Tait v. Principal Life Insurance Co et al

Filing 21

RULING ON OBJECTIONS re 19 Objection to Report and Recommendations filed by Miranda Tait. Accordingly, Plaintiffs objections to the Report and Recommendation are GRANTED, and Principal's Motion to Dismiss [ECF No. 7] is DENIED.. Signed by Judge Robert R Summerhays on 3/31/2021. (crt,Jordan, P)

UNITED STATES DISTMCT COURT

WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION
MIRANDA TAIT

CASE NO. 6:20-CV-00702

VERSUS

JUDGE ROBERT R. SUMMERHAYS

PRINCIPAL LIFE INSURANCE

MAGISTRATE JUDGE WfflTEHURST

COMPANY, ET AL.

RULING ON OBJECTIONS
Before the Court is a Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6) filed by
Defendant Principal Life Insurance Company ("Principal"). [ECF No. 7]. Pursuant to its motion,

Principal seeks dismissal of Plaintiff Miranda Tait's claim for long tenn disability benefits,
asserting Plaintiffs "alleged disability commenced after the expiration" of Principal's policy. Id.
The Magistrate Judge issued a Report and Recommendation ("R&R") recommending Principal's

motion be granted. [ECF No. 18]. Plaintiff has filed objections to the R&R [ECF No. 19], and
Principal has responded [ECF No. 20]. For the reasons set forth below, the Court DECLINES to
adopt the recommendation of the Magistrate Judge.

Plaintiff brings this suit against Principal, seeking long-tenn disability benefits as provided
in a group long term disability policy issued by Principal to Plaintiffs employer, the Advocacy
Center. [ECF No. 1]. According to the Complaint, in 2018, Plaintiff was diagnosed with
neurosarcoidosis, a "life-threatening neurodegenerative disease" which affects Petitioner's central
nervous system, limits her cognitive abilities and causes hearing loss, headaches, speech problems,
mood swings, anxiety, depression, memory loss, dementia, and vision impairments. Id. at ^ 5.
Plaintiff alleges that throughout 2018, her disease worsened and her last day of work was

1 Alternatively, Plaintiff seeks damages from Principal for breach of fiduciary duty. [ECF No. 1 at ^ 18].

December 31, 2018. Id. at \ 6. According to Plaintiff, on that day she "was in utter misery from
her disabilities, [and] worked from home in her bed and couch...." [ECF No. 19 at 14]. At some

point after work but prior to midnight. Plaintiff "became literally bedridden, was disabled and
could not work." Id. On January 31, 2019, Plaintiff filed a claim for long term disability benefits.

[ECF No. 1 at If 6]. On February 11, 2019, Principal denied Plaintiffs claim on the basis that
Plaintiff did not become disabled until after her coverage terminated. Id. at \ 9.

On the same day this suit was filed, Plaintiff also filed suit against MONY Life Insurance
seeking long term disability benefits under its policy. The MONY policy was obtained by the
Advocacy Center to replace Principal's policy and had an effective date of January 1, 2019. ECF
No. 7-5; Tait v. MONY Life Ins. Co. of N. America, et al.. Docket No. 20-704, ECF No. 1. In the
MONY suit. Plaintiff alleges that she last worked at the Advocacy Center on December 31, 2018,
and on that day she "performed the regular and general duties as an attorney in the 'usual way9 for
the 'usual number of hours.5" Id. at ^ 6, 8. Based upon the allegations in the MONY suit. Principal
filed a Motion to Dismiss Plaintiffs claim for long-term disability benefits, arguing that because
Plaintiff was able to perform her regular duties for the regular number of hours on the last day

Principal's policy was in effect, Plaintiffs disability did not commence until after the expiration
of Principal's policy. [ECF No. 7 at 1]. Stated differently, because Plaintiff asserts "that her
symptoms manifested after work on December 31, 2018," she is not covered under Principal's

policy. [ECF No. 20 at 2]. According to Principal, Plaintiffs allegation in the MONY suit that she
was able to work on December 31, 2018 "necessarily means she was not prevented from
performing any of the duties of her position during the time she was covered under the policy

[issued by Principal]." Id.

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The motion was referred to the Magistrate Judge for R&R. [ECF No. 10]. The Magistrate

Judge found that it is undisputed that Principal's policy expired at midnight on December 31,2018,
and therefore "whether Plaintiff was disabled under the terms of the policy prior to that time, and
was thus eligible for coverage, turns on an interpretation of the Principal policy." [ECF No. 18 at
4]. The Magistrate Judge then found that Plaintiff was not eligible for coverage because her

disability did not begin while she was insured by Principal, reasoning:
The Court finds that Plaintiffs admissions in the MONY suit preclude her
from claiming to have been disabled under the terms of the Principal policy on the
last effective date of the Principal policy. Plaintiff argues that she became disabled
after she left work on December 31, 2018 but before midnight, when Principal's
policy expired. The policy language does not support an hourly parsing of the

ability to work as Plaintiff urges. Indeed, the Principal policy explicitly
contemplates a 40-hour work week, which is commonly understood to encompass
five eight-hour days, especially for professionals, such as attorneys. [FN2]
Professionals, such as attorneys, do not typically contemplate working afterhours
on New Year's Eve. The Principal policy should not be interpreted otherwise.

[FN2] The Court may take judicial notice of such commonly understood
facts.

Id. at 7 (citation omitted). Based upon this analysis, the Magistrate Judge recommended that the
Court find Tait "failed to state a claim for benefits against Principal, whose policy expired on the

last day Plaintiff admitted working full time." Id. at 8. Plaintiff objects to the R&R.
The Court finds Principal has not carried its burden and shown that Plaintiff failed to state
a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). Here, all parties agree the

Principal policy expired at midnight on December 31, 2018. [ECF No. 1 at ^ 10; ECF No. 7-1 at
5, 14]. Plaintiff alleges that on that day, after she finished working but prior to midnight, her
condition deteriorated such that she became disabled as defined under the Principal policy. [ECF
No. 13 at 16]. Principal contends that because Plaintiff was able to work in the "usual way" for the
"usual number of hours" on December 31,2018, she was not disabled on that day "under the plain

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language of the policy," and therefore the Principal policy affords her no coverage. [ECF No. 20
at 5].
The Court disagrees. While on the one hand Principal agrees its policy did not terminate
until midnight on December 31,2018, on the other hand it necessarily argues coverage ended prior
to that time—i.e., at the moment Plaintiff completed her work that day. The plain language of the
policy does not support Principal's interpretation. As pertinent here, the policy provides that it
terminates on "the date this Group Policy is terminated." [ECF No. 7-4 at 37. The policy further
provides that termination of insurance due to termination of the Group Policy "will not affect a
Member's rights to benefits, if any, for a Disability that begins while the Member's insurance is
in force under this Group Policy." Id. Here, all parties agree the policy terminated at midnight on

December 31, 2018, and Plaintiff has alleged that she became disabled prior to that time. The
Second Circuit addressed a similar issue in Louder v. First Unum Life Ins. Co., 284 F.3d 375 (2d
Cir. 2002). There, an insured brought suit against a group long term disability insurer under ERISA
for wrongful denial of benefits due to injuries sustained in a fall that occurred after the insured left
work on her last day of employment. Id. at 377-78. The insurer denied coverage, finding plaintiff
was no longer a covered employee. Id. at 378. According to the insurer, because plaintiff was
injured after work on the last day of her employment, her policy coverage "ended when she walked
out her employer's door for the last time." Id. at 379. The Second Circuit disagreed, finding that
plaintiffs "coverage continued through the whole of her last day of active employment, rather than
ending when she walked out of [her employer's] door for the last time. Indeed, [the insurer's]
proposed coverage cut-off point seems the less reasonable construction of the policy, albeit the
one most favorable to it." Id. at 380; accord Newman v. UNUMLife Ins. Co. of Am., 99 C 7420,
2000 WL 1593443, *3-4 (N.D. 111. Oct. 23, 2000); MccW/ v. Metro. Life Ins. Co., 5:05-CV-

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0817GTS/GJD, 2009 WL 2868234, at *5,10 (N.D.N.Y. Sept. 1, 2009). Likewise, the undersigned
finds Principal has not shown, as a matter of contractual interpretation, that its policy terminated
at the moment Plaintiff finished work on December 31, 2018, sometime prior to midnight.

Accordingly, Plaintiffs objections to the Report and Recommendation are GRANTED,
and Principal's Motion to Dismiss [ECF No. 7] is DENIED.
THUS DONE in Chambers on this

3f^da of March, 2021.
day

ROBERT R. SUMMERHA\
UNITED STATES DISTRICT.

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