Ryan v. ITT Life Ins. Corp.

• Decision Date: 12 January 1990
• Docket Number: No. C3-88-1757,C3-88-1757
• Citation: 450 N.W.2d 126
• Parties: Clifford RYAN, Respondent, v. ITT LIFE INSURANCE CORPORATION, Appellant.
• Court: Minnesota Supreme Court

Page 126

450 N.W.2d 126

Clifford RYAN, Respondent, v. ITT LIFE INSURANCE CORPORATION, Appellant.

No. C3-88-1757.

Supreme Court of Minnesota.

Jan. 12, 1990.

Syllabus by the Court

1. When a standard accident disability income insurance policy is governed by Minn.Stat. Sec. 62A.04 (1988), the required limitations provision of Minn.Stat Sec. 62A.04, subd. 2(11) (1988) applies rather than the general six-year statute of limitations for contracts contained in Minn.Stat. Sec. 541.05, subd. 1(1) (1988).

2. Whether the insured was continuously totally disabled according to the terms of the standard accident and sickness policy is a question of fact that must be answered first in order to determine whether the three-year limitations period of Minn.Stat. Sec. 62A.04, subd. 2(11) bars insured's suit.

3. Determination of whether an insurer is prejudiced by the failure of one insured by a standard accident and sickness insurance policy to give timely Notice of Claim is a question of fact which renders a ruling on the issue of whether such failure bars suit inappropriate on a review of a summary judgment motion.

John D. Hanson, Donohue, Rajdowski, Hansmeier, Grunke & Jovanovich, Ltd., St. Cloud, for appellant.

Luke M. Seifert, St. Cloud, for respondent.

Heard, considered, and decided by the court en banc.

KEITH, Justice.

Appellant, ITT Life Insurance Corporation (ITT Life), appeals the reversal of summary judgment in favor of ITT. ITT had moved the trial court for summary judgment on three grounds: (1) the six-year statute of limitation provided by Minn.Stat. Sec. 541.05, subd. 1 (1988), (2) the three-year contractual limitation required by Minn.Stat. Sec. 62A.04, subd. 2(11) (1988), and (3) plaintiff's noncompliance with the terms of the insurance contract. The trial court granted summary judgment on the grounds that the action was time barred. The court of appeals reversed the trial court's decision and held that the six-year statute of limitations did not bar suit. It also remanded "for findings on 1) whether the contractual three-year period of limitation contained in the insurance contract bars appellant's claim and 2) whether appellant's claim is barred by other provisions in the insurance contract." Ryan v. ITT Life Ins. Corp., 435 N.W.2d 164, 166 (Minn.App.1989).

Respondent, Clifford Ryan, received disability insurance as an employment benefit while he worked for Greenline Farms. The Accident Disability Income Policy ("Policy") was issued by ITT Life.

On February 7, 1980, Ryan was injured in a work-related accident while employed by Greenline Farms. The accident caused an abdominal wall tear requiring surgical repair. Unable to work while recuperating, he claimed and received disability benefits pursuant to the policy. When he resumed work on April 21, 1980, the disability payments terminated.

On June 13, 1980, Ryan was laid off by Greenline Farms and when recalled later, refused to return for personal reasons. As a result, his disability insurance policy with ITT Life ended on August 1, 1980.

Ryan had some difficulty keeping jobs after this time. He attributes the difficulty to back problems which he claims started with the injury on February 7, 1980, although he had seen a chiropractor for back problems, which he attributes to muscle strain, prior to his accident. He asserts that to relieve the back pain, he took so much medication his work pace slowed and he was unable to do the work required by the various jobs. He testified that as early as March 1980 he told his attending physician about his back problems. No medical or other documents, however, show that the injury caused the back pain. X-rays taken of his back in the spring of 1980 showed no signs of back injuries.

In November and December of 1981 Ryan again consulted his physician regarding his back problems. New x-rays were taken, but again there appeared no signs of back injury.

From testimony given at his deposition, Ryan considered himself totally disabled because of his back problems from February 1982 when he stopped seeking work. In March 1982, Ryan applied to the Social Security Administration for disability insurance benefits. After a hearing held before an administrative law judge (ALJ), the judge decided that Ryan was "disabled" within the meaning of the Social Security Act. The conclusion was based on medical evidence, obtained from an examination of Ryan in March 1983, showing existence of a lumbar disc syndrome which necessitated avoidance of activities requiring mechanical stress to his back and permitted only sedentary work. The ALJ dated the disability from February 5, 1982, which was "the alleged onset date of disability."

Not until February 18, 1987, according to both parties, did Ryan commence suit against ITT for disability benefits under the Policy he had had while working on Greenline Farms. ¹ Whether his action was barred by statutes of limitations is initially at issue.

1. Determination of whether summary judgment was properly granted on statutes of limitations grounds depends in part on construction of the implicated statutes. Construction of statutes is a question of law and is subject to de novo review on appeal. Hibbing Educ. Ass'n v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn.1985).

Two statutorily prescribed limitations-of-actions periods have been applied to the ITT Policy in this case. One provides a six-year statute of limitations for actions brought "[u]pon a contract or other obligation, express or implied, as to which no other limitation is expressly prescribed." ² Minn.Stat. Sec. 541.05, subd. 1(1) (1988). The other, contained in the policy contract itself, provides a three-year limitations period pursuant to Minn.Stat. Sec. 62A.04, subd. 2(11) (1988):

No action at law or in equity shall be brought to recover on this policy prior to the expiration of sixty days after written proof of loss has been furnished in accordance with the requirement of this policy. No such action shall be brought after the expiration of three years after the time written proof of loss is required to be furnished.

ITT policy, "Legal Actions" provision at 7.

The ITT policy at issue contained the provisions required by section 62A.04, subd. 2 for standard accident and sickness insurance policies as defined in Minn.Stat. Sec. 60A.06, subd. 1(5)(a) (1988). The provision "Legal Actions" found in respondent's policy is word-for-word the same as that found in Minn.Stat. Sec. 62A.04, subd. 2(11) (1988). It forms part of Minn.Stat. ch. 62A (1988) which constitutes a code for accident and health insurance. Cf. Lindskog v. Equitable Life Assur. Soc'y, 209 Minn. 13, 16-17, 295 N.W. 70, 71 (1940) (considering one of the forerunners of present day Minn.Stat. Secs. 62A.01 to 62A.56 (1988), noted that the sections constitute "what is intended to be a code with reference to accident and health insurance"). Case law regarding insurance policies governed by statute has recognized by implication that the specific limitations provision of section 62A.04, subd. 2(11) controls over the general six-year period of section 541.05, subd. 1(1). See, e.g., Laidlaw v. Commercial Ins. Co. of Newark, 255 N.W.2d 807, 811-12 (Minn.1977) (interpreting section 62A.04 subd. 2 "Proofs of Loss" and "Legal Actions" provisions as applicable statute of limitations); cf. Rottier v. German Insurance Co., 84 Minn. 116, 117-19, 86 N.W. 888, 889-90 (1901) (interpreting the standard fire-insurance limitations period provision as applicable limitation and not referring to the general six-year limitations provision for contracts which also existed at that time).

Based on the specificity and code nature of section 62A.04, subd. 2(11) coupled with case law recognition of the application of express limitations provisions contained within specific statutes governing insurance policies, we hold that the six-year limitations period is inapplicable to an insurance policy governed by Minn.Stat. Sec. 62A.04 and reverse the court of appeals on this issue. The three-year limitations period contained in the policy pursuant to Minn.Stat. Sec. 62A.04, subd. 2(11) applies.

2. ITT Life contends that even if the three-year limit applies, Ryan's action is barred because he did not bring suit within three years after the Policy terminated. ITT Life's contention misconceives when the three-year period of section 62A.04, subd. 2(11) begins to run.

The commencement of the running of the three-year limitation does not depend on when the policy terminated, but rather on when proofs of loss must be furnished, because the filing of written proofs of loss controls when insured can commence an action under the Legal Actions provision. We addressed the issue in Laidlaw v. Commercial Insurance Company of Newark, 255 N.W.2d 807, 811 (Minn.1977). We held that for continuing loss where proofs of loss must be furnished "within 90 days after termination of the period for which the [Company] is liable," Id. at 811, the statute of limitations contained in the "Legal Actions" provision did not begin to run until 90 days after the end of the total continuous period of disability for which the company was liable. The court construed the phrase "the period for which the [Company] is liable" contained in the standard "Proofs of Loss" provision as meaning "the total continuous period of liability, be it short or long." Id. at 811.

The ITT Policy at issue here contains and is governed by the same required statutory provisions on Proofs of Loss and Legal Actions as in Laidlaw. Our holding in Laidlaw governs here. When an insured claims total disability benefits under a policy governed by section 62A.04, subd. 2(7) and (11), the limitations period will not begin to run until 90 days after termination of the continuous period of disability. Thus, Ryan cannot be barred by the three-year limitations statute if he has been continuously totally disabled under the terms of the Policy.

Upon...