Long Term Disability Benefits Denied to Surgeon After Segway Accident

A federal judge in California recently determined that a surgeon who was injured in a segway accident waived his claim to long term disability benefits in a settlement agreement with his former employer.  See Gonda v. The Permanente Med Grp., Inc. (N.D. Cal., No. 3:11-cv-01363-SC, 2/17/15). In addition to finding that the settlement agreement expressly waived claims under the Employee Retirement Income Security Act, the U.S. District Court for the Northern District of California also found that California law—rather than federal common law—governed the agreement, despite noting a lack of clarity on this point from the U.S. Court of Appeals for the Ninth Circuit. By way of background, Dr. Thomas A. Gonda Jr.—who suffered from alcohol and substance abuse problems after his Segway accident—lost his job as a surgeon and received long-term disability benefits from Life Insurance Co. of North America ("LINA") for three years. LINA terminated benefits after Gonda completed a substance abuse treatment program and became certified as an addictions counselor, and he challenged that termination in federal court. According to the District Court, Gonda's lawsuit was barred by the settlement agreement he entered into with his former employer in the course of a wrongful termination lawsuit. The settlement agreement released all Gonda's claims against his former employer and its agent, and the agreement specifically mentioned claims brought under ERISA. Significantly, the court found that the settlement agreement specifically released claims against the employer's long-term disability plan, despite not mentioning the plan by name. On that point, the court found that the language releasing claims against the employer was broad enough to extend to the employer's disability plan. Gonda argued that a later agreement in which LINA—who wasn't a party to either lawsuit—agreed to consider his administrative appeals despite the settlement agreement superseded the waiver. The District Court disagreed, noting that it was “unclear” how LINA's willingness to hear the appeals could affect the employer's contractual rights. According to the District Court, “[w]illingness to continue internal administrative appeals does not equate to a waiver of Defendants' contractual right to be released from Dr. Gonda's claims against them."