Jones v. Unum Provident Corp.

• Decision Date: 01 March 2010
• Docket Number: No. 08-3830.,08-3830.
• Citation: 596 F.3d 433
• Parties: Carol JONES, Plaintiff-Appellant, v. UNUM PROVIDENT CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

596 F.3d 433

Carol JONES, Plaintiff-Appellant, v. UNUM PROVIDENT CORPORATION, Defendant-Appellee.

No. 08-3830.

United States Court of Appeals, Eighth Circuit.

Submitted: October 22, 2009.

Filed: March 1, 2010.

Mark M. Nolan, argued, Jodell M. Galman, on the brief, St. Paul, MN, for appellant.

Terrance J. Wagener, argued, John Harper, III, on the brief, Minneapolis, MN, appellee.

Before LOKEN, Chief Judge, HANSEN and MELLOY, Circuit Judges.

LOKEN, Chief Judge.

Carol Jones filed a claim for long term benefits under the group disability insurance policy issued to her employer by an affiliate of Unum Provident Corporation ("Unum"). After Unum denied the claim and Jones's appeal, she commenced this action for wrongful denial of benefits under the Employee Retirement Income Security Act of 1974 ("ERISA"). See 29 U.S.C. § 1132(a)(1)(B). The district court¹ granted summary judgment dismissing her claim. Jones appeals, arguing Unum and the court erred in concluding that a lapse in coverage triggered the pre-existing condition limitation in the prior group insurer's policy. Reviewing the grant of summary judgment de novo, we affirm. See Jessup v. Alcoa, Inc., 481 F.3d 1004, 1006 (8th Cir.2007) (standard of review).

I. Background

In January 2004, Jones was hospitalized for major depression and stopped working as a legal secretary with Fabyanske, Westra & Hart, P.A. She filed a claim for disability benefits under the firm's Group Long Term Disability Insurance Policy issued by Fortis Benefits Insurance Company ("Fortis"). Fortis found Jones disabled and began paying long-term disability benefits after a three-month qualifying period. Her treating psychiatrist, Dr. Paul Richardson, cleared Jones to return to work after June 7, 2004. Jones notified Fortis but advised that she disagreed with Dr. Richardson's decision and was seeking a different psychiatrist. Fortis suspended benefit payments on June 8, advising Jones it would review her eligibility and requesting additional medical information. Dr. Richardson released Jones to work part-time on June 28 and full-time on July 26.

Jones returned to work part-time on June 28. She scheduled initial appointments with two other psychiatrists, who refused to support her claim of continuing long-term disability without further investigation. She did not pursue follow-up appointments. She stopped working on July 15, and a new psychiatrist, Dr. John Heefner, supported her claim of continuing disability. Jones sent Fortis records from her visits to Dr. Heefner and the other psychiatrists. On August 26, Fortis notified Jones that it was denying her long-term disability claim for benefits after June 7, based on her failure to satisfy the test of disability in the Fortis policy. Jones did not appeal this adverse decision. She returned to work part-time on September 20, 2004, and began working full-time on October 4. Effective January 1, 2005, the Fabyanske firm changed group disability insurance providers from Fortis to Unum.

II. The Claim at Issue

Jones stopped working in late February 2005, complaining of an infected dog scratch. The Fabyanske firm terminated her employment in mid-March. Later that month, Jones filed a long-term disability claim with Unum, based upon a recurrence of her major depression and other ailments. Unum denied the claim based upon the pre-existing condition clause in the Unum policy:

In order to receive a payment you must satisfy the pre-existing condition provision under: 1. the Unum plan; or 2. the prior carrier's plan, if benefits would have been paid had that policy remained in force.

Unum first determined that Jones did not satisfy the Unum policy's pre-existing condition clause because she received psychiatric treatment within the three months prior to the effective date of the Unum policy, January 1, 2005, and her disability began during the first twelve months after the effective date of the policy. Jones does not challenge that decision. Rather, the dispute turns on Unum's application of the pre-existing condition limitation in the Fortis policy.

Like the Unum policy, the Fortis policy defined a pre-existing condition as one that was diagnosed or treated during the three months before the claimant became insured; it denied coverage "for any disability caused by a pre-existing condition" during the first twelve consecutive months of being insured under the policy. Unum initially determined that Jones's coverage under the Fortis policy lapsed on August 26, 2004, the date of Fortis's final decision that she was "no longer considered disabled." Because coverage did not resume until she returned to full-time work in October 2004, and because Jones received psychiatric treatment within three months prior to that date, Unum concluded that benefits would not have been paid under the pre-existing condition clause of the Fortis policy, had it remained in force. Jones appealed that decision under the appeal provisions of the policy.

Before resolving Jones's appeal, Unum contacted Fortis about the apparent lapse in coverage. The Fortis claims agent who handled Jones's prior disability claim opined that coverage lapsed on June 8. Unum sent Fortis a confirming letter. Unum also explained to Jones in a telephone conversation that her benefits were denied based on the Fortis policy, suggested that Jones contact Fortis, and noted that "our decision may change" if Fortis changed its position. Jones apparently contacted Fortis, because the Fortis agent called Unum again and confirmed that Jones fell out of an eligible class when her disability ended and she failed to return to full-time work. In denying the appeal on May 24, 2006, Unum's appeals department determined, consistent with the informal Fortis opinion, that Jones's coverage under the Fortis policy lapsed on June 8, 2004, the retroactive effective date of Fortis's August 26 decision that Jones was no longer disabled, and did not resume until she returned to work full-time in October.

In granting summary judgment, the district court concluded that Unum did not abuse its discretion in determining that Jones's coverage under the Fortis policy lapsed between June 8 and October 4, 2004:

[T]he Fortis policy provides that a covered person's insurance ends when the person is no longer in an eligible class or when the person stops active work. Under the Fortis policy, eligible classes are defined in part to include active full-time employees, full-time means working at least thirty hours per week, and active work means working full-time for the policyholder at the employee's usual place of business. Fortis determined that Jones was no longer disabled as of June 8, 2004, and she first returned to full-time work at Fabyanske approximately four months later. Under these circumstances, the Fortis plan plainly provides that her insurance ended.

For the most part, we agree with this analysis. The Fortis policy provided that insurance coverage ends when a person "stops active work" or is no longer in an "eligible class," defined as being "an active full-time employee." Coverage for Jones was not an issue while she was receiving long-term disability benefits. No doubt for this reason, the policy did not address the issue. The record suggests that the Fabyanske firm continued to classify Jones as a full-time employee who was on disability leave, and Fortis waived monthly insurance premiums for continued coverage. But what happened to that status when Jones recovered the ability to resume work?

We disagree with Unum and the district court on one aspect of the issue. We conclude that coverage continued when Jones returned to work part-time on June 28, 2004, consistent with Dr. Richardson's limited release-for-work and with long-term benefits suspended but not yet denied, just as coverage would continue for a full-time employee who is reduced to part-time work during a medical leave. Accord Weber v. GE Group Life Assur. Co., 541 F.3d 1002 (10th Cir.2008); Tester v. Reliance Standard Life Ins. Co., 228 F.3d 372 (4th Cir.2000). But here, Jones quit work entirely on July 15, contrary to Dr. Richardson releasing her for full-time work on July 26, and Fortis found her not disabled on August 26, retroactive for benefits purposes to June 7, 2004. In these circumstances, both Unum and the district court reasonably looked to the coverage provisions in the Fortis policy and concluded that her coverage lapsed. As of no later than August 26, Jones had stopped active work and was no longer in the eligible class of active full-time employees, defined as those who work at least thirty hours per week. The 2004 billing records reflect that Fortis waived premium payments for Jones until she was "added" as an employee after returning to full-time work in October, consistent with coverage having lapsed.

On appeal, Jones argues that her coverage under the Fortis policy began in April 2001, and there was no lapse in coverage in 2004 because her employer...