When you buy disability insurance you count on it being there when you can’t work and lose your income. You are buying, as insurers tell you, peace of mind--the knowledge that in the worst case scenario you and your dependents will have resources to protect the most important things in your life. One of the things disability insurers routinely do, however, is elevate form over substance when evaluating disability claims. Last week’s case of Demirovic v. Building Service 32 B-J Pension Fund, 2006 U.S. App. LEXIS 25891 (2nd Cir.) illustrates both that tactic and a welcome rejection of it by the federal judiciary. Nezmije Demirovic, an emigré with limited English language skills, worked as a night cleaner for about 30 years. At age 55 she applied for disability benefits in light of a degenerative knee, diabetic neuropathy, retinopathy and a variety of other physical and mental deficiencies. Her treating physicians were unanimous in their opinions that she could not stand for more than two hours a day or perform even a sedentary job on a prolonged sustained basis. The Fund that provided her disability benefits rejected her application saying that the Plan document language required Demirovic to prove she was unable to work “in any capacity” before she was entitled to benefits. The Plan reasoned that because Demirovic had the physical capacity to do something, she was not entitled to benefits. A literal, strict reading of the Plan language would appear to bear out the Plan’s argument, especially when its decision was reviewed under an arbitrary and capricious standard of review, as the U.S Court of Appeals for the Second Circuit acknowledged it was obligated to do. The court framed the issue in the case as whether the Plan document language could reasonably be interpreted “so strictly as to deny benefits to any claimant who is physically capable, in the abstract, of any kind of work whatsoever, regardless of the claimant’s individual vocational circumstances.” The court held that it could not. Relying on cases from the Eleventh and Tenth Circuits, the court ruled that the language of the Plan could not be read so literally as to require that a claimant be “utterly helpless” before she will be considered disabled. The court stated that the Plan had to take into account Demirovic’s age, lack of education, lack of language skills, and other vocational factors to determine whether she could earn a “reasonably substantial income” from some other job that rose to “the dignity of an income or livelihood, though not necessarily as much as she earned before the disability.” Kudos to the Second Circuit for keeping in mind the practical purpose of disability insurance. And congratulations to Nezmije Demirovic and her first rate disability lawyer, Aba Heiman, for their hard fought win. Demirovic is a hit; you’ll find it in this website’s library.