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Marshburn v. Unum Life Insurance Company of America

United States District Court, C.D. California

January 5, 2015

JULE MARSHBURN
v.
UNUM LIFE INSURANCE COMPANY OF AMERICA, ET AL

Michael Horrow, Russell Petti, Attorneys Present for Plaintiffs.

Daniel Maguire, Attorneys Present for Defendants.

CIVIL MINUTES - GENERAL

CHRISTINA A. SNYDER, District Judge.

Proceedings: DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Dkt. No. 20, filed December 8, 2014)

I. INTRODUCTION

On December 4, 2013, plaintiff Julie Marshburn, M.D., filed this lawsuit against defendant Unum Life Insurance Company of America ("Unum") and Does 1 through 10. On January 10, 2014, Unum removed the action to this Court on the basis of diversity and federal question jurisdiction. Dkt. Nos. 1, 8. In brief, the complaint alleges that Unum failed to make disability payments owed to plaintiff under the terms of an insurance policy issued by Unum, having improperly determined that plaintiff was not disabled. See generally Compl. (attached to Dkt. No. 8). Plaintiff brings claims for breach of contract and breach of the duty of good faith and fair dealing. Id.

On December 8, 2014, Unum filed the instant motion, seeking summary judgment on the ground that the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"), governs plaintiff's claims for long-term disability benefits and completely preempts plaintiff's asserted state law claims. Dkt. No. 20. Plaintiff filed an opposition on December 15, 2014. Dkt. No. 21. Unum filed a reply on December 22, 2015. Dkt. No. 23. On January 5, 2015, the Court held a hearing on the matter. For the reasons that follow, the Court concludes that ERISA governs the ineligibility defense raised by Unum, but that Unum has not shown that it is entitled to summary judgment on the basis of ERISA preemption of plaintiff's state-law claims.

II. FACTUAL BACKGROUND

Unless otherwise noted, the following facts are not in material dispute for purposes of this motion.

A. Unum's Relevant Insurance Policies

In 2003, plaintiff was admitted to an Internal Medicine residency program at Cedars-Sinai Medical Center in Los Angeles, California ("Cedars-Sinai"). Def.'s Separate Statement ("DSS") ¶ 12; Pl.'s Response to Def.'s Separate Statement ("PRS") ¶ 12. At all times relevant to this motion, Cedars-Sinai maintained an employee welfare benefit plan (the "Plan") for its eligible employees. DSS ¶ 1; PRS ¶ 1. Effective February 1, 1997, Unum issued Group Long Term Disability Policy No. XXXXXXXXX (the "Group Policy"), which funded in part the Plan's long-term disability insurance coverage. DSS ¶ 2; PRS ¶ 2. As a resident at Cedars-Sinai, plaintiff was eligible to participate in the Plan and for disability coverage under the Group Policy. DSS ¶ 13; PRS ¶ 13. For purposes of short-term disability, the Group Policy defines "disability" as when, "due to your sickness or injury... you are unable to perform the material and substantial[1] duties of your regular occupation;[2] and [] you are not working in any occupation." DSS ¶ 3; PRS ¶ 3. For purposes of long-term disability, the Group Policy defines "disability" as when "you are limited[3] from performing the material and substantial duties of your regular occupation due to your sickness and injury; and [] you have a 20% or more loss in your indexed monthly earnings due to the same sickness or injury." DSS ¶ 4; PRS ¶ 4.

The Group Policy had a "conversion" feature that allowed an employee whose employment was terminated to retain insurance coverage as an individual.[4] This provision reads:

If you end employment with your Employer, your coverage under the plan will end. You may be eligible to purchase insurance under Unum's group conversion policy. To be eligible, you must have been insured under your Employer's group plan for at least 12 consecutive months.... You must apply for insurance under the conversion policy and pay the first quarterly premium within 31 days after the date your employment ends. Unum will determine the coverage you will have under the conversion policy. The conversion policy may not be the same coverage [Unum] offered you under your Employer's group plan.

DSS ¶ 8; PRS ¶ 8. The Group Policy explains that a person is "not eligible to apply for coverage under Unum's group conversion policy if, " among other things, the person is "disabled under the terms of the plan, " "recover[s] from a disability and do[es] not return to work for [the prior] Employer, " or is "on a leave of absence." DSS ¶ 9; PRS ¶ 9.

B. Plaintiff's Injuries and Medical Treatment

In August 2003, while working at Cedars-Sinai, plaintiff injured her right shoulder lifting a patient. DSS ¶ 15; PRS ¶ 15. Although plaintiff initially expected the injury to heal on its own, it did not. See Dkt. No. 22-2 (Marshburn Decl.) ¶¶ 5, 6. In the spring of 2006, plaintiff took off the last month of her residency as a "reading month" to prepare for a board examination and have surgery on the injured shoulder. Id . ¶ 7. On June 5, 2006, Dr. Neal S. El-Attrache performed surgery on plaintiff's right shoulder to repair a labrum tear. DSS ¶ 16; PRS ¶ 16. During this surgery, plaintiff suffered a torn ligament in her right thumb. DSS ¶ 19; PRS ¶ 19. Plaintiff asserts that she was placed on restricted duty as a result of the surgery, but that the restriction did not have an immediate impact on her work duties because she was studying for boards at the time. Marshburn Decl. ¶ 8. In March 2007, plaintiff had surgery on her right thumb, as well as a second surgery on her right shoulder to clean up scar tissue. DSS ¶ 21; PRS ¶ 21. Plaintiff then tore ligaments in her right finger while rehabilitating her shoulder in May 2007. DSS ¶ 22; PRS ¶ 22.

Plaintiff did not return to work until March 2008. DSS ¶ 18; PRS ¶ 18. According to plaintiff, she was unable to work until this time because of "a number of factors, including the need for additional surgeries and some medical issues which were both related and unrelated" to her first shoulder surgery. PRS ¶ 18.

C. Plaintiff's Conversion Policy

Plaintiff's employment at Cedars-Sinai terminated on June 30, 2006. DSS ¶ 24; PRS ¶ 24. Cedars-Sinai subsequently sent plaintiff a document notifying her of the opportunity to convert her Unum life and disability insurance coverage into an individual policy no longer affiliated with Cedars-Sinai, along with an application for conversion coverage. DSS ¶ 25; PRS ¶ 25; see Marshburn Decl. ¶ 14 & Ex. A. This notice was dated July 7, 2006, but plaintiff recalls receiving the document "much later in July."[5] Marshburn Decl. ¶¶ 9, 10. ...


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