TL;DR:
Reliance Standard Life Insurance sold a long-term disability policy to a worker who later developed a rare autoimmune disease that left her unable to work.
When she turned to the policy she had paid for, the evil insurance company used an extreme reading of a “pre-existing condition” clause to deny benefits, even though no doctor had suspected or treated her actual disease during the relevant time window.
A federal appeals court recently ruled that this interpretation distorted the plain language of the policy and was arbitrary and capricious. That court ruling exposes how corporate profit incentives and weak oversight in the disability insurance system leave sick and disabled workers exposed.
Keep reading for the details of how this happened, what it reveals about corporate ethics, and why our late-stage capitalistic system makes this kind of harm predictable.
A Disabled Worker, a Paid Policy, and a Corporate Escape Hatch
The story centers on Cheriese D. Johnson, a human resources employee at The William Carter Company, a major brand in baby and children’s clothing. She started the job in July 2016 and bought a long-term disability policy from Reliance Standard Life Insurance Company. The policy took effect on October 12, 2016.
By January 26, 2017, Johnson could no longer work. She was totally disabled under the terms of the policy. Months later, doctors finally identified the culprit: scleroderma, a rare, chronic autoimmune disease that replaces normal tissue with dense, thick fibrous tissue and produces symptoms like joint pain, persistent cough, shortness of breath, digestive problems, and fatigue.
Before that diagnosis, Johnson had gone from doctor to doctor with a long list of problems: nausea, vomiting, fatigue, chronic pain, swelling in her hands and feet, cognitive issues, dizziness, and more. She received at least ten different diagnoses; fibromyalgia, borderline lupus, sleep apnea, bronchitis, reflux disease, hypertension, and others.
None of them was scleroderma. None of her doctors suspected scleroderma before a lung biopsy in February 2017 finally revealed it.
Reliance Standard refused to pay. Surprise surprise 🙄
The evil insurance company invoked a “pre-existing condition” exclusion, arguing that because Johnson had received treatment for symptoms that could be consistent with scleroderma during the three-month “lookback period” before her coverage started, her disability fell outside the promise it had sold.
In 2025, a federal appeals court reviewed that decision and concluded that Reliance Standard’s interpretation of its own policy was wrong and unreasonable.
The court described the company’s reading as a warping of the policy’s plain language that effectively turned a pre-existing condition exclusion into a pre-existing symptom exclusion… a move that let the insurer walk away from a disabled worker whose rare disease no one had diagnosed in time.
Inside the Allegations: How Reliance Standard Rewrote Its Disability Promise
At the core of this case is a single sentence in Reliance Standard’s long-term disability policy. The company promised benefits unless the disability was:
“caused by; contributed to by; or resulting from; a Pre-Existing Condition.”
The policy then defined “Pre-Existing Condition” as:
“any Sickness or Injury for which the Insured received medical Treatment, consultation, care or services, including diagnostic procedures, or took prescribed drugs or medicines”
during the three months immediately before coverage began!
The key phrase is “for which.” The court explained that “for” refers to the purpose of treatment. A doctor treats a person for a specific illness when the doctor intends to address that illness. Treatment for vague symptoms is not the same thing as treatment for a specific disease that no one has yet identified.
Reliance Standard took a different view.
The evil insurance company treated any symptom during the lookback period that was not inconsistent with the later-diagnosed disease as treatment “for” that disease; even when no one suspected that diagnosis at the time. Under this logic, the court noted, a patient told to drink more water for headaches would count as having received treatment “for” a brain tumor if a tumor was discovered later, simply because headaches can be a symptom of a tumor.
The court rejected this reading as unreasonable and arbitrary. It concluded that Reliance Standard “warps the plain and ordinary meaning” of the policy and transforms it into something much harsher than what a worker would reasonably think they bought!
Timeline: How the System Failed Cheriese Johnson
| Date / Period | Event | What Happened |
|---|---|---|
| December 2015 | Early symptoms | Johnson began experiencing coughing and pain in her hands and feet. |
| July 2016 | Employment and insurance | Hired by The William Carter Company and purchased long-term disability coverage from Reliance Standard. |
| July 12 – Oct 12, 2016 | Policy lookback period | Three-month window used to screen “pre-existing conditions.” |
| Aug 15, 2016 | Clinic visit | Follow-up visit for fatigue, muscle weakness, nausea, vomiting; ongoing prescriptions continued. |
| Aug 23, 2016 | Diagnostic procedure | Upper gastrointestinal endoscopy showed gastritis and hiatal hernia. |
| Sept 6, 2016 | Multiple diagnoses | Treated for vomiting, nosebleeds, memory loss, body aches, joint swelling; diagnosed with infections, reflux disease, edema, hypertension; new medications prescribed! |
| Sept 13, 2016 | Further symptoms | Treated for fainting episode and low blood sugar; diagnosed with bronchitis, fatigue, reflux disease, and sleep apnea. |
| Sept 30, 2016 | Severe deterioration | Treated for extensive neurologic and physical symptoms, including numbness, cognitive problems, loss of motor skills, and swelling! |
| Oct 12, 2016 | Policy effective date | Long-term disability coverage formally began. |
| Jan 26, 2017 | Total disability | Johnson reached the point where she could no longer work in her job. |
| Feb 2017 | Lung biopsy | Biopsy led to diagnosis of scleroderma, a rare autoimmune disease. |
| ~Late 2017 | Claim filed | About eight months after the diagnosis, Johnson submitted a long-term disability claim based on scleroderma. |
| 2017–2018 | Internal denial | Reliance Standard denied benefits and upheld that denial after an appeal and a file review by an endocrinologist. |
| 2021 | Federal lawsuit | Johnson sued under federal benefits law to enforce her rights under the plan. |
| District court stage | Initial loss | The district court granted summary judgment to Reliance Standard. |
| November 21, 2025 | Appeals court ruling | The appeals court reversed, holding that Reliance Standard’s denial was wrong and unreasonable under the policy. |
For nearly a decade (according to the timeline , from first symptoms in 2015 to the appellate decision in 2025) Johnson moved through doctors’ offices, hospital procedures, and courtrooms while a disability insurer tried to reinterpret its own contract to avoid paying out.
Corporate Misconduct: Policy Gaming and Claim Denial
Reliance Standard drafted the policy. Reliance Standard also held “discretionary authority” to interpret that policy and decide who qualifies for benefits. Then Reliance Standard read its own language in a way that sharply favored its bottom line and stripped its customer of coverage.
The structure looks simple:
| Policy Element | What the Text Says | How Reliance Standard Used It |
|---|---|---|
| Pre-existing condition definition | Any sickness “for which” the insured received treatment, consultation, services, diagnostic procedures, or prescription drugs during the three-month lookback period. | Company treated any symptom during that period which could match the later disease as treatment “for” that disease, even when doctors never suspected it. |
| Burden of proof | Insurer must prove that an exclusion applies when it denies coverage based on that exclusion! | Company assumed that vague past symptoms gave it a free pass to categorize the disease as pre-existing and deny benefits. |
| Medical review | Scleroderma is typically treated by rheumatologists because it is an inflammatory condition. | Company hired an endocrinologist to review the file and then used that report to uphold the denial. |
The court stressed that no one (neither Johnson nor any of her many specialists) suspected scleroderma during the lookback period. None of the tests performed during that time linked her symptoms to that disease.
Reliance Standard’s approach blurred the line between treating vague symptoms and treating a specific diagnosed disease. Under its logic, almost any later illness could be reclassified as “pre-existing” if the patient once went to a doctor for something as ordinary as fatigue or joint pain. The court described this reasoning as arbitrary and capricious and warned that it turned the pre-existing condition clause into something so broad that the word “condition” nearly lost meaning.
For a disabled worker, the effect is direct: the company took the premiums, then tried to read its own contract in a way that made the promised protection vanish at the moment of need.
Regulatory Capture & Neoliberal Structure: A System That Protects the Insurer
This case unfolds inside the legal framework that governs employer-provided benefits: the Employee Retirement Income Security Act (ERISA). The court explained that federal courts have built a “federal common law” around ERISA that includes a specialized review process for benefit denials.
In the Eleventh Circuit, that process is a six-step sequence. First, a court asks whether the insurer’s decision was wrong. If the answer is yes and the insurer has discretionary authority, the court then asks a second question: even if the decision was wrong, did the insurer have reasonable grounds for it under a very deferential “arbitrary and capricious” standard?
The court described this test clearly: as long as there is a reasonable basis for denying coverage, the decision “must be upheld,” even when there is evidence supporting the opposite outcome.
This structure reflects a wider neoliberal logic in workplace benefits:
- Private insurers design the plans.
- The same insurers interpret those plans and decide who gets paid.
- Courts grant them broad deference when they exercise that discretion.
Workers stand at the end of this chain, facing companies with in-house lawyers, specialist consultants, and years of experience using technical clauses to narrow payouts. Regulatory agencies and courts act mainly after the fact, through complicated litigation, rather than through direct, proactive enforcement.
This is how regulatory capture often looks in a neoliberal setting: rules that appear neutral on paper tilt toward corporate power because they give the drafter and decision-maker both the pen and the gavel.
Profit-Maximization at All Costs: Disability Insurance as a Revenue Strategy
Reliance Standard’s reading of “pre-existing condition” did more than misinterpret a word. It created a powerful financial filter.
If any vague symptom in the lookback period can later be recharacterized as treatment “for” a serious disease, then:
- More claims qualify as excluded.
- Fewer benefits must be paid.
- Profit margins and shareholder returns rise.
The court gave concrete examples. Under the company’s logic, a patient told to drink more water for headaches would count as having been treated “for” brain cancer if a tumor appears later. A person who seeks help for coughing and fatigue during the lookback could lose coverage when tuberculosis is identified afterward, because those early symptoms can fit both the flu and a serious lung disease.
This type of interpretation fits a familiar pattern in late-stage capitalism. Corporations use dense language, complex exclusions, and broad discretionary powers to convert uncertainty into income. The business model extracts value from people’s fear of illness and disability while shrinking the situations in which the company must actually pay.
On paper, this sits under the banner of corporate social responsibility and corporate ethics. In practice, it channels the full machinery of contract drafting, litigation, and administrative discretion toward one aim: maximizing the gap between premiums collected and benefits paid.
Human Impact: Life with Scleroderma and No Safety Net
Scleroderma is rare and severe. It hardens skin and internal tissues. It brings joint pain and stiffness, persistent cough, shortness of breath, digestive problems, and exhaustion. That combination drove Johnson out of the workforce by January 2017.
During the lookback period, she went through a gauntlet of clinics and specialists. She received diagnoses that ranged from fibromyalgia and borderline lupus to reflux disease, hypertension, sleep apnea, bronchitis, infections, and bleeding disorders. Each diagnosis came with its own medications and lab work. None addressed the real disease that would later define her life.
The appeals court noted that Johnson made consistent, good-faith efforts to find out what was wrong with her and to get treatment.
In a system oriented around corporate accountability, those efforts would carry weight. Instead, they became the raw material for a denial letter. Each symptom visit during the lookback period gave Reliance Standard another opportunity to argue that she had received “treatment” for a disease no one knew she had.
For a disabled worker, the stakes are basic: rent, food, medication, and care. A long-term disability policy is supposed to act as a bridge when the body fails. When that bridge collapses under corporate wordplay, the worker faces illness and financial precarity at the same time.
Legal Minimalism & Delay: A System That Rewards Corporate Caution
The scandal at play here also shows how legal minimalism works in practice.
The policy did not say “we will cover you if we diagnose your disease after you enroll.” It relied on a technical clause about treatment during a three-month window. Reliance Standard pushed that clause as far as possible, past the point of ordinary language. The appeals court responded only when the company’s interpretation broke the boundary of reason.
That threshold is high. Courts give insurers wide latitude. The court openly described the standard as “really” deferential and noted that many sister circuits use simpler tests that focus directly on whether the decision was reasonable.
In a capitalist system that rewards short-term gains, this legal environment encourages companies to stretch policy language and to deny close claims. Every denial that survives adds to profit. Every denial that fails still buys time, because the claimant must navigate internal appeals, federal litigation, and appellate review. Time itself becomes an asset for the insurer and a liability for the disabled worker.
Corporate Accountability Fails the Public
The appeals court ultimately reversed the district court and sent the case back, holding that Reliance Standard’s denial of benefits was arbitrary and capricious because it conflicted with the clear language of the plan.
That is a victory for Johnson and for anyone who needs clear, fair interpretation of disability coverage. It is also a warning about structural limits:
- The court emphasized that its role was not to find the best reading of the policy, only to reject those outside the bounds of reason.
- The opinion acknowledged that the insurer’s decision receives significant deference even when wrong.
- The legal system required years of litigation to correct one denial.
In a system organized around neoliberal capitalism, this outcome is less an exception and more a feature. Private disability insurers function as gatekeepers to income for sick and disabled workers. They write the rules, interpret them, and then defend those interpretations under a legal standard that favors their discretion.
When courts eventually step in, the harm has already spread through the worker’s life and household.
This Is the System Working as Intended
This case shows how corporate power, weak oversight, and complex contract language combine to produce predictable harm.
- A worker buys disability insurance tied to her job.
- She develops a rare disease that no one catches in time.
- The insurer uses vague past symptoms to recast the disease as “pre-existing” and deny benefits.
- Courts, constrained by deference and technical tests, intervene only when the interpretation becomes extreme.
💡 Explore Corporate Misconduct by Category
Corporations harm people every day — from wage theft to pollution. Learn more by exploring key areas of injustice.
- 💀 Product Safety Violations — When companies risk lives for profit.
- 🌿 Environmental Violations — Pollution, ecological collapse, and unchecked greed.
- 💼 Labor Exploitation — Wage theft, worker abuse, and unsafe conditions.
- 🛡️ Data Breaches & Privacy Abuses — Misuse and mishandling of personal information.
- 💵 Financial Fraud & Corruption — Lies, scams, and executive impunity.
