Cynthia Raynor v. United of Omaha Life Ins. , 858 F.3d 1268 ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CYNTHIA RAYNOR, No. 14-36090
Plaintiff-Appellant,
D.C. No.
v. 3:14-cv-05252-
RBL
UNITED OF OMAHA LIFE INSURANCE
COMPANY, a Nebraska corporation,
Defendant-Appellee. ORDER
Filed June 6, 2017
Before: Alex Kozinski and William A. Fletcher, Circuit
Judges, and John R. Tunheim,* Chief District Judge.
ORDER CERTIFYING QUESTIONS
TO THE SUPREME COURT OF
OREGON
*
The Honorable John R. Tunheim, Chief United States District Judge
for the District of Minnesota, sitting by designation.
2 RAYNOR V. UNITED OF OHAMA LIFE INS. CO.
SUMMARY**
Certification to Supreme Court of Oregon
The panel certified the following questions of state law to
the Oregon Supreme Court:
1. If the Director of the Department of
Consumer and Business Services approves a
contractual limitations provision in an
insurance policy under Oregon Revised
Statutes § 742.021, does the language of the
policy always control or do the standard
provisions of the Oregon Insurance Code
apply if the standard provisions are more
favorable than the approved insurance policy
provision?
2. If the Oregon standard provisions do apply,
when does “the period for which the insurer
was liable” under Oregon Revised Statutes §
743.429 end?
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
RAYNOR V. UNITED OF OHAMA LIFE INS. CO. 3
ORDER
Oregon law requires insurance policies to conform with
the standard provisions of the Oregon Insurance Code. Or.
Rev. Stat. § 742.021. Under the standard provisions,
insureds who suffer from continuing loss have three years and
ninety days “after the termination of the period for which the
insurer is liable” to file suit. Or. Rev. Stat. §§ 743.429, .441.
Oregon law permits insurers to issue policies with
alternatively worded provisions, but only when those
alternatively worded provisions are approved by the Director
of the Department of Consumer and Business Services. Or.
Rev. Stat. § 742.021. Those policies must be “in each
instance not less favorable in any respect to the insured or the
beneficiary.” Id.In the present case, we are asked to apply an insurance
policy that may not conform with the standard limitations
period required under Oregon law. The insurer contends that
the policy terms must control because the policy has been
approved by the Director of the Department of Consumer and
Business Services. If the policy terms control, the claims of
Plaintiff, the insured, are time-barred. But if we are permitted
to apply the State’s standard provisions despite the Director’s
approval of the policy, Plaintiff’s suit may go forward if
1) we determine that the standard limitation provision is more
favorable than the corresponding provision in her policy, and
2) we determine under the standard provisions that her claim
is not time-barred. To determine whether Plaintiff’s claim is
time-barred under the standard provisions, we must interpret
the phrase, “period for which the insurer is liable.” Neither
the meaning of this phrase, nor a court’s authority to apply
standard provisions to a Director-approved policy, has been
directly addressed by Oregon courts.
4 RAYNOR V. UNITED OF OHAMA LIFE INS. CO.
The timeliness of Plaintiff’s suit therefore depends on two
important and unresolved issues of Oregon law that are
dispositive in this case. We respectfully certify both
questions to the Oregon Supreme Court so that we, as well as
the Oregon bar, might benefit from an authoritative decision
on these issues. We offer first “[a] statement of all facts
relevant to the questions certified,” before turning to “[t]he
questions of law to be answered.” Or. Rev. Stat.
§§ 28.210(1), (2).
BACKGROUND
I. Factual and Procedural History
From December 2002 to March 2008, Cynthia Raynor
worked as a real estate agent for RE/MAX in Washington
State. RE/MAX held, on Raynor’s behalf, a long-term
disability (“LTD”) policy (“Policy”) offered by United of
Omaha Life Insurance Company (“Omaha”). The Policy was
issued in Oregon and is subject to Oregon law. On March 5,
2008, Raynor left RE/MAX for medical reasons. She then
submitted to Omaha a claim for LTD benefits, which Omaha
granted in June.
For the next twenty months, Raynor received monthly
disability payments without incident or complaint. However,
on February 23, 2010, Omaha mailed Raynor a letter
informing her that it was reviewing her eligibility for benefits
under a new definition of disability. While Raynor’s
eligibility for initial benefits depended only on whether she
could not perform “at least one of the Material Duties of [her]
Regular Occupation,” her continued eligibility for benefits
after two years depended on whether she was “unable to
perform all of the Material Duties of any Gainful
RAYNOR V. UNITED OF OHAMA LIFE INS. CO. 5
Occupation.” On December 6, 2010, Omaha mailed Raynor
a letter stating that because she did not meet the “any Gainful
Occupation” standard, it would be discontinuing her benefits.
Raynor appealed internally on October 12, 2011. On May 3,
2012, Omaha upheld the denial of Raynor’s claim. On March
26, 2014, Raynor filed suit against Omaha, alleging wrongful
termination of her LTD benefits.
The Policy contains a contractual limitation period of
three years from “the date written proof of loss is required.”
The Policy does not define “proof of loss.” However, in a
section entitled “Proof of Loss Requirements,” the Policy
specifies that a claim form must be mailed “within 90 days
after the end of [the claimant’s] Elimination Period; or as
soon as reasonably possible.” That section further states that
if a claimant cannot meet the ninety-day deadline, she must
provide the claim form no later than a year after the time
proof of loss is required.
The parties filed cross-motions for summary judgment on
the question whether the Policy’s three-year contractual
limitation period barred Raynor’s suit. On December 17,
2014, the United States District Court for the Western District
of Washington awarded summary judgment to Omaha. The
court examined the terms of the Policy and concluded that
written proof of loss was required by May 3, 2010, the
deadline for Raynor to submit forms and medical records in
connection with her claim for continuing loss under the “any
Gainful Occupation” standard. Because Raynor did not bring
suit within three years of that date, the district court deemed
her suit untimely.
The district court also considered Raynor’s argument that
Oregon’s standard insurance provisions saved her suit from
6 RAYNOR V. UNITED OF OHAMA LIFE INS. CO.
being time-barred. Raynor argued in the district court that
because language in § 743.429 was more favorable to the
insured than corresponding language in the Policy, the
standard provisions of the state code should be read into the
Policy. Section 743.429 stipulates that “[w]ritten proof of
loss must be furnished to the insurer at its 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.”
The district court was unconvinced, noting that Oregon’s
Director of the Department of Consumer and Business
Services had already approved the Policy without the model
language. The district court then reasoned that even if
§ 743.429 governed, the “period for which [Omaha] was
liable” expired on June 3, 2010, the end of Raynor’s two-year
benefits period under the “Your Regular Occupation”
definition of disability. This appeal followed.
II. Discussion
A. Oregon Revised Statutes § 742.021
Oregon law requires that “[i]nsurance policies . . . contain
such standard or uniform provisions as are required by the
applicable provisions of the Insurance Code.” Or. Rev. Stat.
§ 742.021. When an insurance policy “contains any
condition, omission or provision not in compliance with the
Insurance Code,” the policy “shall be construed and applied
in accordance with such conditions and provisions as would
have applied had such policy been in full compliance with the
Insurance Code.” Or. Rev. Stat. § 742.038. It is undisputed
that the Policy does not contain a precise equivalent to
§ 743.429.
RAYNOR V. UNITED OF OHAMA LIFE INS. CO. 7
Omaha seeks shelter under an exception to the
aforementioned rule:
[T]he insurer may at its option substitute for
one or more of such [standard or uniform]
provisions corresponding provisions of
different wording approved by the Director of
the Department of Consumer and Business
Services which are in each instance not less
favorable in any respect to the insured or the
beneficiary.
Or. Rev. Stat. § 742.021. Omaha provides an affidavit from
its Manager for Product and Filing Compliance, Sandy
Rampling, who asserts that the Omaha Master Policy form
and Omaha Certificate of Insurance form were approved by
the State of Oregon in 2001 and 2005, respectively. Omaha
contends that § 742.021 delegates to state administrative
authorities the conclusive power to decide whether a
proposed policy is “not less favorable . . . to the insured.” On
this view, once an insurance policy attains approval by the
Director of the Department of Consumer and Business
Services, policy terms may not be challenged as less
favorable to the insured than the standard provisions of the
Oregon Insurance Code.
Omaha’s interpretation is not the only possible
interpretation of § 742.021. On its face, § 742.021 appears to
require satisfaction of two independent conditions before
standard provisions can apply. First, the Director of the
Department of Consumer and Business Services must
approve the proposed language. Second, that language must
not be in any way less favorable to the insured. The statute
is silent as to whether only state officials can make a
8 RAYNOR V. UNITED OF OHAMA LIFE INS. CO.
favorability determination, or whether competent courts may
make that determination, even after the approval of such
language by the Director of the Department of Consumer and
Business Services.
The Oregon Supreme Court has not yet had occasion to
address this question. Although the Oregon Court of Appeals
decided two cases where parties raised § 742.021 arguments,
neither case discussed approval by the Department of
Consumer and Business Services or the powers of a
reviewing court. In Providence Health Plan v. Winchester,
252 Or. App. 283, 288 P.3d 13 (2012), the insured invoked
§ 742.021 to argue that the insurer could not apply policy
terms less favorable than the standard provisions. The
Oregon Court of Appeals resolved the matter on an
alternative ground, declining to “address whether, as
Providence asserts, its contracts need not comport with the
standard terms of the insurance code.” Id. at 19. The court
came closer to answering our question in Mid-Century
Insurance Co. v. Turner, 219 Or. App. 44, 182 P.3d 855(2008). In that case, the Oregon Court of Appeals explicitly
relied on § 742.021, but only to reject the insurance
company’s interpretation of its own policy language. Id. at
857, 860–65 (reasoning that “if given the effect [that the
company] urges, certain provisions of the policy . . . are
unenforceable in that they are ‘less favorable’ to the insured
than operative provisions of the Oregon Insurance Code”). In
so holding, the court asserted its power to invoke § 742.021
to avoid a construction of policy language that would conflict
with the Oregon Insurance Code. But the court did not
address whether it could read Oregon’s standard provisions
into a Director-approved policy if the court independently
determines those provisions to be more favorable than
corresponding policy terms.
RAYNOR V. UNITED OF OHAMA LIFE INS. CO. 9
The Oregon legislature has instructed courts to liberally
construe the Insurance Code, which “is for the protection of
the insurance-buying public,” in favor of insureds. Or. Rev.
Stat. §§ 731.008, .016. Because this issue involves a specific
matter of statutory interpretation, implicating not just
questions of intent and meaning but also relative institutional
competencies and competing values of efficiency and
accountability, we “are hesitant . . . to speculate” as to how
the Oregon Supreme Court would answer the questions
before us. Doyle v. City of Medford, 565 F.3d 536, 542 (9th
Cir. 2009). An authoritative ruling will save parties from
needless litigation and ensure that both insurers and insureds
are on clearer notice of their rights and obligations.
B. Oregon Revised Statutes § 742.038
If the Oregon Insurance Code’s limitations period governs
a Director-approved policy that contains a less favorable
limitations term despite the approval of the Director, we must
next ask whether the Policy is less favorable to the insured
than the standard provisions. In one respect, the Policy does
comply with the Insurance Code. Both the Policy and the
Insurance Code contain a three-year limitations period that
runs from the date written proof of loss is required. But if the
Policy and the Insurance Code define “date written proof of
loss is required” in different ways, the starting point for the
limitations period will differ markedly between the two.
Raynor’s policy does not explicitly set a date by which
written proof of loss is required. The section governing an
initial claim of benefits requires that the form containing
written proof of loss be mailed “within 90 days after the end
of [the claimant’s] Elimination Period; or as soon as
reasonably possible.” There is no corresponding “proof of
10 RAYNOR V. UNITED OF OHAMA LIFE INS. CO.
loss” section for when an applicant applies for continuing
coverage after receiving two years of monthly payments.
Section 743.429 stipulates that “written proof of loss must
be furnished to the insurer at its 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 . . . .”
Read together with the three-year limitation period under
§ 743.441, § 743.429 contemplates that beneficiaries like
Raynor should have three years plus ninety days after “the
termination of the period for which the insurer is liable” to
file suit.
No Oregon appellate court has defined the phrase “period
for which the insurer is liable.” Under one reading, which
has been adopted by the majority of courts that have
considered the question, the phrase refers to the full period
during which the claimant is actually disabled. See Oglesby
v. Penn Mut. Life Ins. Co., 877 F. Supp. 872, 886 (D. Del.
1994) (cataloging cases and secondary sources to conclude
that the “general weight of authority on this issue” is that
“disability insurance claimant need not submit proof of loss
until the termination of the period in which the insured was
disabled”). Under this reading of § 743.429, the question
whether Raynor’s lawsuit is time-barred depends entirely on
the fact of her continued disability—a disputed question of
material fact that the district court was not entitled to resolve
at summary judgment. Other courts have at times interpreted
the phrase differently. See id. (cataloging several contrary
cases). Responding to the concern that the majority rule
would encourage a claimant to sleep on her rights, one court
has said that the “insured is not likely to wait years before
filing proof of loss because he will want to receive benefits as
RAYNOR V. UNITED OF OHAMA LIFE INS. CO. 11
soon as possible.” Laidlaw v. Commercial Ins. Co. of
Newark, 255 N.W.2d 807, 812 (Minn. 1977). While we
could predict how the Oregon Supreme Court would rule, it
would be only a prediction. An answer from the Oregon
Supreme Court would provide both insurers and insureds a
clear and authoritative rule as to when the Insurance Code’s
limitations period expires.
CONCLUSION
We respectfully certify to the Oregon Supreme Court the
following questions of Oregon law:
1. If the Director of the Department of Consumer and
Business Services approves a contractual limitations
provision in an insurance policy under Oregon Revised
Statutes § 742.021, does the language of the policy always
control or do the standard provisions of the Oregon Insurance
Code apply if the standard provisions are more favorable than
the approved insurance policy provision?
2. If the Oregon standard provisions do apply, when does
“the period for which the insurer was liable” under Oregon
Revised Statutes § 743.429 end?
We respectfully ask the Oregon Supreme Court to
exercise its discretionary authority under Oregon’s Uniform
Certification of Questions of Law Act to accept and decide
these questions. See Or. Rev. Stat. §§ 28.200 to .255. Our
phrasing of the questions should not restrict the Court’s
consideration of the issues involved. We acknowledge that
“[t]he [C]ourt may reformulate the relevant state law
questions as it perceives them to be, in light of the
contentions of the parties,” Toner ex rel. Toner v. Lederle
12 RAYNOR V. UNITED OF OHAMA LIFE INS. CO.
Labs., 779 F.2d 1429, 1433 (9th Cir. 1986), and “[w]e agree
to abide by the decision of the Oregon Supreme Court,”
Doyle, 565 F.3d at 544. If the Court determines that the
questions presented in this case are inappropriate for
certification, or if it declines the certification for any other
reason, we will resolve the questions according to our best
understanding of Oregon law.
The Clerk will file a certified copy of our Order with the
Oregon Supreme Court under Oregon Revised Statutes
§ 28.215. This appeal is withdrawn from submission and will
be submitted following receipt of the Oregon Supreme
Court’s Opinion on the questions certified. The Clerk is
directed to administratively close this docket, pending further
order. We retain jurisdiction over any further proceedings in
this court. The parties will notify the Clerk within one week
after the Oregon Supreme Court accepts or rejects
certification, and again within one week after the Court
renders its Opinion.
IT IS SO ORDERED.
____________________________________
Alex Kozinski, Circuit Judge