Opinion
Civil Action No. 00-11393-RWZ
August 1, 2002
MEMORANDUM OF DECISION
Plaintiff is a former employee of Agri-Mark Inc. who suffered a work-related back injury on June 18, 1996. He continued to be employed and paid by the company until December 1, 1997, at which point his employment terminated. Thereafter, plaintiff and his employer, Agri-Mark, each took steps toward securing him long-term disability benefits. Agri-Mark initially sent his claim to CNA Insurance, its insurance provider effective January 1, 1997, but CNA responded that it was not responsible for the claim because plaintiff's disability occurred in 1996, before its policy took effect. CNA referred Agri-Mark to defendant Life Insurance of North America ("LINA"), Agri-Mark's previous long-term disability insurance carrier. Agri-Mark then forwarded plaintiff's insurance forms and supporting materials to LINA on July 8, 1999, along with a letter explaining that plaintiff's claim had originally been filed through CNA. Plaintiff filed an application for long-term disability benefits with LINA on July 20, 1999.
LINA's policy states: "Written notice of claim must be given to the Insurance Company within 30 days of the occurrence or start of the loss on which the claim is based. If notice is not given at that time, the claim will not be invalidated or reduced if it is shown that written notice was given as soon as reasonably possible."
In keeping with this policy, LINA wrote to plaintiff on August 20, 1999, and asked that he furnish a written explanation for the late submission of his claim within 30 days. Plaintiff did not respond. On September 17, 1999, LINA denied plaintiff's claim on the basis that he had failed to provide an explanation for his late submission. The letter of denial informed plaintiff that he could appeal the company's decision by submitting a written explanation for his delay within 60 days. Plaintiff did not appeal the company's decision, but instead filed this action challenging the denial of benefits on June 6, 2000.
LINA seeks summary judgment on the ground that notice was untimely, arguing that, as a matter of law, the denial of benefits was proper because plaintiff did not comply with the policy's notice requirements. The notice provision of LINA's policy specifies that claims must be filed within thirty days or "as soon as reasonably possible." It is undisputed that plaintiff did not file his claim within thirty days. The only question is whether plaintiff filed his claim "as soon as reasonably possible."
LINA's pleading, entitled "Motion for Summary Judgment Based on Untimely Notice," raises an additional defense that plaintiff was not entitled to benefits because he did not supply LINA with the information it needed to determine when his disability occurred, and thus, to ascertain whether his claim was covered under its policy. The issue of whether or not plaintiff was actually disabled under the policy has not been fully briefed, and depends heavily on facts which are still in dispute. Accordingly, summary judgment on that issue is not appropriate. I limit my decision to the issue of untimely notice.
Importantly, LINA never actually determined whether plaintiff filed his claim "as soon as reasonably possible," but simply denied his claim because he did not respond to its repeated requests for an explanation. The policy's notice provision unquestionably places a burden on claimants to demonstrate that their claims were filed with reasonable diligence. However, the policy does not distinguish between Agri-Mark and its employees for purposes of making such a showing. Rather, its language contemplates that correspondence regarding a claim might come from either an individual employee making a claim or from Agri-Mark. Although plaintiff never personally provided LINA with an explanation for his delay in filing, Agri-Mark did so on his behalf on July 8, 1999, when it sent LINA a letter explaining that plaintiff's claim had originally be sent to CNA. Thus, LINA had adequate information with which to decide whether plaintiff's delay was reasonable, and failed to do so. Even now, LINA does not argue that plaintiff's delay was unreasonable, but merely cites his failure to respond as the basis for its denial. Under the terms of the policy, untimeliness is defined as an unreasonably delay; without a showing that plaintiff's delay was unreasonable, LINA cannot argue that the claim was untimely.
The policy includes the following provisions that refer interchangeably to submissions from the Policyholder (Agri-Mark) or from its employees who are claimants under the policy:
ENTIRE CONTRACT. The entire contract will be made up of the policy, the application of the Policyholder, a copy of which is attached to the policy, and the applications, if any, of the Employees.
STATEMENTS NOT WARRANTIES. All statements made by the Policyholder or by any insured Employee will be deemed representations and not warranties. No statement made by the Policyholder or by the Employee to obtain insurance will be used to void or reduce the insurance unless it is made in writing and is signed by the Policyholder or the Employee and a copy is sent to the Policyholder, the Employee or his beneficiary.
CLAIM FORMS. When the Insurance Company receives notice of a claim, it will give to the claimant, or to the Policyholder for the claimant, the claim forms it uses for filing proof of loss. . . .
Plaintiff further argues that, under Massachusetts law, LINA may not deny coverage based on plaintiff's untimely notice unless it also shows that it was prejudiced by the plaintiff's delay. In support of this proposition, plaintiff notes that Massachusetts has adopted a "notice-prejudice" rule for liability insurers, Johnson Controls, Inc. v. Bowes, 381 Mass. 278 (1980), M.G.L. c. 175, § 112, and that the Supreme Court has generally held that state "notice-prejudice" rules are not preempted by ERISA. UNUM Life Insurance Company of America v. Ward, 526 U.S. 358 (2000). Plaintiff urges that the same public policy objectives which led Massachusetts to adopt a notice-prejudice rule for liability insurers also support the same rule for disability insurers. While this may be the case, the fact that the state legislature has expressly limited the rule to liability insurers weighs heavily against extending the rule to disability insurers. In any event, I need not reach the issue of whether the rule precludes summary judgment because LINA's motion for summary judgment is denied on other grounds.
There remain material issues of disputed fact as to whether plaintiff's delay was reasonable. Accordingly, the motion for summary judgment is DENIED.