Spence v Assurant Employee Benefits

Filing 29

ORDER: This Court will allow for equitable tolling of the contractual limitation period, and Union Security's Motion to Dismiss for failure to State a Claim 9 is denied. Plaintiff's Motion to Continue Oral Argument 25 is denie d as moot. Plaintiff Counsel's Motion to Withdraw 27 is granted. The Clerk shall mail a copy of this order to Spence. No later than 4/24/2015, Spence shall provide a written status report to the court. That report shall include whether Spence has secured representation or whether Spence intends to proceed pro se. Signed on 3/17/2015 by Judge Michael J. McShane. (cp)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

MATTHEW SPENCE,
Plaintiff,
v.

Case No. 6:14-cv-01612-M:C
OPINION AND ORDER

UNION SECURITY INSURANCE
COMPANY, dba ASSURANT EMPLOYEE
BENEFITS
Defendant.

MCSHANE, Judge:
Defendant Union Security Insurance Company ("Union Security") moves to dismiss
Plaintiff Matthew Spence's ("Spence") Amended Complaint with prejudice as barred by the
contractual limitations period. Before Oral argument, plaintiffs counsel moved to continue oral
argument, ECF No. 25, and to withdraw as counsel, ECF No. 27. The motion to withdraw is
GRANTED. As oral argument is unnecessary, the motion to postpone is now moot. Turning to
the merits of the motion to dismiss, because Union Security failed to provide Spence adequate
notice of his right to bring a civil action following his final administrative appeal, Union
Security's Motion to Dismiss, ECF No.9, is DENIED.
1 -OPINION AND ORDER

BACKGROUND 1
Spence became disabled on October 1, 2010, and eventually filed for Long Term
Disability ("LTD") benefits on May 10,2012. Spence's application for LTD benefits was denied
on August 23,2012, and Spence appealed the denial ofhis LTD benefits on February 1, 2013.
Spence's LTD benefits were again denied on April2, 2013, and Spence requested a final
administrative review on September 30, 2013. Union Security denied Spence's final appeal in a
letter dated November 5, 2013, and stated, "The Appeals process has now been completed. As
you were previously advised, this is the last administrative level of appeal available, and Mr.
Spence's file is now closed." ECF No. 14; Ex. Bat 22.
On October 10, 2014, Spence brought this action pursuant to the Employee Retirement
Income Security Act of 1974,29 U.S.C. § 1001 et. seq. ("ERISA"), seeking unpaid LTD benefits
pursuant to the terms of his group LTD plan under 29 U.S.C. § 1132(a)(1)(B). Plaintiff seeks
these remedies, plus his costs and attorney fees, pursuant to 29 U.S.C. § 1132(e)(l), (f), and (g),
as well as ORS 742.061.

STANDARDS
To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a complaint must contain
sufficient factual matter that "state[s] a claim to relief that is plausible on its face." Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face when the factual
allegations allow the court to infer the defendant's liability based on the alleged conduct.

Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). The factual allegations must present more than "the
mere possibility of misconduct." !d. at 678.

1

The court takes all relevant facts in this opinion from the allegations in the complaint.

2- OPINION AND ORDER

While considering a motion to dismiss, the court must accept all allegations of material
fact as true and construe in the light most favorable to the non-movant. Burget v. Lokelani
Bernice Pauahi Bishop Trust, 200 F.3d 661, 663 (9th Cir. 2000). But the court is "not bound to

accept as true a legal conclusion couched as a factual allegation." Twombly, 550 U.S. at 555. If
the complaint is dismissed, leave to amend should be granted unless the court "determines that
the pleading could not possibly be cured by the allegation of other facts." Doe v. United States,
58 F.3d 494,497 (9th Cir. 1995).
DISCUSSION

Spence brought this action more than three years from the commencement date of the
three-year contractual limitation? The issue for this Court is whether Union Security's failure to
substantially comply with 29 U.S.C. § 1133 equitably tolls the contractual limitations period
between Union Security's final adverse benefits determination and the initial filing ofthis action.
Because Union Security's final adverse benefits determination letter failed to advise Spence of
his right to bring a civil action, or the time in which to do so, I find that Spence's Amended
Complaint is timely.
I. Final Adverse Benefit Determination Letter

29 U.S.C. § 1133 governs adverse benefit determination letters. It authorizes the
Secretary of Labor to establish regulations explaining the meaning of the statute and requires that
the statute be applied "[i]n accordance with regulations of the Secretary." Moyer v.\_Metro. Life
Ins,. Co., 762 F.3d 503, 505 (6th Cir. 2014) (quoting 29 U.S.C. § 1133). The regulations require

that the plan administrator must provide notification of "any adverse benefit determination" and
2

The parties disagree whether the commencement date for purposes of the three-year contractual limitation is the
"date of loss" as specified in the policy, or the date by which "written proof of loss is required to be furnished" as
specified by Miss. Code. Ann. § 83-9-5. However, the difference is not significant enough to affect whether Spence
brought this action before the contractual limitation period expired, so the only issue is that of equitable tolling.

3 -OPINION AND ORDER

include: "[a] description of the plan's review procedures and the time limits applicable to such
procedures, including a statement of the claimant's right to bring a civil action ... following an
adverse benefit determination on review[.]" 29 C.P.R. § 2560.503-1.
An ERISA fiduciary must at all times "discharge [its] duties with respect to a plan solely

in the interest of the participants and beneficiaries." 29 U.S.C. § 1104(a)(l). The claimant's right
to bring a civil action is included as a part of those procedures for which applicable time limits
niust be provided. Moyer, 762 F.3d at 505. See also Solien v. Raytheon Long Term Disability
Plan# 590, No. CV 07--456 TUC DGB, 2008 WL 2323915, at·*7 (D. Ariz. June 2, 2008)

("Judicial review is an appeal procedure for an adverse benefit determination and is therefore a
part ofthe claim procedures covered by these regulations, especially when the time limit for
filing a judicial action is established contractually by the Plan."). A plan administrator does not
act "solely in the interest ofthe participants and beneficiaries," if it does not bring tq the
claimant's attention the plan's time-limit requirements for all review procedures, including the
right to sue under ERISA, because an untimely request forecloses all external review of the
claim. !d. at 8.
When a benefits termination notice fails to explain the proper steps for appeal, the plan's
time bar is not triggered. White v. Jacobs Eng'g Group Long Term Disability Plan, 896 F.2d 344,
351 (9th Cir. 1989). The statutory mandate to plan administrators to "afford a reasonable
opportunity to any participant whose claim for benefits has been denied for a full and fair
teview" supports this result. !d. (quoting 29 U.S.C. § 1133(2)).
Union Security alleges that all three of its denial letters adequately informed Spence of
his right to bring a lawsuit under ERISA. However, the final denial letter only stated, "The
Appeals process has now been completed. As you were previously advised, this is the last
4- OPINION AND ORDER

administrative level of appeal available, and Mr. Spence's file is now closed." ECF No. 14; Ex. B
at 22. From those two sentences, Spence would not have known that he even had a right to bring
. a civil action in federal court, much less the time in which to do so. As the Ninth Circuit noted in
White, when a benefits termination notice fails to explain the proper steps for appeal, the plan's
time bar is not triggered. White, 896 F .2d at 3 51.
If this Court were to accept Union Security's position, Spence would have run the
contractual limitations period before he ever received his final adverse disability determination.
To hold as such would not comply with the ERISA mandate to "afford a reasonable opportunity
to any participant whose claim for benefits has been denied for a full and fair review[.]" 29
U.S.C. § 1133(2). Furthermore, Spence would only have run the contractual limitation period
before the final adverse benefits letter if the commencement date was the "date ofloss," as ·
defined in the policy, as opposed to the date by which "written proof of loss is required to be
furnished" as specified in Miss. Code. Ann. § 83-9-5. 3 Using the date by which proof ofloss is
due in the policy, 4 Spence would still have been within the three-year contractual limitation
period when he received the final adverse benefits letter on November 5, 2013. Therefore, by
tolling the contractual limitations period due to Union Security's improper adverse benefits
letter, Spence's current action is timely.

3

The policy reads, "Delivered in: Mississippi and governed by its laws, unless otherwise preempted by federal law."
ECF No. 14; Ex. A, p. 5. See also Heimeshoffv. Hartford Life & Ace. Ins. Co., 134 S. Ct. 604,614 (2013) ("the vast
majority of states require certain insurance policies to include a 3-year limitations periods that run from the date
proof of loss is due.")
4
"Proof must be given within 90 days after the end of your qualifying period." ECF No. 14; Ex. A, p. 37 (emphasis
in original). "Qualifying period" is defined as "The greater of 3 month( s) or the length of the Qualifying Period
under the prior policy." ld. at 19 (emphasis in original). Neither party has submitted the specific dateby which proof
of loss should have been provided. Regardless, ifthe "date of loss" were October 1, 2010, then Spence would have
had to submit "proof of loss" within 90 days of the expiration of the Qualifying Period, which is at least three
months. Under any calculation, that submission date would have been later than November 5, 2010, which means
when Spence received his fmal adverse benefits letter on November 5, 2013, the contractual limitations period had
not yet expired.

5- OPINION AND ORDER

Why Spence waited nineteen months to file his claim for benefits is unclear from the
record, but the delay was not so umeasonable as to render equitable tolling infeasible in this case.

CONCLUSION
Oral argument on this issue is unnecessary. Union Security did not provide adequate
'
notice because the final adverse benefits determination letter did not inform Spence of his right

to bring a civil action or the time in which to do so. Accordingly, this Court will allow for
-equitable tolling of the contractual limitation period, and Union Se.curity's Motion to Dismiss, ·
ECF No.9, is DENIED.
The clerk shall mail a copy of this order to Spence. No later than April 24, 2015, Spence
shall provide a written status report to the court. That report shall include whether Spence has
secured representation or whether Spence intends to proceed pro se.
IT IS SO ORDERED.
DATED thisi? th day of March, 2015.

\'------1

L--__.

Michael McShane
United States District Judge

6- OPINION AND ORDER