Walter Weyrauch v. CIGNA Life Ins. Co. ( 2005 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 04-3182
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Walter E. Weyrauch, *
*
Appellant, *
* Appeal From the United States
v. * District Court for the
* District of Minnesota.
Cigna Life Insurance Company *
of New York, *
*
Appellee. *
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Submitted: June 23, 2005
Filed: August 2, 2005
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Before MELLOY, HEANEY, and GRUENDER, Circuit Judges.
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HEANEY, Circuit Judge.
Walter E. Weyrauch appeals the district court’s adverse grant of summary
judgment on his suit seeking recovery of long-term disability benefits from Cigna
Life Insurance Company (Cigna). For the reasons stated herein, we reverse and
remand.
BACKGROUND
Weyrauch spent much of his life as a stockbroker. In August of 1996, he
accepted a position as an investment banker with Salomon Smith Barney. He
immediately became eligible for long-term disability benefits under a long-term
disability income policy (Policy) issued by Cigna.
Unfortunately, on October 26, 1996, Weyrauch suffered a stroke. He was
released from the hospital nine days later. Despite the lingering effects of the stroke,
Weyrauch returned to work shortly after his release and was working six hours a day
by January of 1997. By April, Weyrauch apparently was working full time for
Salomon Smith Barney even though his speech was somewhat slurred and he had
weakness in his hand and left leg.
For the remainder of 1997 and 1998, Weyrauch was able to perform the duties
of his job, earning $56,562.12 in 1997 and $82,911.47 in 1998.1 Although it is
unclear when Weyrauch’s condition degenerated, he was diagnosed with a permanent,
partial disability after a neuropsychological evaluation on March 13, 1999. The
report recommended vocational counseling because return to unrestricted
employment at professional levels was doubtful.
Salomon Smith Barney terminated Weyrauch on July 8, 1999. The cause for
termination is not reported in the record, but it appears that Weyrauch was continually
absent from work after April 10, 1999. In addition to being fired, Weyrauch suffered
numerous personal setbacks related to his condition, including a divorce and eviction
from his home that year.
1
The record reveals that Weyrauch received short-term disability benefits some
time during the period of October 26, 1996 to December 31, 1998. (J.A. at 118.) The
amount of benefits and the time period to which the payments related are not stated.
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In July of 2000, Weyrauch sought the assistance of counsel, who promptly filed
a claim on his behalf on July 7, 2000. The claim was as follows:
Mr. Weyrauch was employed at SalomanSmithBarney [sic] October 31, 1996
when he suffered an onset of total disability that began with a stroke. Enclosed
you will find a letter describing his neuropsychological evaluation done
March 13, 1999 that clearly indicates he is totally disabled . . . .
....
. . . I believe he is eligible for benefits for the time period beginning
October 26, 1996 down to the present.
(J.A. at 180-181.)
After requesting and obtaining medical records, Cigna denied Weyrauch’s
claim on September 19, 2000, and in the letter of denial stated a number of reasons,
including late submission of the claim, failure to provide an excuse for late
submission, lack of cooperation, and prejudice to its ability to determine contractual
conditions resulting from the late submission. Weyrauch then filed several appeals
with Cigna’s Appeals Team, resulting in subsequent denials on November 11, 2000
and May 1, 2001.
In response to the denial of his claim for disability benefits, Weyrauch filed suit
in the United States District Court for the District of Minnesota on June 25, 2001,
seeking recovery of benefits under a policy governed by the Employee Retirement
Income Security Act of 1974 (ERISA). The court referred the case to a magistrate.
Cigna asked the magistrate to uphold the denial of benefits because Weyrauch failed
to comply with the terms and conditions of the Policy. Both parties moved for
summary judgment; the magistrate recommended granting Cigna’s motion based on
the finding that Weyrauch violated three different contractual limitations periods: the
30-day period to file notice of claim, the 90-day period to file proof of loss, and the
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three-year period to bring suit–any one of which would have been a sufficient basis
to deny the claim. The court accepted this recommendation, and this appeal followed.
ANALYSIS
I. Standard of Review
We review de novo a grant of summary judgment. Torres v. UNUM Life Ins.
Co. of Am., 405 F.3d 670, 677 (8th Cir. 2005). 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); Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). When making this determination, we view the record in the
light most favorable to the non-moving party, giving “that party the benefit of all
reasonable inferences to be drawn from the underlying facts.” United States v.
Friedrich, 402 F.3d 842, 844 (8th Cir. 2005).
Further, we review de novo the district court’s determination of the appropriate
standard of review of a benefit plan decision under ERISA. Ortleib v. United
HealthCare Choice Plans, 387 F.3d 778, 781 (8th Cir. 2004). Under ERISA, the court
should apply a deferential standard of review if “the benefit plan gives the
administrator or fiduciary discretionary authority to determine eligibility for benefits
or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
101, 115 (1989). In the court below, Weyrauch argued that a de novo standard of
review was appropriate because the Policy did not contain a term giving Cigna
discretionary authority. Cigna did not dispute this. Thus, the district court
determined that a de novo standard of review was appropriate. Finding nothing in the
record persuading us to the contrary, we agree with the district court’s determination.
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II. Discussion
We initially discuss the magistrate’s finding that Weyrauch’s action, filed on
June 25, 2001, should have been filed by July 23, 2000 and was barred for failure to
file suit within the statute of limitations period. In our view, the magistrate was in
error. Under ERISA, the statute of limitations provided by Minnesota Statute
62A.04, subdivision 2(11) controls,2 and we think it clear that the suit is timely under
that statute of limitations.
A. Timeliness of Suit
Because ERISA does not provide a statute of limitations for actions to recover
benefits, we look first to the most analogous state statute of limitations. Johnson v.
State Mut. Life Assurance Co. of Am., 942 F.2d 1260, 1261-62 (8th Cir. 1991) (en
banc). In the context of long-term disability policies, this court has held that the most
analogous Minnesota statute is Minnesota Statute section 62A.04, subdivison 2.
2
The magistrate’s opinion suggests that the contractual limitations period is
relevant to determine if Weyrauch’s claim is barred. We note that a contractual
limitations period shorter than that provided by state law may be effective in some
cases. Wilkins v. Hartford Life & Accident Ins. Co., 299 F.3d 945, 948 (8th Cir.
2002). But the Policy here includes a clause stating that “[i]f any time limit set forth
in the policy . . . is less than that permitted by the law of the state in which the
Employee lives when the policy is issued, then the time limit provided by the policy
is extended to agree with the minimum permitted by the law of that state.” (J.A. at
65.)
Here, the Minnesota statute mandates a minimum limitations period allowing
the insurer to substitute alternate provisions only if they are “not less favorable in any
respect to the insured or the beneficiary.” Minn. Stat. § 62A.04, subd. 2. By its own
terms, the Policy automatically extends its limitations period to meet the state law
requirement. Therefore, it is unnecessary to consider whether we would reach a
different result if we applied the contractual limitations period.
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Blaske v. UNUM Life Ins. Co. of Am., 131 F.3d 763, 764 (8th Cir. 1997). This
statute’s limitations period runs three years from the date proof of loss is required.
Minn. Stat. § 62A.04, subd. 2(11). The subsection concerning proof of loss provides:
Written proof of loss must be furnished to the insurer at its said office
in case of claim for loss for which this policy provides any periodic
payment contingent upon continuing loss within 90 days after the
termination of the period for which the insurer is liable and in case of
claim for any other loss within 90 days after the date of such loss.
Minn. Stat. §62A.04, subd. 2(7) (emphasis added).
Thus, under the statute, the type of claim determines the date proof of loss is
due. For claims involving continuing loss, such as the long-term disability claim
here, proof of loss is due 90 days after the termination of the period of disability;3 for
claims with a discrete loss date, proof of loss is due 90 days from that date. Id. The
net effect of these provisions is that an action must be filed within three years and 90
days of the date the insured ceases to be totally disabled.
It follows, therefore, that Weyrauch had three years and 90 days from the date
his disability ended to file suit. Viewed in the light most favorable to Weyrauch, the
record establishes that he was diagnosed with a permanent disability on March 13,
1999, which rendered him totally disabled on that date under the terms of the Policy.
The Policy was in effect on this date, and he was still employed by Salomon Smith
Barney. Weyrauch filed suit June 25, 2001–well within the three years and ninety
days he was permitted under the statute of limitations. Thus, his suit is clearly timely.
3
In Ryan v. ITT Life Ins. Corp., 450 N.W.2d 126 (Minn. 1990), the Minnesota
Supreme Court addressed the proof of loss provision of section 62A.04, concluding
“[w]hen an insured claims total disability benefits under a policy governed by section
62A.04, subd. 2(7) and (11), the limitations period will not begin to run until 90 days
after termination of the continuous period of disability.” Ryan, 450 N.W.2d at 129.
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Cigna insists that Weyrauch’s claim relates only to the discrete occurrence of
his stroke, and thus, proof of loss was due, at the latest, by July 27, 1997, and the time
to file suit expired on July 27, 2000. We disagree. To the extent that Weyrauch
believes he is eligible for benefits dating back to October 26, 1996, he is incorrect.
The stroke occurred on October 26, 1996, but the record reflects Weyrauch returned
to full-time work by April 1997 and earned significant wages in both 1997 and 1998.
The fact that he requested benefits dating back to October 26, 1996, however, is
irrelevant to the question of whether he is entitled to any benefits resulting from a
disability occurring while he was covered by the Policy.
Weyrauch may survive summary judgment on the question of whether his suit
was timely filed by showing onset of a disability while he was covered by the Policy
and by filing suit within three years and ninety days after his disability ceased.
Weyrauch has done so by introducing the neuropsychologist’s report, which declared
him permanently disabled as of March 13, 1999, and we conclude that the district
court erred by granting summary judgment on this ground.
B. Proof of Loss and Notice of Claim Requirements
Having decided that Weyrauch’s suit is not barred by the statute of limitations,
we must address the magistrate’s finding that Weyrauch did not timely file notice of
claim or proof of loss and that Cigna was prejudiced as a result. The magistrate erred
when he found that Weyrauch should have filed notice of his claim by May 23, 1997
and proof of loss by July 23, 1997.
We previously noted that under Minnesota Statute section 62A.04, proof of
loss is due 90 days after the termination of the period of disability. Viewing the facts
in the light most favorable to Weyrauch for purposes of Cigna’s summary judgment
motion on the issue of timely filing of proof of loss, Weyrauch’s disability continued
at least until August 23, 2000, when proof of loss was filed. Although Cigna may
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argue to the contrary, this would present a disputed fact issue for resolution on
remand as to whether Weyrauch is entitled to disability benefits under the Policy.
We next turn to the timeliness of Weyrauch’s notice of claim. Minnesota law
and the Policy both require filing of notice at the onset of the disability. Minn. Stat.
§ 62A.04, subd. 2(5); (J.A. at 65). At the latest, Weyrauch should have filed notice
of his claim 30 days from the date he was declared permanently disabled, March 13,
1999, which he did not do. However, the Policy’s notice of claim provision states
that a “claim will not be invalidated or reduced if it is shown that written notice was
given as soon as was reasonably possible.” (J.A. at 65.) Accordingly, we must
determine whether, viewing the record in the light most favorable to Weyrauch, he
filed notice as soon as was reasonably possible.
Weyrauch argues that his delay in filing was reasonable, given his mental
impairments. The magistrate, believing that the notice was due by May 23, 1997,
found this unpersuasive. He noted that Weyrauch passed his driver’s test and
returned to work as a stock broker in 1997. This misses the mark. Although these
facts are relevant to Weyrauch’s condition in 1997, the real question is whether his
impairments affected his ability to give notice at the onset of his disability, which the
record reflects began in 1999. In addition to the diagnosis of permanent mental
disability, Weyrauch was divorced, evicted from his home, and fired during 1999.
Under these circumstances, a reasonable fact-finder could conclude that Weyrauch’s
mental condition prevented him from filing a claim until he enlisted the aid of counsel
to do so the following year.
Even if the fact-finder determines that Weyrauch did not file the notice of his
claim as soon as was reasonably possible, under Minnesota law,4 an insurer may not
4
Although ERISA preempts many state statutes, it is settled law that ERISA
preemption does not apply to notice-prejudice rules that regulate insurance. UNUM
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invalidate the claim on this basis absent a showing of prejudice due to insured’s late
filing. Ryan v. ITT Life Ins. Corp., 450 N.W.2d 126, 130 (Minn. 1990). Cigna
argued below that it suffered prejudice because Weyrauch’s late filing prevented it
from investigating whether his disability was caused by a pre-existing condition. The
Policy provides that the pre-existing condition “limitation will not apply to a period
of total disability which begins more than 12 months after the most recent Effective
Date of the Employee’s Insurance.” (J.A. at 55.) The record shows that the effective
date of Weyrauch’s insurance is August 9, 1996. Thus, the pre-existing condition
limitation only applies to disabilities occurring on or before August 9, 1997. As
previously noted, during 1997 and 1998, Weyrauch returned to work full-time for
Salomon Smith Barney. His disability, diagnosed March 13, 1999, occurred
subsequent to those dates, and thus, is outside the period for which the pre-existing
condition limitation applies. Therefore, Cigna’s inability to obtain records relating
to a pre-existing condition is irrelevant to the question of prejudice here.5
CONCLUSION
The district court erred by granting Cigna’s motion for summary judgment.
Weyrauch’s action was not barred by the applicable statute of limitations, and his
Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 369 (1999).
5
Moreover, we doubt the validity of any arguments that may be advanced
attempting to relate Weyrauch’s 1999 disability back to his stroke in 1996 for the
purpose of establishing prejudice. The Policy specifically addresses this situation,
stating that “[s]eparate periods of Total Disability resulting from the same or related
causes will be considered one period of Total Disability unless separated by the
Employee’s return to Active Service for at least 6 consecutive months.” (J.A. at 56.)
Mr. Weyrauch returned to active service in April of 1997 and continued through
1998. Under the Policy’s terms, even related disabilities are treated as separate
periods of total disability when separated by a return to active service for six months,
as they were here.
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proof of loss was timely filed. Although Weyrauch filed notice of his claim more
than 30 days after the onset of disability, whether he filed notice as soon as
reasonably possible given his mental impairments is a disputed issue to be resolved
by the fact-finder on remand, as is the question of whether Cigna has been actually
prejudiced by the late filing.6 For the reasons stated above, we reverse the district
court’s grant of summary judgment and remand for proceedings consistent with this
opinion.
______________________________
6
On remand, Cigna may advance other defenses that may be available under the
provisions of its disability Policy.
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