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CAPIANCO v. LONG TERM DISABILITY PLAN OF SPONSOR UROMED

United States District Court, S.D. California


October 20, 2005.

GIL CAPIANCO, Plaintiff,
v.
LONG TERM DISABILITY PLAN OF SPONSOR UROMED CORP., a Corporation, et al., Defendants.

The opinion of the court was delivered by: DANA SABRAW, District Judge

ORDER (1) DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND (2) GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
[Doc. Nos. 100, 106]
This matter comes before the Court on the parties' cross-motions for summary judgment. The parties have each filed oppositions to the others' motions and replies to those oppositions. The matter came on for hearing on October 14, 2005. Howard Hellen, Esq. appeared on behalf of Plaintiff, and Bruce Celebrezze, Esq. appeared on behalf of Defendant Hartford. For the reasons set out below, the Court denies Plaintiff's motion, and grants Defendant's motion.

I.

  PROCEDURAL BACKGROUND

  Plaintiff Gil Capianco filed his complaint in this case on March 20, 2003. He brings this action pursuant to the Employee Retirement Income Security Act ("ERISA"). Plaintiff alleges two claims: one for benefits under his former employer's long-term disability insurance plan, and one for statutory penalties under 29 U.S.C. § 1132(c). The parties have been through two rounds of summary judgment motions thus far in the case. First, Defendant brought a motion for summary judgment on the issue of exhaustion, which this Court denied. Next, the parties brought cross-motions for summary judgment on the standard of review applicable to this case. Defendant argued for an abuse of discretion standard, and Plaintiff argued in favor of de novo review. The Court denied Defendant's motion, and granted Plaintiff's motion, and decided the appropriate standard of review for this case was de novo. The parties now bring cross-motions for summary judgment on the substance of Plaintiff's claims.

  II.

  FACTUAL BACKGROUND

  Plaintiff is a former employee of UroMed Corporation. As an employee of UroMed, Plaintiff participated in a long-term disability insurance policy issued by Defendant Hartford. The Hartford Policy is part of an ERISA plan.

  On October 29, 2001, Plaintiff submitted a claim for benefits under the Hartford Policy, asserting he was disabled due to multiple sclerosis. (Def.'s Response to Pl.'s Separate Stmt. of Uncontroverted Material Facts in Supp. of Pl.'s Mot. for Summ. J., Fact No. 4.) Defendant denied Plaintiff's claim on May 3, 2002, based on the pre-existing condition exclusion in the Hartford Policy. (Id. at No. 10.) That exclusion generally provides that benefits will not be payable if the insured received medical care for the asserted disability in the ninety days preceding the insured's effective date of coverage. (Decl. of Kim M. Huber in Supp. of Def.'s Mot. for Summ. J. ("Huber Decl."), Ex. A at POL011.)

  Although Plaintiff does not presently dispute that he received medical care for his multiple sclerosis during the ninety-day lookback period described in the pre-existing condition exclusion, (see Pl.'s Response to Def.'s Stmt. of Uncontroverted Facts in Opp'n to Def.'s Mot. for Summ. J., Fact No. 10), he appealed Hartford's denial of his claim on grounds that an exception to the pre-existing condition exclusion applied. (Def.'s Response to Pl.'s Separate Stmt. of Uncontroverted Material Facts in Supp. of Pl.'s Mot. for Summ. J., Fact No. 14.) The exception to the pre-existing condition exclusion preserves the possibility of coverage if the insured was covered under a "Prior Plan," and was not limited by a pre-existing condition under that "Prior Plan." (Huber Decl., Ex. A at POL011.) III.

  DISCUSSION

  The parties move for summary judgment on Plaintiff's claims for benefits and statutory penalties. The parties dispute whether the Court should consider extrinsic evidence in deciding whether Plaintiff is entitled to benefits under the Hartford Policy. They also dispute whether Plaintiff is entitled to benefits under that Policy, and whether he is entitled to any statutory penalties under ERISA.

  A. Summary Judgment

  Summary judgment is appropriate if there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party has the initial burden of demonstrating that summary judgment is proper. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). The moving party must identify the pleadings, depositions, affidavits, or other evidence that it "believes demonstrates the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the parties' differing versions of the truth." S.E.C. v. Seaboard Corp., 677 F.2d 1301, 1306 (9th Cir. 1982).

  The burden then shifts to the opposing party to show that summary judgment is not appropriate. Celotex, 477 U.S. at 324. The opposing party's evidence is to be believed, and all justifiable inferences are to be drawn in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, to avoid summary judgment, the opposing party cannot rest solely on conclusory allegations. Berg v. Kincheloe, 794 F.2d 457, 459 (9th Cir. 1986). Instead, it must designate specific facts showing there is a genuine issue for trial. Id. More than a "metaphysical doubt" is required to establish a genuine issue of material fact." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

  B. Benefits

  De novo review of a benefits decision requires this Court to determine "`whether, upon a full review of the administrative record, the decision of the administrator was correct.'" Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510, 518 (1st Cir. 2005), cert. denied, 74 U.S.L.W. 3108 (U.S. Oct. 11, 2005) (No. 05-189). In this case, Hartford denied Plaintiff's claim for benefits based on the policy's pre-existing condition exclusion. Plaintiff asserts that decision was incorrect for three reasons. First, he argues he is entitled to benefits pursuant to the continuity of coverage exception to the pre-existing exclusion. Second, he contends Defendant's denial of his claim violated his reasonable expectations under the Policy. Third, he insists that Defendant either waived the pre-existing condition exclusion, or else it should be estopped from relying on the exclusion. Defendant disputes that the continuity of coverage exception applies to Plaintiff's claim and that the reasonable expectations doctrine applies to this case, and argues it did not waive the pre-existing condition exclusion, nor should it be estopped from relying on it.*fn1

  1. Continuity of Coverage

  The Policy at issue in this case provided disability insurance resulting "from a covered accidental bodily injury, sickness or pregnancy." (Huber Decl., Ex. A at POL008.) The pre-existing condition exclusion states:

No benefit will be payable under the plan for any Disability that is due to, contributed to by, or results from a Pre-existing Condition, unless such Disability begins:
1. after the last of 90 consecutive day(s) while insured during which you receive no medical care for the Pre-Existing Condition; or
2. after the last day of 365 consecutive day(s) during which you have been continuously insured under this plan.
Pre-existing Condition means:
1. any accidental bodily injury, sickness, Mental Illness, pregnancy, or episode of Substance Abuse; or
2. any manifestations, symptoms, findings, or aggravations related to or resulting from such accidental bodily injury, sickness, Mental Illness, pregnancy, or Substance Abuse;
for which you received Medical Care during the 90 day period that ends the day before:
1. your effective date of coverage; or
2. the effective date of a Change in Coverage.
Medical Care is received when:
1. a Physician is consulted or medical advise is given; or 2. treatment is recommended, prescribed by, or received from a Physician.
Treatment includes but it not limited to:
1. medical examinations, tests, attendance or observation; and
2. use of drugs, medicines, medical services, supplies or equipment.
(Id. at POL011.) There is no dispute in this case that Plaintiff received medical care for his multiple sclerosis during the ninety days preceding his effective coverage date of March 27, 2001. (See Pl.'s Resp. to Def.'s Stmt. of Uncontroverted Material Facts, Fact No. 10.) Accordingly, Defendant properly relied on the pre-existing condition exclusion to deny Plaintiff's claim for benefits.

  Nevertheless, Plaintiff asserts that an exception to the pre-existing condition exclusion applies to his claim and warrants the payment of benefits. That continuity of coverage exception states:

If you become insured under the Group Insurance Policy on the Plan Effective Date and were covered under the Prior Plan on the day before the Plan Effective Date, the Pre-existing Conditions Limitation will cease to apply on the first to occur of the following dates:
1. the Policy Effective Date, if your coverage for the Disability was not limited by a pre-existing condition restriction under the Prior Plan; or
2. if your coverage was limited by a pre-existing condition restriction under the Prior Plan, the date the restriction would have ceased to apply had the Prior Plan remained in force.
(Huber Decl., Ex. A at POL011.) Plaintiff argues he was covered under a "Prior Plan," therefore the pre-existing condition exclusion should not apply to his claim.*fn2

  To support this argument, Plaintiff presents the Court with six pieces of evidence. First, he provides a June 28, 2002 letter from Jill R. Welch, Human Resources Manager of a company called NOMOS, which verifies that Plaintiff was a "covered employee" under a UNUM long term disability plan offered by Plaintiff's former employer, Radiation Oncology Computer Systems ("ROCS") from October 1, 1999, until November 30, 2000. (Decl. of Gil Capianco ("Capianco Decl."), Ex. B.) Second, Plaintiff presents a copy of a UNUM Group Life and Accidental Death and Dismemberment Plan issued to UroMed's predecessor in interest, SSGI. (Capianco Decl., Ex. C.) Third, Plaintiff provides a copy of a memo describing insurance and other benefit plans for Prowess Systems*fn3 as of November 2000. (Capianco Decl., Ex. D.) Fourth, Plaintiff presents a July 23, 1997 memo to all ROCS employees concerning the UNUM long term disability plan. (Capianco Decl., Ex. E.) Fifth, Plaintiff provides a form letter issued to all UroMed employees concerning UroMed's change in benefit providers from Provident to Hartford. (Capianco Decl., Ex. F.) The final piece of evidence is a February 20, 2000 Employee Benefits Review for SSGI. (Capianco Decl., Ex. G.)

  Although this evidence tends to show Plaintiff was covered under a long-term disability policy offered by one of his former employers, it does not establish Plaintiff was covered by a "Prior Plan" as that term is defined in the Hartford Policy. The Hartford Policy defines a "Prior Plan" as "the long term disability insurance carried by the Employer on the day before the Plan Effective Date." (Huber Decl., Ex. A at POL008.) The Employer is defined elsewhere in the Hartford Policy as "Uromed Corporation." (Id. at POL006, POL004.) None of the evidence provided by Plaintiff establishes that he was covered by a prior long term disability policy offered by UroMed. Indeed, Plaintiff's evidence shows UroMed's prior long-term disability policy was issued by Provident, and Plaintiff presents no evidence that he was covered under a Provident policy. Absent any such evidence, the continuity of coverage exception does not apply to Plaintiff's claim, and it does not warrant an award of benefits.

  2. Reasonable Expectation

  Plaintiff's second argument in support of his claim for benefits is that Defendant's application of the pre-existing condition exclusion violated his reasonable expectations under the Hartford Policy. The doctrine of reasonable expectations "requires a plan to be interpreted in accordance with the reasonable expectations of the insured where the plan is ambiguous or where exclusionary provisions in a plan are not sufficiently conspicuous." Lancaster v. United States Shoe Corp., 934 F.Supp. 1137, 1150 (N.D. Cal. 1996).

  Here, Plaintiff asserts the Hartford Policy is ambiguous because it contains a pre-existing condition exclusion and an exception to that exclusion in the event of continuity of coverage. However, these two provisions, when read together, are not ambiguous. Both provisions are clearly set out in the policy. The term "pre-existing condition" is explicitly defined, as are the circumstances in which the continuity of coverage exception would apply. Other than the mere inclusion of these two provisions in the Policy, Plaintiff points to no specific language in the policy that is alleged to be ambiguous. In the absence of such a showing, the doctrine of reasonable expectations does not justify Plaintiff's claim for benefits.

  3. Waiver/Estoppel

  In the course of the briefing and at oral argument, it became clear that Plaintiff was raising an additional argument in support of his claim for benefits, specifically, that Defendant either had waived the pre-existing condition exclusion or that Defendant should be estopped from relying on that exclusion. To support this argument, Plaintiff relies on an item of evidence also cited in support of his reasonable expectations argument, namely, an April 12, 2001 e-mail he received from Lisa Scibilia, an employee in the human resources department at UroMed. (See Capianco Decl., Ex. A.) According to Plaintiff, he inquired of Ms. Scibilia whether he would be eligible for long term disability coverage under the Hartford Policy. (Capianco Decl. at 2.) Ms. Scibilia responded that she "called the Hartford and Blue Cross and they had said that since your group is being considered a transfer and not as newhires [sic] and you are coming directly from another plan, than [sic] both for medical and all disabilitites [sic] that the pre-existing conditions are waived." (Capianco Decl., Ex. A.) Plaintiff asserts this e-mail constitutes a waiver by Defendant of the pre-existing conditions exclusion, or in the alternative, that by virtue of the e-mail, Defendant should be estopped from relying on that exclusion.

  The primary problem with Plaintiff's waiver argument, however, is he fails to provide any evidence or legal authority that Ms. Scibilia, an employee of UroMed, had authority to waive the pre-existing condition exclusion on Defendant's behalf. Plaintiff does not allege Ms. Scibilia was an agent of Defendant, nor does he allege the Hartford Policy granted Ms. Scibilia authority to change its terms. Indeed, the Policy explicitly provides that only Hartford has "authority to determine eligibility for benefits and to construe and interpret all terms and provisions of the Group Insurance Policy." (Huber Decl., Ex. A at POL020.) Accordingly, Plaintiff's waiver argument does not demonstrate his entitlement to benefits. To prevail on his estoppel argument, Plaintiff must establish "a material misrepresentation, reasonable and detrimental reliance upon the representation and extraordinary circumstances." Pisciotta v. Teledyne Industries, Inc., 91 F.3d 1326, 1331 (9th Cir. 1996) (citing In Re Unisys Corp. Retiree Medical Benefit "ERISA" Litigation, 58 F.3d 896, 907 (3d Cir. 1995)). He must also establish there is an ambiguity in the Hartford Policy "such that reasonable persons could disagree as to their meaning or effect[,]" and that the representations involve "an oral interpretation of the plan." Id. (citing Greany v. Western Farm Bureau Life Ins. Co., 973 F.2d 812, 821 (9th Cir. 1992)).

  In this case, Plaintiff has failed to demonstrate any of the elements of an estoppel claim. He has failed to establish Defendant made a material misrepresentation. To the extent he relies on the Scibilia e-mail to establish this fact, as stated above, that representation cannot be attributed to Defendant. Furthermore, even if the Scibilia e-mail could be considered a material misrepresentation, Plaintiff has failed to demonstrate his reliance on that representation was reasonable. Plaintiff also fails to show any extraordinary circumstances, and as mentioned above, he fails to demonstrate the Hartford Policy is ambiguous. Thus, Plaintiff's estoppel argument does not serve as a basis to award him benefits.

  In sum, the Court finds there are no genuine issues of material fact in this case that preclude this Court from determining the propriety of Defendant's decision to deny Plaintiff's claim for benefits. Considering the evidence set out above, Defendant's decision to deny Plaintiff's claim for benefits was correct under the Policy, and thus Defendant is entitled to judgment in its favor on this claim.

  C. Statutory Penalties

  The only other claim at issue in this case is for statutory penalties under 29 U.S.C. § 1132(c). Plaintiff alleges he is entitled to penalties under this statute as a result of Defendant's failure to respond to his administrative appeal in a timely manner. However, Plaintiff fails to explain which of the eight subsections contained in this statute provide for the penalties he seeks. Indeed, the Court's review of the statute indicates that no subsection of Section 1132(c) applies to this case, and no subsection allows for the recovery of penalties for the failure to timely respond to an administrative appeal of a denial of plan benefits. Because Plaintiff fails to provide any legal support for this claim, the Court grants Defendant's request for judgment.

  IV.

  CONCLUSION AND ORDER

  For all the foregoing reasons, the Court DENIES Plaintiff's motion for summary judgment [Doc. No. 106] and GRANTS Defendant's motion for summary judgment [Doc. No. 100]. The Clerk of the Court shall enter judgment accordingly.

  IT IS SO ORDERED.

20051020

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