Opinion
98-CV-0100E(F).
April 19, 2002
MEMORANDUM and ORDER
Defendant The Hartford Life and Accident Company ("Hartford") seeks summary judgment dismissing plaintiff Sugg's claim for benefits under a group long-term disability insurance policy ("the Policy") issued by Hartford to Sugg's previous employer ("Pinkerton's"). For the reasons set forth below, that motion will be granted in part and denied in part.
Such is currently defendant ITT Hartford's true name.
Hartford argues that Sugg is not eligible for benefits due to a Policy exclusion for certain disabilities resulting from or contributed to by a pre-existing condition ("the Exclusion"). It is undisputed that Sugg was diagnosed and has been treated for diabetes since 1988 and that he commenced the relevant period of employment at Pinkerton's in April of 1994. The parties also agree that the Exclusion only applies if Sugg had become disabled prior to June 1, 1995 — i.e., within one year after the date he had become eligible for coverage under the Policy. Hartford has denied coverage because it found that Sugg had become "totally disabled" within the meaning of the Policy in November of 1994. Sugg maintains that he did not become disabled until November of 1995. As explained infra, this Court finds that a genuine issue of fact is presented as to when Sugg became "totally disabled" within the meaning of the Policy.
Hartford also contends that Sugg is "judicially estopped" from arguing that his disability commenced in November of 1995 because the plaintiff had represented in a related Social Security Administration proceeding that he was disabled as of January of 1995. Without considering the necessary legal predicates to such an argument, the Court rejects it both because (i), without any explanation, such was not raised until Hartford's reply papers and (ii) Sugg had, in such proceeding and prior to his being denied benefits by Hartford, amended his alleged date of onset of disability to be November of 1995. Clemens Aff., Ex. G at 1.
Hartford contends that its conclusion regarding when Sugg became disabled is subject to review only for arbitrariness or capriciousness because the Policy assertedly gives it discretionary authority in making such decision. See Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989) ("Bruch") (holding that a plan administrator's decision is entitled to review for arbitrariness or capriciousness — rather than de novo review — where the policy gives her discretionary authority over determining eligibility for benefits or in construing the terms of the policy). Such position is founded upon the Policy's requirement that, in order to obtain benefits, an insured must "submit proof of loss satisfactory to *** Hartford." Clemens Aff., Ex. D at 11 (emphasis supplied). However and as is relevant herein, this Court finds that such language is not so broad as to give Hartford discretionary authority over the determination when Sugg has been prevented by a disability from working within his "own occupation." Id., Ex. D at 8 (Policy's definition of "Totally Disabled"). See MacMillan v. Provident Mut. Life Ins. Co. of Phila., 32 F. Supp.2d 600, 606 (W.D.N.Y. 1999) ("[t]here is no reason to take an all-or-nothing approach in which any grant of discretionary power, no matter how limited, makes all decisions of the administrator subject to review for abuse of discretion") (construing Bruch); see also Barnable v. First Fortis Life Ins. Co., 44 F. Supp.2d 196, 203 (E.D.N.Y. 1999) (finding that a provision in a long-term disability insurance policy stating that evidence regarding the insured's medical condition "must be acceptable" to insurer did not vest insurer with discretionary authority over its determination whether the insured was disabled from "any and every gainful occupation"). This Court finds that Hartford's argument is particularly ill-suited to this case because Sugg's "proof of loss" was sufficient for Hartford to find that he was and is totally disabled — albeit, as of a time such that the Exclusion applies. Consequently, Hartford's decision when Sugg became disabled is subject to de novo review. Bruch, 489 U.S. at 115.
Hartford cites four cases wherein policy language requiring that proof of loss must be acceptable to the insurer has triggered review under the "arbitrary-and-capricious" standard; however, in each of those cases such language was construed as giving the insurer discretionary authority over the decision whether an insured had demonstrated that she had suffered a total disability rather than when an insured's demonstrated disability had begun. See Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376 (6th Cir. 1996); Snow v. Standard Ins. Co., 87 F.3d 327 (9th Cir. 1996); Donato v. Metropolitan Life Ins. Co., 19 F.3d 375 (7th Cir. 1994); Miller v. Metropolitan Life Ins. Co., 925 F.2d 979 (6th Cir. 1991). Buckley v. Metropolitan Life, 115 F.3d 936 (11th Cir. 1997) (per curiam) — also cited by Hartford — merely upheld (under the arbitrary-and-capricious standard) the termination of benefits by an insurer where the insured failed "to submit evidence of Total Disability as required by the Committee," id. at 938 (quoting policy), and is inapposite.
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, a motion for summary judgment must be granted when the record presents no genuine issue of material fact and, based upon the undisputed facts, the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-323 (1986). The existence of a factual dispute between the parties will not prevent the entry of a summary judgment unless it is a "genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248 (1986). An issue of fact is genuine only where the evidence taken as a whole would allow a rational factfinder to return thereupon a verdict in favor of the non-moving party; whether such issue is material is governed by applicable substantive law. Id. at 248. In considering a motion for summary judgment, this Court's duty is to determine whether a genuine issue of material fact exists that must proceed to trial and not to resolve such issue. Id. at 249. In doing so, this Court must accept as true evidence provided by the non-moving party and, in considering the evidence as a whole, any ambiguities must be resolved and all reasonable inferences therefrom must be drawn in the light most favorable to such party. Id. at 255; Adickes v. Kress Co., 398 U.S. 144, 157 (1970). However, summary judgment must be entered against a party that fails to make a sufficient showing of the existence of any element essential to that party's case and on which that party bears the burden of proof. Celotex Corp., 477 U.S. at 322.
With respect to the question when Sugg became disabled, the following facts are undisputed. Sugg was hired by Pinkerton's as a "Group Training Director" and, from April through November of 1994, his duties included traveling about various eastern and mid-western states to train former employees of General Motors Corporation ("GM") who had been hired by Pinkerton's after the latter had contracted to provide security services at GM's plants. Sugg worked out of his house and was supplied by Pinkerton's with an automobile, a computer and a phone system. In late November of 1994, Sugg suffered severe complications stemming from a condition related to his diabetes and was hospitalized for six days. Sugg was out of work for two weeks, for which he took vacation time.
While Sugg was off, GM communicated to Pinkerton's its dissatisfaction with having Sugg train security personnel at each plant. GM decided that the creation of a training manual specific to GM's security needs would be preferable. After returning to work, Sugg was assigned to the task of creating such a manual. He continued to work out of his home, still having use of the automobile, computer and phone system previously provided by Pinkerton's. There was no change in his pay or his benefits and no person was re-assigned to fill the role of the traveling trainer. Cotter Aff., Ex. A (Transcript of Deposition of Richard C. Sugg, Jr. taken January 18, 1999).
Sugg finished producing the manual in approximately November of 1995. By that time, his condition had worsened to the point that the Social Security Administration ("the SSA") found that, as of that time, he was unable to work at any gainful employment. His position at Pinkerton's was eliminated and Sugg applied for long-term disability benefits under the Policy. Sugg's supervisor had told him that, if he would indicate November of 1994 as the date of onset of his disability, the "waiting period" for benefits would thereby be reduced. On an "Employee's Statement" submitted to Hartford, Sugg wrote "11 1994" on lines marked "Date of Onset of Illness or Injury causing Present Disability" and "date of Disability."
In April of 1996 Hartford's "Benefit Manager" declined Sugg's application for benefits, finding that he had become disabled from continuing in his "own occupation" in November of 1994 by virtue of the fact that he could no longer perform the duties required of a traveling trainer. Sugg thereafter unsuccessfully sought reconsideration by the Benefits Manager and later "appealed" such denial to Hartford's "LTD Supervisor," asserting, inter alia, that the SSA had found that he was disabled as of November of 1995 and that, between April of 1994 and November of 1995, his "position remained the same" even though his duties had changed. Hartford abided by its earlier denial, pointing out that the SSA's benchmark for total disability differs from that provided in the Policy and reiterating its position that, as of November of 1994, his "own occupation" required traveling and prolonged standing and that, due to his illness, he was unable to perform such duties after 1994.
According to the Policy,
"Totally Disabled means:
• during the Qualifying Period; and
• the next 24 months,
that you are prevented by accidental bodily injury or sickness from doing all the material and substantial duties of your own occupation." Clemens Aff., Ex. D at 8.
The "Qualifying Period" is
"[t]he first 3 months of any one period of total disability.
"If:
• you cease to be totally disabled; and
• you return to work for a total of 14 or fewer days during a Qualifying Period,
if [sic] will not interrupt or extend the Qualifying Period. However, except for the 14 or fewer days you work, you must be totally disabled by the same condition for the whole Qualifying Period." Id., Ex. D at 3.
Upon consideration of the undisputed facts and of the relevant Policy language, this Court finds that a genuine issue exists as to whether Sugg was prevented by his illness from working in his "own occupation" after November of 1994. If the plaintiff demonstrates that his duties changed due to a circumstance unrelated to his medical condition, the undersigned opines that Hartford's contention that Sugg was "totally disabled" within the meaning of the Policy as of 1994 — and is therefore excluded from coverage — will be significantly undermined. Hartford relied solely upon the Exclusion in denying benefits. Accordingly, its motion for a summary judgment on Sugg's claim for benefits must be denied.
Hartford does not argue that Sugg is not entitled to benefits because he had initially — and arguably falsely — represented that his total disability had commenced in November of 1994 despite the fact that he continued working after such date.
Hartford also seeks dismissal of Sugg's state-law claim for breach of contract, arguing that such is preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1144(a). That contention is both uncontradicted and correct. Consequently, such claim — the only one alleged in the Complaint — will be dismissed. Sugg will be granted leave to file an amended complaint that properly asserts a claim for benefits under ERISA, 29 U.S.C. § 1132(a)(1)(B). An amended complaint must omit Pinkerton's from the caption unless a related claim is to be advanced against such party.
Accordingly, it is hereby ORDERED that Hartford's January 25, 1999 motion for summary judgment is granted insofar as it seeks dismissal of Sugg's state-law claim, that the Complaint is dismissed, that Sugg is granted leave to serve and file an amended complaint in accordance with this Order, that Sugg shall serve and file such within thirty days of the entry of this Order and that Hartford's motion for summary judgment is denied in all other respects.