If I were to ask the average claimant what “material and substantial” means relative to an ERISA Plan or IDI claim, the response would most likely be, “important.” However, it might surprise claimants and insureds to know that there is a theoretical side to defining disability Plans in addition to the practical considerations usually contained in the Summary Plan Description.
Have you ever wondered what the alphabet soup after my name represents? Most of those who have ever “touched” claims are either asked, or required to take industry courses (Health Insurance Association of America, HIA, or HIAA) that actually teach insurance and claim theory. It’s funny though, that in my experience, attorneys who have cross-examined me at deposition, as well as actual insurers themselves, often are unaware of the theories that are taught in these courses.
Most short and long-term disability Plans define disability using the phrase “material and substantial” and then go on to define it as follows: Material and substantial means duties that are normally required for and form a significant and integral part of the performance of the member’s own occupation and which cannot be reasonably omitted or modified by the member or the employer. You might notice that the Plan defines “material and substantial” in a subjective way, meaning it is subject to interpretation.
However, there’s much more to the story. The use of the words MATERIAL and SUBSTANTIAL are both qualitative and quantitative descriptions defined in theory at least, as any required job task performed more than 20% of the time in a normal work day. If a normal workday is defined as 40 hours/week, or 8 hours per day, a material duty by definition is one that is performed by the claimant, or insured for at least 1.6 hours per day, or 8 hours per week total.
The word SUBSTANTIAL is the quantitative definition that again refers to the percentage of time devoted to a particular duty. This is why it is extremely important for IDI insureds to include “percentage of time spent” on their submitted Curriculum Vita. It’s not a good idea to underestimate the egregious ingenuity of insurers who may have teams of people examining CPT or CDT codes to determine what’s material and what’s not.
It’s also not a good idea to allow insurers to determine for themselves what’s MATERIAL AND SUBSTANTIAL and what isn’t. This is again why it’s important for for claimants and insureds to clearly document all job duties performed and the percentage of time spent on each task.
When you look, or consider this issue, make sure that ALL of your material and substantial duties are documented. ERISA employers often use “canned” occupation descriptions. While most insurers have gotten away from this, some still use “canned”, and outdated software to determine what job is performed with the umbrella of “an occupation as defined in the national economy.” While it is true that “occupational descriptions” can get fairly complicated, the gist of this article is more about the use of MATERIAL AND SUBSTANTIAL as written in the definitions of disability. The take from this article is that a job task would not be considered MATERIAL OR SUBSTANTIAL if performed less than 20% of the time in a normal work day, and insureds should take great caution when listing percentages so that tasks are not listed greater than 20%, if not significant.
Now, I can already hear someone in the background asking the obvious questions, “Can a task be material, but not substantial? Or, substantial, but not material?” And the answer is, “Of course they can.” A task could be extremely important, but not performed that often, or, a task is performed all the time, but isn’t all that significant. These are considerations that are dictated by common sense on a claim by claim basis, but still part of insurance theory. But, for most situations, tasks must BOTH be MATERIAL AND SUBSTANTIAL.
I remember sitting across the table from a group of attorneys who asked me a question in a deposition about “material duties”. When I began the “theory talk” about 20% etc. they got all flustered and asked me to “prove it”, and produce the book, my proof of earned credentials etc. When I was ready to hand over the information their eyes clouded over in bewilderment. I was thinking, “I gotcha’”.
There is always a theoretical component to insurance definition, and it makes a good argument for hiring experts with the alphabet soup after their names. In any event, it is important for claimants and insureds to understand how MATERIAL AND SUBSTANTIAL is defined, to that they can take the lead in defining what is material and what isn’t before the insurance company does. Staying a step ahead of the claims process is always a good thing.