Seltzer v. Paul Revere Life Ins. Co.

• Decision Date: 18 July 2012
• Docket Number: No. 11–15046.,11–15046.
• Citation: 12 Cal. Daily Op. Serv. 8130,688 F.3d 966
• Parties: Philip A. SELTZER, Plaintiff–Appellant, v. PAUL REVERE LIFE INSURANCE COMPANY; Unum Group, fka UnumProvident Corporation, Defendants–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

688 F.3d 966

12 Cal. Daily Op. Serv. 8130

Philip A. SELTZER, Plaintiff–Appellant,

v.PAUL REVERE LIFE INSURANCE COMPANY; Unum Group, fka UnumProvident Corporation, Defendants–Appellees.

No. 11–15046.

United States Court of Appeals,Ninth Circuit.

July 18, 2012.

Steven C. Dawson (argued), Anita Rosenthal, and Steven A. Gruenemeir, Dawson & Rosenthal P.C., Phoenix, AZ, for the appellant.

Stephen M. Bressler, Ann Martha Andrews, Kristina N. Holmstrom, Lawrence Kasten (argued), Lewis and Roca LLP, Phoenix, AZ, for the appellee.

D.C. No. 2:09–cv–02104–SRB, District of Arizona, Phoenix.

Before: STEPHEN REINHARDT, RICHARD R. CLIFTON, and N. RANDY SMITH, Circuit Judges.

ORDER

STEPHEN REINHARDT, Circuit Judge.

Plaintiff Philip Seltzer has asserted contract and bad faith claims against Defendant Paul Revere Life Insurance Company and Unum Group, Paul Revere's parent company.¹ This appeal presents the question of when the claims accrued for the purpose of determining whether those claims are barred by Arizona's statute of limitations.

As described in more detail below, Seltzer became disabled in 1981 and was unable to continue his career as a chiropractor. He was paid monthly disability benefits by Paul Revere starting that year. Under the policies, those payments would continue for the rest of Seltzer's life if the disability was the result of an “accident,” but would cease when Seltzer turned 65 if it was the result of “sickness.” Seltzer initially reported the disability as a “sickness,” and Paul Revere classified it that way. Seltzer later revised the description to characterize it as the result of an “accident.” After meeting with a Paul Revere employee in 1986, Seltzer signed a statement at Paul Revere's request that “I agree to the understanding of this as a sickness claim and not an accident.” Some years later, Seltzer again took the position that the disability resulted from an “accident,” but Paul Revere did not change its position and stopped paying benefits when Seltzer turned 65 in 2009.

Seltzer argues that his claims did not accrue until 2009, when Seltzer turned 65 and Paul Revere stopped paying benefits. Paul Revere argues that Seltzer's claims accrued no later than 1986, when Seltzer agreed to the classification of his claim as resulting from “sickness.”

Because this issue is governed by Arizona law but is not clearly addressed by relevant Arizona authorities, we certify it to the Supreme Court of Arizona pursuant to the procedures established by Arizona Revised Statutes § 12–1861 and Rule 27 of the Rules of the Supreme Court of Arizona.

I. Factual Background

Pursuant to Supreme Court of Arizona Rule 27(a)(3)(B), we set forth the facts relevant to the question certified.

In 1981, at the age of 36, Seltzer's wrist pain forced him to cease his practice as a chiropractor. ER 204.² Seltzer was covered by two disability insurance policies issued by Paul Revere. ER 3. Both policies provided monthly payments in the event of the insured's disability. If the disability was due to “accident,” the policies provided for benefits for the rest of Seltzer's life. If the disability was due to “sickness,” the policies provided for benefits only until the insured's 65th birthday. ER 146, 158.

Seltzer submitted a disability claim to Paul Revere. He used the claim form for a disability caused by “sickness.” ER 4. The physicians' records and letters he submitted in support of his claim described his disability as a progressive condition from chronic trauma related to his occupation and did not trace the condition to any specific accident, though one doctor did use the word “injury.” ER 33–34, 137, 204. In response to a request for clarification from Paul Revere, Seltzer's treating physician said that “[a]s far as the date of his injury, I feel this was probably a slowly progressive thing which came on from chronic trauma related to his occupation.” An orthopedic surgeon agreed, opining that “it is my belief that [Seltzer] had an occupational overuse syndrome.” ER 134.

Paul Revere began paying benefits without specifying whether it considered Seltzer's disability to be due to sickness or accident. Each month, Seltzer submitted a monthly progress report to the insurer which gave him a choice between checking a box for “sickness” or for “accident.” From 1981 through early 1984, Seltzer checked the “sickness” box. ER 4.

In February 1984 an orthopedic surgeon reported to Paul Revere that Seltzer told him that Seltzer's wrist pain had first appeared when “he was manipulating a very large patient who was very muscular” and “felt something snap very sharply in both of his wrists.” ER 201. Seltzer said he was rushed to the hospital immediately after the incident. Id.³ Paul Revere was apparently unsure how to respond to the new report. Its medical department noted that the “history of sudden onset” described in the new report was an example of the “discrepancies” in Seltzer's accounts of his injury. ER 250, 260. In May 1984 Seltzer began checking the “accident” box instead of the “sickness” box on his monthly forms. ER 4.

In April 1986 Paul Revere dispatched its employee Sandra Imboden to speak to Seltzer about the classification of his disability. ER 4. After their meeting, at Imboden's request, Seltzer signed a handwritten, notarized note which read in its entirety:

I have discussed today with Sandra Imboden the sickness status of this claim as filed by me in April 1981 and confirmed by letter from Dr. Herbertson. I agree to the understanding of this as a sickness claim and not an accident.

ER 214. Imboden reported to the insurance company that Seltzer “understands that sickness and accident pay different benefit periods.” ER 247. She said that “I will allow you to use your judgment as to whether a follow-up letter need be sent.” ER 92. Paul Revere never sent a follow-up letter. Seltzer returned to his previous custom of checking the “sickness” box on his monthly forms.

In 1994, Seltzer met with a representative of Paul Revere to discuss the possibility of Seltzer's surrendering future payments under the policy in exchange for a lump-sum payment of $403,000. ER 5. The Paul Revere employee said that in the course of discussing his calculations, he noted that Seltzer was only eligible for benefits until the age of 65. ER 5. Seltzer apparently did not object to this assumption. No changes resulted from the discussion, and the monthly payments continued. ER 5.

Subsequent doctor visits over the years produced evidence that Seltzer contends supports his “accident” theory. In 1991, based on an MRI of Seltzer's wrists, a radiologist diagnosed a “rupture of the triangular fibrocartilage of the right wrist,” which he classified as an “injury.” ER 262. In 1999, one of Seltzer's doctors wrote Paul Revere a letter explaining that Seltzer “apparently had a significant episode on March 21, 1981, after manipulating an extremely muscular patient” and that “[h]is condition is not known to be related to a systemic illness.” ER 112.

That same year, Seltzer switched back to checking the “accident” box on his forms. ER 4. See, e.g., ER 113. Paul Revere apparently did not take any action in response.

In January of 2009, just nine months shy of his 65th birthday, Seltzer sent Paul Revere a letter asking it to confirm that it classified his disability as resulting from an accident. ER 4, 125, 127, 130. A Paul Revere employee informed Seltzer over the phone that “at this point in time, his claim is being handled under the Sickness provision of his policy.” ER 130. Paul Revere followed up this phone conversation with a letter that summarized its reasons for classifying Seltzer's disability as due to sickness, including the medical evidence from Seltzer's doctors and Seltzer's 1986 statement. ER 134–35.

At Paul Revere's invitation, Seltzer appealed from the determination reported in the letter. ER 135–39. Pursuant to its internal appeals process, Paul Revere's “in-house physician” spoke with Seltzer's attending physician and reviewed the records related to Seltzer's claim. ER 137. The in-house physician concluded that “the etiology [of Seltzer's disability] is an overuse syndrome, which aggravated a preexisting degenerative state of the triangular fibrocartilage or a slight anatomical anomaly in the ulnar aspect of the wrist area.” ER 138. Consistent with this opinion and its earlier analysis of the claim file, Paul Revere upheld its determination that Seltzer's disability was due to sickness. Id.

Plaintiff sued the insurer for breach of contract and insurance bad faith in state court. ER 4. The insurer removed the action to the U.S. District Court for the District of Arizona. ER 4. The district court concluded that Seltzer's claims were barred by the statute of limitations and granted summary judgment in favor of Paul Revere. ER 9. Seltzer appealed to this court. In a memorandum disposition filed concurrently with this certification order, we affirmed that summary judgment in part. Specifically, we concluded that Seltzer failed to include in his complaint any allegations in support of his alternative theory that he is entitled to lifetime benefits under a policy provision unrelated to the “accident” provision discussed in this certification order, and that he also failed to seek leave from the district court to add any such allegations.

II. The Question of Law

This case turns on an issue of state law: when did Seltzer's contract and bad faith claims accrue? Did the claims accrue no later than 1986, when Seltzer signed a statement agreeing to the “understanding” that his disability was caused by sickness? Or did they accrue only in 2009, when the insurance company reiterated its position that the disability resulted from sickness and ceased making payments? If the claims accrued in 1986, Seltzer's claims are barred by the relevant statutes of limitations. Ariz.Rev.Stat. §§ 12–542; 12–548; Ness v. W. Sec. Life Ins. Co., 174 Ariz. 497, 851 P.2d...