United States District Court, N.D. California
HONG-NGOC T. DAO, Plaintiff,
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, Defendant.
ORDER RE: CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT;
MOTION FOR DETERMINATION OF VALIDITY OF POLICY PROVISIONS;
AND MOTION TO COMPEL RE: DKT. NOS. 170, 182, 185
ILLSTON United States District Judge.
1, 2016, the Court held a hearing on the parties'
cross-motions for partial summary judgment and
plaintiff's motion for a determination of the validity of
policy provisions and motion to compel. For the reasons set
forth below, the Court GRANTS in part and DENIES in part
defendant's motion for partial summary judgment, DENIES
plaintiff's motion for partial summary judgment, and
DENIES plaintiff's motion for a determination of the
validity of policy provisions and motion to compel.
Plaintiff's claim for benefits
October 26, 2014, plaintiff Hong-Ngoc T. Dao filed this
lawsuit against defendant Liberty Life Assurance Company of
Boston ("Liberty"). Plaintiff has a contract with
Liberty for supplemental disability insurance. The second
amended complaint alleges, among other things, that Liberty
breached this contract by improperly and unreasonably denying
plaintiff's claim for long-term disability benefits, and
by wrongfully refusing to pay the requested benefits.
issued a Group Disability Income Policy of the University of
California, Policy No. GD3-860-037972-03/GF3-860-037972-01
("the Policy"), which provides group disability
insurance benefits to eligible employees of the University of
California("UC") through its Short Term Disability
Insurance Plan and Supplemental Disability Insurance Plan.
Dkt. No. 185-6, Ex. 1. The Policy provides up to 12 months of
short term disability ("STD") benefits, followed by
long term disability coverage ("LTD") under the
Supplemental Disability Insurance Plan. For STD coverage, the
"Covered Person" must be totally disabled from
performing his or her "own occupation."
Id. For LTD coverage, the "Covered Person"
must be totally disabled from performing "any
occupation." Id. at P00011.
was first enrolled in the Supplemental Disability Insurance
Plan in 2005, when she began work at the University of
California at UCSF. Dkt. No. 185-6, Ex. 2 (Dao depo. at
119-46. Plaintiff had a one year break in service
in approximately 2008, after which she accepted a job at UC
Berkeley in 2009, and then she moved to her most recent
position as a Research Policy Manager at the University of
California Office of the President (UCOP) in November 2011.
to the declaration of Corie Gillham, Short Term Disability
Case Manager II for Liberty, in July 2013 plaintiff reported
experiencing increased migraines and stress and stopped
working. Gillham Decl. ¶ 4. Plaintiff submitted a claim
for STD benefits on September 30, 2013, and provided the
names and contact information for two treating physicians,
Dr. Heublein (primary care) and Dr. Kitt (neurologist).
Id. Liberty claims it requested information from
both doctors and that it received some but not all of the
requested information from Dr. Heublein and did not receive
any information from Dr. Kitt. Plaintiff claims that the
evidence shows that Liberty never requested any information
from Dr. Kitt until July 2014. Liberty states that based on
the information provided by Dr. Heublein, Liberty initially
approved plaintiff’s STD claim on October 8, 2013, and
issued payments commencing August 5, 2013.
the fall of 2013, Dr. Heublein extended plaintiff’s
return to work several times, and in early 2014, Dr. Heublein
released plaintiff to return to work 20 hours a week as of
February 10, 2014. Plaintiff worked part time from February
to April 2014, working mostly from home, and was therefore
eligible for partial disability benefits.
January 29, 2014, Liberty sent plaintiff a letter stating
that her STD benefits would end on August 5, 2014, and that
Liberty would begin to evaluate an LTD claim while also
continuing to process her STD claim. Between January and July
of 2014, Liberty requested that plaintiff and her physicians
provide information in support of her claims for benefits.
Liberty asserts that plaintiff and her physicians failed to
provide the requested information, and in a letter dated
August 5, 2014, Liberty denied plaintiff's claim for LTD
parties dispute whether Liberty acted reasonably with regard
to its investigation of plaintiff’s claims for STD and
LTD benefits. Plaintiff contends that Liberty failed to
conduct a proper investigation and instead “papered the
file” to support a denial of LTD benefits. Plaintiff
alleges, inter alia, that Liberty’s claim file
notes do not support various assertions made by Liberty about
efforts that it made to contact plaintiff and her physicians,
that Liberty backdated a request for medical information,
that Liberty repeatedly requested information that was
irrelevant to its LTD evaluation, and that Liberty put
plaintiff under five days of covert surveillance in order to
find some reason to deny her claim. Plaintiff also claims that
her physicians provided sufficient evidence of her disability
prior to Liberty’s denial of her LTD claim in August
2014. Plaintiff’s primary care physician, Dr. Heublein,
stated in July 2014 that plaintiff suffered from chronic
migraine headaches with nausea, vertigo and photophobia, and
that her symptoms made it difficult for her to perform
activities of daily living. Another physician, Dr. James,
stated in July 2014 that plaintiff had been diagnosed with
Major Depressive Disorder, Post Traumatic Stress Disorder,
and Chronic Migraines with aura.
to Liberty, plaintiff repeatedly failed to respond to
letters, phone calls, and requests for information, plaintiff
never completed the STD claim forms, and she only returned
some of the LTD claim forms for the first time in July 2014.
Liberty denies that it backdated any letters and states that
the date on the letters at issue was a typographical error.
Liberty also asserts that it conducted surveillance on
plaintiff based on her failure to respond to requests for
information, and that Liberty contacted all of
plaintiff’s physicians as soon as plaintiff informed
Liberty about her treatment from these physicians and
provided contact information for the physicians. Liberty also
claims that despite repeatedly requesting current medical
information from plaintiff’s medical providers, the
physicians either did not respond or provided information
that was either incomplete or not recent.
attorney sent a letter dated October 1, 2014, to Liberty.
Dkt. No. 185-5, Ex. 1. Plaintiff characterizes this letter as
a pre-litigation settlement demand, while Liberty
characterizes this letter as an appeal of the denial of LTD
benefits. The letter stated, inter alia, that
plaintiff had authorized her counsel to settle all claims she
has against Liberty for $6, 000, 000, and set forth the facts
in support of plaintiff's claim for LTD benefits. Liberty
Technical Claims Team Manager Trisha Brewster has submitted a
declaration stating "Because Plaintiff was challenging
the denial and claimed continued disability, and Liberty Life
had now received some records and information on her
psychological treatment from Dr. James and Plaintiff's
neurologist had contacted Liberty Life agreeing to provide
the records requested, I interpreted the letter as an appeal
and made the decision to reopen the claim and approve
benefits at that time." Dkt. No. 185-5 ¶ 6.
October 14, 2014, Ms. Brewster wrote to plaintiff's
counsel and informed him that Liberty was re-opening
plaintiff's claim to conduct additional investigation,
and advised that LTD benefits were being reinstated
retroactive to August 5, 2014 with the understanding that
additional records would be provided. Id., Ex. 2.
Liberty issued a check to plaintiff on October 14, 2014 for
$8, 411.68 for the period from August 5, 2014 to October 4,
filed this lawsuit on October 26, 2014.
October 29, 2014 through March 30, 2015, Liberty issued
plaintiff monthly checks for $4, 205.84.
November 28, 2014, the Social Security Administration awarded
plaintiff Social Security disability benefits. Dkt. No.
185-1, Ex. 2. The award letter stated that plaintiff was
found to be disabled under Social Security's rules on
July 5, 2013, and that plaintiff would receive a retroactive
award of $22, 264.00 for the period from January 2014 through
December 2014, and that she would then receive monthly
benefits. Id. Plaintiff's initial Social
Security benefit amount was $2, 024.30 per month.
March 2015, Liberty learned that plaintiff had received an
award of Social Security disability benefits. On March 30,
2015, Liberty sent a letter to plaintiff's attorney
stating that pursuant to terms of the Policy regarding
"Benefits from Other Income, " Liberty "will
begin reducing [plaintiff's] disability benefit from
Liberty to offset for her Social Security benefits and we
will calculate the overpayment due." Id. Ex. 3.
That letter also cited the Policy's provision regarding
"Right of Recovery, " and stated "We ask that
you set aside any retroactive payment received to repay this
obligation. Once we have calculated the amount due, we will
notify you." Id.
April 9, 2015, Liberty sent plaintiff's counsel another
letter stating that based upon plaintiff's Social
Security award, "we have reduced [plaintiff's] LTD
monthly benefit from $4205.84 to $3864.17, to reflect her
Social Security award." Id. Ex. 4. The letter
also stated Liberty had calculated the amount of the
overpayment that plaintiff was required to repay Liberty as
$15, 964.93. Id. Between April 2015 and July 2015,
plaintiff received the lowered LTD monthly benefit of $3,
another letter dated July 27, 2015, Liberty informed
plaintiff that Liberty had not received repayment of the
overpayment, and that "If we do not receive repayment
for the overpayment due by August 10, 2015, we will begin
reducing [plaintiff's] Supplemental Disability benefits
to recover the overpayment." Id. Ex. 5. In a
letter dated August 18, 2015, Liberty informed
plaintiff's attorney that "Liberty Life will
withhold [plaintiff's] monthly disability benefit payment
in the amount of $3864.17 beginning with the next payment
scheduled to release on August 29, 2015. . . . Please note
that, although the scheduled repayments will absorb
[plaintiff's] entire benefit payment for a period of
time, once she has fully repaid Liberty Life, she will again
receive disability payments, provided she continue[s] to be
eligible under her contract." Id. Ex. 6. From
August 2015 through December 2015, Liberty ceased paying
plaintiff LTD benefits in order to recover the alleged
overpayment. In January 2016, Liberty resumed making monthly
LTD payments of $3, 864.17 to plaintiff, and plaintiff
continues to receive monthly LTD benefits from Liberty.
Policy includes in the SCHEDULE OF BENEFITS an explanation of
how benefits are calculated, which includes the deduction of
Benefits from Other Income and instruction to see SECTION 4
for a discussion of Benefits from Other Income. Dkt. No.
185-6, Ex. 1, P0006, P0007. SECTION 4- DISABILITY INCOME
BENEFITS states how benefits are obtained and calculated,
including the offset of Other Income Benefits. Id.,
P00015-26. This offset is discussed for short term disability
at P00015-20, and for long term disability at P00021-26.
Under SHORT TERM/SUPPLEMENTAL DISABILITY COVERAGE, the Policy
explains how to obtain and calculate benefits:
When Liberty receives proof that a Covered Person is Totally
Disabled due to Injury or Sickness and requires the regular
attendance of a Physician, Liberty will pay the Covered
Person a Weekly Benefit after the end of the Waiting Period.
The benefit will be paid for the period of Total Disability
if the Covered Person gives to Liberty proof of continued:
1. Total Disability; and
2. regular attendance of a Physician,
The proof must be given upon Liberty's request and at the
Covered Person's expense.
For the purpose of determining Total Disability, the Injury
must occur and the Covered Person's Total Disability must
begin while the Employee is insured for this coverage; and
Total Disability which is the result of the Covered
Person's Sickness must begin while the Employee is
insured for this coverage. In addition, a loss of a license
for any reason does not, in itself, constitute Total
The Weekly Benefit will not:
1. exceed the Covered Person's Amount of Insurance; or
2. be paid for longer than the Maximum Benefit Period.
The Amount of Insurance and the Maximum Benefit Period are
shown in the ...