-time Employee,” because there it could only mean that the employee is actually (actively) working Full-time (i.e. at least 30 hours a week). Wrong again, held the court. The plan defined “Full-time” as working for at least 30 hours “during a person’s regular work week.” And that could not possibly be interpreted to suggest that the employee must “work thirty hours a week consistently.” Id. at *7. Rather, “regular work week” plainly refers to “something established by employment terms and routine practice.” Id. Besides, the plan’s “eligibility provision nowhere states that an individual must work thirty hours every week, or even at least one week per month. It states only that ‘Full-time’ means working thirty hours in a ‘regular work week.’” Id. Based on this analysis, the court “conclude[d] that the defined term ‘Full-time’ fails to resolve the ambiguity concerning the meaning of ‘active.’” Id.

Still not done, Reliance noted that, whatever Mr. Carlile’s “regular work week” had been before his employer gave him notice of termination, his “regular work week” afterwards did not encompass working 30 hours. The court was having none of that: “Reliance offers no authority to support the proposition that a not-yet-effective notice of termination negates an established history of regularly working thirty hours per week.” Id. To be sure, the court had earlier noted that the employer never tracked Mr. Carlile’s hours, so it is not clear how the court concluded that he had “an established history of regularly working thirty hours per week.” Somewhat to the contrary, the court observed in a footnote simply that Mr. Carlile was not required to prove he worked thirty hours in any particular week, and that Reliance Standard did not dispute that his regular work week before his termination was at least thirty hours.

At the end of this journey, the Tenth Circuit summed its conclusion thusly:

In sum, the Plan’s eligibility requirements are that an employee be “active” and “Full-time.” App. vol. 1, 108. Construing the ambiguous term “active” in Mr. Carlile’s favor and against Reliance, that word means merely that the employee is currently employed—which Mr. Carlile indisputably was here, because his termination was not yet effective. And Mr. Carlile was also “Full-time” because there is no dispute that his regular work week at LRI involved working at least thirty hours per week. Mr. Carlile is entitled to long-term disability benefits under the Plan.

Id. at *9.

Given that “Full-time” is defined to require that the employee be “working,” among other things, it would seem to already require that the person is currently employed. Alas, the court never addressed why the plan would require one to be an “active, Full-time Employee” if “active” did not add anything to “Full-time Employee.”

After following the linguistic journey the Tenth Circuit brought us on, it is almost a shame to note that, toward the end of its disquisition on the word “active,” the court remarked that the Fourth Circuit had endorsed the same interpretation of a similar phrase, as used in a different type of policy issued by Reliance Standard, Tester v. Reliance Std. Life Ins. Co., 228 F.3d 372 (4th Cir. 2000). The Tenth Circuit appeared to suggest that Reliance Standard should somehow be faulted because it allegedly “declined to amend its standard policy language in the wake of Tester[.]” Id. at 8.

Photo of Patrick Begos Patrick Begos

Mr. Begos has nearly 30 years of commercial and insurance litigation, arbitration, mediation and negotiation experience, representing companies and individuals in a wide array of industries. He has a national reputation in handling litigation under the Employee Retirement Income Security Act (ERISA) and…

Mr. Begos has nearly 30 years of commercial and insurance litigation, arbitration, mediation and negotiation experience, representing companies and individuals in a wide array of industries. He has a national reputation in handling litigation under the Employee Retirement Income Security Act (ERISA) and, in particular, denial of group benefits claims. Mr. Begos has litigated hundreds of ERISA cases and has been involved in shaping the development of ERISA law across the country. He is a regular speaker at ERISA and insurance conferences around the country and has written extensively for various nationwide publications. Read his full rc.com bio here.