United States District Court, S.D. California
October 20, 2005.
GIL CAPIANCO, Plaintiff,
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.
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.
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.
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
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).
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
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
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
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
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
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.
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.
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.
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