McClure v. Life Ins. Co. of North America

• Decision Date: 23 May 1996
• Docket Number: No. 94-15874,94-15874
• Parties: 96 Cal. Daily Op. Serv. 3616, 96 Daily Journal D.A.R. 5936, Pens. Plan Guide (CCH) P 23925N Richard McCLURE, Plaintiff-Appellee, v. LIFE INSURANCE COMPANY OF NORTH AMERICA; The EG&G Voluntary Accident Insurance Plan; Cigna Corporation; EG&G, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1129

84 F.3d 1129

96 Cal. Daily Op. Serv. 3616, 96 Daily Journal

D.A.R. 5936,

Pens. Plan Guide (CCH) P 23925N

Richard McCLURE, Plaintiff-Appellee, v. LIFE INSURANCE COMPANY OF NORTH AMERICA; The EG&G Voluntary

Accident Insurance Plan; Cigna Corporation;

EG&G, Inc., Defendants-Appellants.

No. 94-15874.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 8, 1995.

Decided May 23, 1996.

Travis C. Williamson, Williamson & Rush, Las Vegas, Nevada, for defendants-appellants.

Laura Wightmann FitzSimmons, Las Vegas, Nevada, for plaintiff-appellee.

Appeal from the United States District Court for the District of Nevada; Philip M. Pro, District Judge, Presiding. D.C. No. CV-00063-PMP(LRL).

Before BOOCHEVER and REINHARDT, Circuit Judges, and KING, ^** District Judge.

PER CURIAM:

Defendants/appellants Life Insurance Company of North America ("LINA"), the EG & G Voluntary Accident Insurance Plan Cigna Corporation, and EG & G, Inc. ("EG & G") appeal from the district court's decision granting plaintiff/appellee Richard McClure's ("McClure") renewed motion for summary judgment. The district court held that the "process of nature" rule was not preempted by the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. ("ERISA"), that state laws apply, and that Nevada would adopt the "process of nature" rule. The court also held that McClure's disability was the result of the process of nature, and that McClure could recover because the parties stipulated that the accident was the proximate cause of his disability.

I

McClure started working as a fire fighter for EG & G in 1980. McClure paid all required premiums for a policy issued by LINA for accidental death, dismemberment and permanent disability ("the policy"). The policy provided for the lump sum payment of $350,000.00 to McClure if he became totally and permanently disabled because of an accident.

On November 16, 1988, McClure tripped over a guide wire and fell. This was the accident to which he attributed his disability. However, prior to the accident, on October 24, 1988, McClure began seeing Dr. Fathie, a board certified neurosurgeon. He initially complained of right side lateral thigh pain with numbness and tingling. He also complained of lower back pain for about six months. On November 4, 1988, Dr. Fathie suggested that McClure have an MRI of his lower back area, as well as other tests. Dr. Fathie found some abnormalities in McClure's discs. McClure testified, however, that the symptoms that he had prior to the fall did not cause him to modify his work activities in any way. There was no evidence contradicting that testimony.

The day after the accident, November 17, 1988, McClure again saw Dr. Fathie. The medical records reflect, however, that McClure did not inform the doctor of his accident. McClure then continued working. He was unable to perform the physical duties required by his job, however, and performed light duties, not actual fire fighting. In October 1989, he was forced to stop working, as no light duty was available.

In January 1990, McClure began seeing an orthopedist, Dr. Brandner. Dr. Brandner concluded that the accident set in motion a chain of deterioration that resulted in the disability. The parties have stipulated that the accident was the proximate cause of the eventual total disability.

On November 27, 1990, McClure made a claim for permanent total disability benefits under the group accident policy. On May 14, 1991, his claim was denied. On July 12, 1991, he requested that his claim be reviewed, and on July 16, 1991, his claim was again denied. McClure then filed a complaint for declaratory relief and benefits under ERISA. He prevailed upon summary judgment motions.

The issues raised in this appeal are reviewed de novo. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994) (a grant of summary judgment is reviewed de novo); Olson v. General Dynamics Corp., 960 F.2d 1418, 1420 (9th Cir.1991), cert. denied, 504 U.S. 986, 112 S.Ct. 2968, 119 L.Ed.2d 588 (1992). If an ERISA benefit plan gives the administrator discretionary authority to determine eligibility for benefits, or to construe the terms of the plan, then the administrator's decision is reviewed under the deferential "arbitrary and capricious" standard. Madden v. ITT Long Term Disability Plan, 914 F.2d 1279, 1283-84 (9th Cir.1990), cert. denied, 498 U.S. 1087, 111 S.Ct. 964, 112 L.Ed.2d 1051 (1991). LINA does not argue that the policy in question grants any such discretionary authority. Therefore, our review, like the district court's, is governed by Fed.R.Civ.P. 56(c), which provides that the court shall enter summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party has the initial burden of "identifying for the court the portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact." T.W. Elec. Serv. Inc., v. Pacific Elec. Contractors Ass'n., 809 F.2d 626, 630 (9th Cir.1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986)). We may affirm a summary judgment for reasons other than those relied on by the district court. Shawmut Bank, N.A., v. Kress Assocs., 33 F.3d 1477, 1484 (9th Cir.1994).

The district court found that: 1) McClure's disability was the result of the process of nature and, 2) McClure was entitled to benefits even though he had a preexisting condition, because the accident was the proximate cause of his disability. Under the "process of nature" rule, a claimed disability is considered to have occurred immediately within the meaning of a total disability policy provision when it follows directly from the accidental injury within the time the process of nature takes.

II.

Under ERISA, state law does not control the construction of the LINA policy. ERISA preempts state common-law rules related to employee benefit plans. 29 U.S.C. § 1144(a); Evans v. Safeco Life Ins. Co. 916 F.2d 1437, 1439 (9th Cir.1990). While ERISA's "savings" clause exempts from preemption "any law of any state which regulates insurance," 29 U.S.C. § 1144(b)(2)(A), "state laws of insurance policy interpretation do not qualify for the saving clause exception and are preempted." Evans, 916 F.2d at 1440. Instead, "the interpretation of ERISA insurance policies is governed by a uniform federal common law." Id. at 1439.

McClure argues that the "process of nature" rule "regulates" insurance and thus is saved from preemption by ERISA. This court need not reach the issue whether ERISA preempts a state "process of nature" rule. Even without relying on the "process of nature" rule, under the stipulation and the undisputed facts, and applying general federal rules of contract interpretation, it is clear that McClure was continuously and totally disabled immediately following the accident, and permanently and totally disabled within one year. See Aetna Ins. Co. v. Craftwall of Idaho, Inc., 757 F.2d 1030, 1034 (9th Cir.1985) (declining to address state law question where unnecessary to resolution of case).

The parties' stipulation of facts provides:

10. McClure continued working at the Nevada Test Site but was unable to perform all of the physical tasks required of him because of unrelenting back pain, beginning with the accident of November 16, 1988. Ultimately, and the plaintiff contends because of the accident of November 16, 1988, McClure was unable to perform any of the physical tasks of a firefighter and EG & G, the employer, informed him that it had no light duty available and plaintiff was forced to stop working on October 12, 1989 ...

17. Although McClure had a pre-existing back condition that was aggravated by the accident of November 16, 1988, the fall itself was the proximate cause of McClure's subsequent total disability. That is, the fall of November 16, 1988, set in motion the chain of events which led to McClure's total disability retirement on October 12, 1989.

According to the LINA policy:

"Continuous and total disability", which must result from such injuries and commence within 180 days after the date of the accident, means the insured's complete inability during the first year thereof to perform every duty of his occupation.

(Emphasis added.) At issue is the meaning of "every duty." (Emphasis added). Because in the district court this issue was not specifically addressed, although generally raised, we ordered the parties to file supplemental briefs discussing this provision.

This court has the power to affirm a district court's grant of summary judgment on any basis supported by the record. Golden Nugget, Inc. v. American Stock Exch., Inc., 828 F.2d 586, 590 (9th Cir.1987) (per curiam). "Whether, as a prudential matter, we should do so depends on the adequacy of the record and whether the issues are purely legal, putting us in essentially as advantageous a posture to decide the case as would be the district court." Id. In this case, the parties' stipulation of facts puts this court in that advantageous posture.

Assuming that a particular occupation required performance of three duties, and that an employee was unable to perform one of those duties, under one interpretation, the employee could not perform "every duty" of his occupation. The other interpretation of "every duty" is that the employee would be disabled only if he or she could not perform each of the three duties.

Thus, the word "every" is ambiguous. See Black's Law Dictionary 555 (6th ed.1990) (defining "every" as "Each one of all; ..." The term is sometimes equivalent to "all"; and sometimes equivalent to "each " (emphasis added)). "Every" can mean both "all" (the entirety) and "each" (the separate parts...