237 F.3d 1042 (9th Cir. 2001), 99-55990, Laventure v. The Prudential Ins. Co of Am.

Docket Nº:99-55990
Citation:237 F.3d 1042
Party Name:DANA LAVENTURE, Plaintiff-Appellant, v. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant-Appellee.
Case Date:January 19, 2001
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1042

237 F.3d 1042 (9th Cir. 2001)

DANA LAVENTURE, Plaintiff-Appellant,

v.

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant-Appellee.

No. 99-55990

United States Court of Appeals, Ninth Circuit

January 19, 2001

Argued and Submitted November 16, 2000

Page 1043

Jeffrey C. Metzger, Laguna Hills, California, for the plaintiff appellant.

Ronald K. Alberts, Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone, Marina Del Rey, California, for the defendant-appellee.

Appeal from the United States District Court for the Central District of California Manuel L. Real, District Judge, Presiding. D.C. No.CV-98-4075 R(Rzx)

Before: Thomas G. Nelson and William A. Fletcher, Circuit Judges, and Edward C. Reed,[*] District Judge.

REED, District Judge:

This action arises from the denial of disability income insurance benefits. Dana LaVenture ("LaVenture") appeals the district court's summary judgment order in favor of Appellee Prudential Life & Accident Insurance Company ("Prudential"). The district court determined that LaVenture's disability policy was part of an overall ERISA benefits plan. Therefore, the district court dismissed LaVenture's complaint, which sought damages for breach of contract and insurance bad faith, because ERISA preempts all state law claims. We reverse and remand.

I. FACTS AND PROCEDURAL BACKGROUND

Thomas and Dana LaVenture are husband and wife and the sole shareholders of Pacific Graphics, Inc., ("PGI") a commercial printing company incorporated in 1992.1

In 1992, the business purchased a health insurance policy covering only Thomas and Dana LaVenture. In the spring of 1994, PGI received a solicitation from Printers Industries of America ("PIA")2 for a long-term disability insurance policy issued through the Printers Disability Trust ("PDT"). Mr. LaVenture completed and mailed the application. The disability insurance was to cover only Mr. and Mrs. LaVenture. The application contained the following statement under the heading "how to enroll": "Your insurance will be effective on the first of the month following its acceptance by the administrator."

In October of 1994, Mr. LaVenture received a response letter from PDT, along with a "Participating Agreement," which indicated that the disability insurance coverage would become effective on November 1, 1994.

Between when Mr. LaVenture filed the application and when he received the Participating Agreement, Mrs. LaVenture's health began to decline. In August of 1994, she began experiencing joint pain, discomfort in her left side, depression,

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and anxiety. On November 12, 1994, Dr. Robing Dore, a rheumatologist, diagnosed LaVenture with fibromyalgia and recommended that LaVenture stop working because she was totally disabled.

On May 1, 1995, Mr. and Mrs. LaVenture hired their first full-time employee and provided company paid health insurance to the new employee. They did not, however, offer the new employee disability insurance. Since May of 1995, Mr. and Mrs. LaVenture have hired two additional employees who have also been offered health insurance but not disability insurance. It is uncontroverted that no one associated with the company, other than the LaVentures, has ever been provided any disability benefit or disability insurance policy by PGI.

In June of 1995, Dr. Dore diagnosed appellant with Lyme disease in addition to her fibromyalgia. On February 26, 1996, LaVenture submitted a disability claim to PDT and Prudential on three conditions: fibromyalgia, Lyme disease, and herniated discs.3 The claim included a statement by Dr. Dore dated January 30, 1996. Dr. Dore stated that LaVenture was totally disabled due to fibromyalgia and Lyme disease, and that she had been totally disabled since November 8, 1994.

On July 29, 1996, Maureen Majewski, Disability Claim Manager for Prudential, wrote a letter denying the claim for disability benefits. The letter stated:

Based on medical information submitted by Dr. James Grimes, it was documented that you were treated on August 15, 1994, August 18, 1994, September 21, 1994, September 30, 1994, October 4, 1994, October 18, 1994 for myalgia/mitositis, back pain and fibromyosis. In addition, laboratory testing was performed on August 15, 1994 and September 30, 1994, as well as a chest x-ray and electrocardiogram. Since charges were incurred and treatment was rendered within 90 days of your coverage effective date, benefits are not payable under the policy.

Based on the medical records, you were diagnosed with Lyme Disease in July of 1995. However, the disability determination is based on the information available November 8, 1994. Based on the original information submitted with the claim, the conditions were pre-existing. Lyme Disease was not diagnosed until after you left work. Unfortunately, the claim was submitted late, but the disability determination is based on your condition on November 8, 1994.

On August 4, 1997, Prudential sent a letter...

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