Susan Patterson v. Reliance Standard Life Insurance Company et al, No. 5:2013cv00211 - Document 34 (C.D. Cal. 2013)
Court Description: ORDER GRANTING PLAINTIFFS MOTION FOR SUMMARY ADJUDICATION by Judge Jesus G. Bernal re: 19 Motion for Summary Adjudication. (See document for specifics) (mrgo)
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Susan Patterson v. Reliance Standard Life Insurance Company et al Doc. 34 1 O 2 3 4 UNITED STATES DISTRICT COURT 5 CENTRAL DISTRICT OF CALIFORNIA 6 7 8 9 10 11 12 13 14 15 16 17 18 ) ) ) SUSAN PATTERSON ) Plaintiff, ) ) v. ) ) ) RELIANCE STANDARD LIFE ) INSURANCE COMPANY; ) REDLANDS COMMUNITY ) HOSPITAL VOLUNTARY GROUP ) LIFE INSURANCE PLAN ) ) Defendants. ) ) ) ) ) ) ) ) ) Case No. EDCV 13-00211 JGB (OPx) ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION 19 20 Before the Court is Plaintiff’s Motion for Summary 21 Adjudication to Establish Defendant Reliance Standard 22 Life Insurance Company’s Liability to Pay Benefits. 23 (Doc. No. 19.) 24 filed and the arguments presented at the November 18, 25 2013 hearing, the Court GRANTS Plaintiff’s Motion for 26 Summary Adjudication. After considering the papers timely 27 28 1 Dockets.Justia.com 1 I. BACKGROUND 2 3 A. Procedural Background 4 5 Plaintiff Susan Patterson filed her Complaint on 6 February 1, 2013 naming Reliance Standard Life 7 Insurance Company (“Reliance Standard”) and Redlands 8 Community Hospital Voluntary Group Life Insurance Plan 9 as Defendants. (Doc. No. 1.) On September 30, 2013, 10 the Court approved the parties’ stipulation to file the 11 First Amended Complaint (“FAC”). 12 On October 30, 2013, Reliance Standard and Redlands 13 Hospital filed their respective answers. 14 30, 31.) (Doc. Nos. 17, 18.) (Doc. Nos. 15 16 Plaintiff filed her Motion for Summary Adjudication 17 on October 17, 2013. 18 Motion, Plaintiff filed: 19 20 21 22 23 24 (Doc. No. 19.) In support of her Plaintiff’s Statement of Uncontroverted, Material Facts (“Pl. SUF,” Doc. No. 19-2); Doc. No. 20); and Declaration of Glenn R. Kantor (“Kantor Decl.,” Declaration of Alan E. Kassan (“Kassan Decl.,” Doc. No. 21) attaching Exhibit 1. 25 26 27 28 2 On October 28, 2013, Reliance Standard filed its 1 2 Opposition to Plaintiff’s Motion. 3 support of its Opposition, Reliance Standard filed: 4 Defendant Reliance Standard’s Statement of (Doc. No. 26.) In 5 Genuine Disputes of Material Fact (“Def. SGD,” 6 Doc. No. 27); Doc. No. 28) attaching Exhibits 1-11; and 7 8 9 Declaration of Peter Sailor (“Sailor Decl.,” Defendant Reliance Standard’s Objections to Evidence (“Def. Obj.,” Doc. No. 29). 10 11 On November 4, 2013, Plaintiff filed her Reply. 12 13 (Doc. No. 32.) 14 15 B. First Amended Complaint 16 17 In her FAC, Plaintiff alleges that her sister, Cara 18 Dietrich, was employed by Redlands Community Hospital 19 (“Redlands Hospital”). 20 her employment, Ms. Dietrich was afforded the 21 opportunity to purchase Voluntary Group Life Insurance. 22 (Id.) 23 Group Life Insurance in the amount of $260,000. 24 ¶ 7.) 25 under the Life Insurance Plan. 26 October 2006 through her death in March 2010, the 27 correct amount of premium payments for her voluntary (FAC, ¶ 6.) As a benefit of In 2006, Ms. Dietrich applied for Voluntary (FAC, Reliance Standard is the insurer of the benefits (FAC, ¶ 3.) 28 3 From 1 life insurance coverage were deducted from her 2 paycheck. (FAC, ¶ 7.) 3 Ms. Dietrich passed away in March 2010. 4 (FAC, ¶ 5 8.) Subsequently, Plaintiff submitted a claim for 6 benefits which was denied on February 9, 2011. 7 Reliance Standard denied Plaintiff’s claim because at 8 the time of the application, Reliance Standard had not 9 received proof of Ms. Dietrich’s good health. (Id.) (Id.) 10 Plaintiff timely appealed the denial of benefits. 11 (FAC, ¶ 9.) On July 22, 2011, Reliance Standard denied 12 the appeal. (Id.) 13 14 Plaintiff’s action arises under the Employee 15 Retirement Income Security Act of 1974 (“ERISA”), 29 16 U.S.C. § 1132. 17 of payment of life insurance proceeds in the amount of 18 $260,000, disgorgement of profits from Defendant’s use 19 of life insurance proceeds rightfully belonging to 20 Plaintiff, attorney’s fees and costs, and payment of 21 prejudgment and post-judgment interests allowed under 22 ERISA. Plaintiff requests relief in the form (See FAC.) 23 24 25 26 27 28 4 II. LEGAL STANDARD1 1 2 3 Federal Rule of Civil Procedure 56 empowers the 4 Court to enter summary judgment on factually 5 unsupported claims or defenses, and thereby “secure the 6 just, speedy and inexpensive determination of every 7 action.” 8 (1986). 9 “pleadings, depositions, answers to interrogatories, Celotex Corp. v. Catrett, 477 U.S. 317, 325 Summary judgment is appropriate if the 10 and admissions on file, together with the affidavits, 11 if any, show that there is no genuine issue as to any 12 material fact and that the moving party is entitled to 13 judgment as a matter of law.” 14 A fact is material when it affects the outcome of the 15 case. 16 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th 17 Cir. 1997). Fed. R. Civ. P. 56(c). Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 18 19 The party moving for summary judgment bears the 20 initial burden of establishing an absence of a genuine 21 issue of material fact. 22 This burden may be satisfied by either (1) presenting 23 evidence to negate an essential element of the non- 24 moving party's case; or (2) showing that the non-moving 25 party has failed to sufficiently establish an essential 26 element to the non-moving party's case. 27 Celotex, 477 U.S. at 323. 1 Id. at 322-23. Unless otherwise noted, all references to “Rule” refer to the Federal Rules of Civil Procedure. 28 5 1 Where the party moving for summary judgment does not 2 bear the burden of proof at trial, it may show that no 3 genuine issue of material fact exists by demonstrating 4 that “there is an absence of evidence to support the 5 non-moving party's case.” 6 party is not required to produce evidence showing the 7 absence of a genuine issue of material fact, nor is it 8 required to offer evidence negating the non-moving 9 party's claim. Id. at 325. The moving Lujan v. National Wildlife Fed'n, 497 10 U.S. 871, 885 (1990); United Steelworkers v. Phelps 11 Dodge Corp., 865 F.2d 1539, 1542 (9th Cir. 1989). 12 13 However, where the moving party bears the burden of 14 proof at trial, the moving party must present 15 compelling evidence in order to obtain summary judgment 16 in its favor. 17 Property at 8110 E. Mohave, 229 F. Supp. 2d 1046, 1047 18 (S.D. Cal. 2002) (citing Torres Vargas v. Santiago 19 Cummings, 149 F.3d 29, 35 (1st Cir. 1998) (“The party 20 who has the burden of proof on a dispositive issue 21 cannot attain summary judgment unless the evidence that 22 he provides on that issue is conclusive.”)). 23 to meet this burden results in denial of the motion and 24 the Court need not consider the non-moving party's 25 evidence. 26 229 F. Supp. 2d at 1048. United States v. One Residential Failure One Residential Property at 8110 E. Mohave, 27 28 6 1 Once the moving party meets the requirements of 2 Rule 56, the burden shifts to the party resisting the 3 motion, who “must set forth specific facts showing that 4 there is a genuine issue for trial.” 5 U.S. at 256. 6 burden by showing “some metaphysical doubt as to the 7 material facts.” 8 Zenith Radio Corp., 475 U.S. 574, 586 (1986). 9 United States Supreme Court has held that “[t]he mere Anderson, 477 The non-moving party does not meet this Matsushita Elec. Indus. Co., Ltd. v. The 10 existence of a scintilla of evidence in support of the 11 non-moving party's position is not sufficient.” 12 Anderson, 477 U.S. at 252. 13 exist that “can be resolved only by a finder of fact 14 because they may reasonably be resolved in favor of 15 either party.” 16 judgment motion, the Court must examine all the 17 evidence in the light most favorable to the non-moving 18 party. 19 engage in credibility determinations, weighing of 20 evidence, or drawing of legitimate inferences from the 21 facts; these functions are for the jury. 22 U.S. at 255. 23 conclusion, a bald assertion of the “ultimate fact” is 24 insufficient. 25 986, 990-91 (9th Cir. 1991). Id. at 250. Genuine factual issues must When ruling on a summary Celotex, 477 U.S. at 325. The Court cannot Anderson, 477 Without specific facts to support the See Schneider v. TRW, Inc., 938 F.2d 26 27 28 7 1 III. DISCUSSION 2 3 A. Evidentiary Objections 4 5 The majority of Reliance Standard’s objections to 6 Plaintiff’s evidence are on the grounds that they are 7 irrelevant, speculative, or constitute an improper 8 legal conclusion. 9 evidence on the ground that it is irrelevant, 10 speculative, and/or argumentative, or that it 11 constitutes an improper legal conclusion are all 12 duplicative of the summary judgment standard itself" 13 and are thus "redundant" and unnecessary to consider 14 here. 15 Supp. 2d 1110, 1119 (E.D. Cal. 2006); see Anderson, 477 16 U.S. at 248 ("Factual disputes that are irrelevant or 17 unnecessary will not be counted."). 18 does not rule on any of the parties’ relevance 19 objections or objections as to improper legal 20 conclusions. (See Def. Obj.) "Objections to Burch v. Regents of Univ. of California, 433 F. Thus, the Court 21 22 Reliance Standard also objects to some of 23 Plaintiff’s facts on the ground that they 24 mischaracterize the evidence. 25 Ms. Dietrich “exercised her right under the Policy to 26 receive . . . Supplemental Life insurance benefits in 27 the amount of $260,000.” Plaintiff alleges that (Pl. SUF, ¶ 4.) 28 8 Plaintiff 1 cites to the Group Benefit Enrollment Form that Ms. 2 Dietrich completed for basic and supplemental life 3 insurance coverage in support of that assertion. 4 1 to Kassan Decl., RS0103, RS0147.)2 5 evidence submitted demonstrates that Ms. Dietrich 6 completed the application for Supplemental Life 7 insurance coverage. 8 completing the Group Benefit Enrollment Form is 9 sufficient to demonstrate that Ms. Dietrich exercised (Exh. Therefore, the The dispute is whether merely 10 her right to receive the supplemental life insurance 11 coverage. 12 13 Reliance Standard also objects to the evidence 14 cited in support of Plaintiff’s assertion that Ms. 15 Dietrich met all premium obligations from October 2006 16 to her death in March 2010. 17 Standard objects that Plaintiff mischaracterizes the 18 evidence cited in support of that fact. 19 22.) 20 assertion is Reliance Standard’s letter to Plaintiff 21 upholding its decision to deny her claim for 22 supplemental life insurance benefits, in which Reliance 23 Standard lists representations Plaintiff made in her 24 appeal request, including her statement that Ms. 25 Dietrich made the premium payments every pay period (Pl. SUF, ¶ 22.) Reliance (Def. Obj., ¶ The evidence Plaintiff cites in support of her 26 2 27 28 Evidence denoted by the initials “RS” refer to the numbered pages in the insurance claim file, which are submitted by the parties in support of their papers. 9 1 from October 2006 to her death in March 2010. 2 (Exh. 1 to Kassan Decl., RS0144-0149.) 3 4 “When evidence is not presented in an admissible 5 form in the context of a motion for summary judgment, 6 but it may be presented in an admissible form at trial, 7 a court may still consider that evidence.” 8 Regents of Univ. of Cal., 433 F. Supp. 2d 1110, 1120 9 (E.D. Cal. 2006) (citing Fraser v. Goodale, 342 F.3d Burch v. 10 1032, 1037 (9th Cir. 2003)) (emphasis in original). 11 Here, the Court finds that evidence of Ms. Dietrich’s 12 payment of premiums can be introduced in an admissible 13 form at trial. 14 payments were taken from Ms. Dietrich’s paychecks every 15 pay period since her October 2006 initial enrollment 16 application through the date of her death in March 17 2010. 18 Ms. Dietrich’s payroll record can be presented at trial 19 to demonstrate that she made the premium payments on 20 the supplemental insurance benefits plan. 21 Reliance Standard does not provide any evidence to 22 demonstrate that Ms. Dietrich did not make premium 23 payments for the supplemental insurance benefits 24 coverage. 25 Standard’s objection as to Plaintiff’s evidence of Ms. 26 Dietrich payment of premiums. Plaintiff claims that the premium (Exh. 1 to kassan Decl., RS0146.) Therefore, In addition, Therefore, the court overrules Reliance 27 28 10 Reliance Standard objects to evidence Plaintiff 1 2 cites in support of her assertion that “[t]here is no 3 evidence in any of the records produced by Reliance 4 Standard to suggest that Ms. Dietrich was ever asked to 5 provide evidence of insurability at the time of her 6 application, or any time thereafter.” 7 Reliance Standard also objects to Plaintiff’s assertion 8 that she explained to Reliance Standard “that her 9 sister was in excellent health at the time she enrolled (Pl. SUF, ¶ 8.) 10 for the supplemental insurance . . .” (Pl. SUF, ¶ 16.) 11 Since the Court does not rely on these facts to reach 12 its decision, the Court does not rule on Reliance 13 Standard’s objection as to the evidence cited in 14 support of these facts. 15 Finally, Reliance Standard objects to statements in 16 17 the Declaration of Alan E. Kassan and the Declaration 18 of Glenn R. Kantor on the basis that these statements 19 constitute hearsay. 20 Court does not rely on these statements in reaching its 21 decision, the Court does not rule on Reliance 22 Standard’s hearsay objections. (Def. Obj. at 10-12.) Since the 23 24 B. Uncontroverted Facts 25 26 27 Both sides cite facts that are not relevant to resolution of the Motion. To the extent certain facts 28 11 1 are not mentioned in this Order, the Court has not 2 relied on them in reaching its decision. 3 finds the following material facts are supported 4 adequately by admissible evidence and are 5 uncontroverted. 6 controversy” for the purposes of this Motion. 7 3; see generally Fed. R. Civ. P. 56. The Court They are “admitted to exist without L.R. 56- 8 9 1. The Insurance Policy 10 11 In 2003, Reliance Standard issued group policy 12 number GL 134915 (the “Plan” or “Policy”) to Redlands 13 Hospital. 14 Hospital’s Group Benefit Enrollment Form specifies that 15 it provides basic life insurance to all eligible 16 employees. 17 addition, supplemental life insurance is available to 18 “all eligible employees on a voluntary basis, through 19 after tax payroll deductions.” 20 specifies a waiting period of 90 days of continuous 21 employment for employees in the eligible class. 22 1 to Kassan Decl., RS0009.) (Exh. 1 to Sailor Decl., RS0001.) Redland (Exh. 4 to Sailor Decl., RS0103.) (Id.) In The Policy (Exh. 23 24 The Plan provides: 25 If an eligible person pays a part of the 26 premium, he/she must apply in writing for the 27 insurance to go into effect. 28 12 He/she will 1 become insured on the date stated on the 2 Schedule of Benefits, except that the 3 insurance will go into effect: (1) on the date 4 he/she applies, if he/she applies within 5 thirty-one (31) days of the date he/she is 6 first eligible; or (2) on the date we approve 7 any required proof of good health. We require 8 proof of good health if a person applies: (a) 9 after thirty-one (31) days from the date 10 he/she first becomes eligible . . . 11 (Exh. 1 to Sailor Decl., RS0015.) The policy states 12 that it is “delivered in California and is governed by 13 its laws.” (Exh. 1 to Kassan Decl., RS0001.) 14 15 16 The Plan contains an incontestability clause which states, in part: 17 Any statement made in your application will be 18 deemed a representation, not a warranty. 19 cannot contest this Policy after it has been in 20 force for two (2) years from the date of issue, 21 except for non-payment of premium. 22 We (Id. at RS0013.) 23 24 2. Ms. Dietrich’s Employment 25 26 27 Ms. Dietrich commenced her employment with Redlands Hospital on June 12, 2006. (Exh. 1 to Kassan Decl., 28 13 1 RS0147.) Through her employment, Ms. Dietrich was 2 eligible to apply for life insurance coverage under the 3 Policy. 4 ¶ 6.) 5 Group Benefit Enrollment Form for basic and 6 supplemental life insurance coverage. 7 Kassan Decl., RS0103, RS0104.) 8 the application for Supplemental Life insurance 9 coverage in the amount of $260,000. (Exh. 1 to Kassan Decl., RS0147; Sailor Decl., On October 30, 2006, Ms. Dietrich completed the (Exh. 1 to Ms. Dietrich completed (Id. at RS0103, 10 RS0104, RS0147.) The Group Benefit Enrollment Form 11 identified Plaintiff as the beneficiary of the Plan.3 12 (Id.) 13 insurability or proof of good health with the Group 14 Benefit Enrollment Form in support of the application 15 for supplemental life insurance coverage. 16 RS0139.) 17 good heath is required if a person applies after the 31 18 days from the date he/she first becomes eligible, 19 neither Defendant explicitly requested that Ms. 20 Dietrich provide evidence of insurability. 21 to Kassan Decl.) Ms. Dietrich did not submit any evidence of (Id. at Even though the Plan specified that proof of (See Exh. 1 22 23 24 25 26 3 27 28 Plaintiff is also the administrator of Ms. Dietrich’s trust, which provides for Ms. Dietrich’s two children. (Exh. 1 to Kassan Decl., RS0173, RS0102.) 14 1 3. Insurance Claim 2 3 Ms. Dietrich died on March 28, 2010 from issues and 4 complications related to Acute Lymphoblastic Leukemia. 5 (Exh. 1 to Kassan Decl., RS0105.) 6 Reliance Standard requested information from Redlands 7 Hospital about Ms. Dietrich. 8 3 to Sailor Decl., RS0159-0160.) 9 Redlands Hospital provided a copy of Ms. Dietrich’s 10 Group Benefit Enrollment Form to reliance Standard. 11 (Sailor Decl., ¶ 13; Exh. 4 to Sailor Decl., RS0093, 12 RS0103.) On October 27, 2010, (Sailor Decl., ¶ 12; Exh. On December 9, 2010, 13 14 On December 16, 2010, Reliance Standard emailed 15 Redlands Hospital noting that Ms. Dietrich became 16 eligible to apply for coverage under the Plan on 17 September 10, 2006. 18 Reliance Standard advised Redlands Hospital that there 19 was no documentation showing that Ms. Dietrich provided 20 written proof of good health to obtain supplemental 21 coverage. 22 Redlands Hospital to provide any information it might 23 have to support supplemental life insurance coverage, 24 explaining that otherwise only basic life insurance 25 coverage was in force. (Exh. 3 to Sailor Decl., RS0153.) (Id. at RS0154.) Reliance Standard asked (Id. at RS0155.) 26 27 28 15 1 Following Ms. Dietrich’s death, Plaintiff, as the 2 beneficiary of the life insurance benefits, filed a 3 claim for both basic life insurance benefits and 4 supplemental life insurance benefits. 5 Kassan Decl., RS0056, RS0057.) 6 of claim, Reliance Standard paid Plaintiff $97,810.39, 7 representing the $95,000 basic life insurance benefit 8 plus interest. 9 February 9, 2011, Reliance Standard denied the $260,000 10 supplemental benefit stating that “Ms. Dietrich did not 11 satisfy the policy requirements in order to obtain the 12 supplemental life insurance coverage” because she 13 failed to submit proof of her good health. 14 Kassan Decl., RS0164-0167.) 15 Redlands Hospital to confirm the premiums it paid on 16 Ms. Dietrich’s behalf for supplemental coverage, 17 stating that it would issue a refund of that amount. 18 (Exh. 7 to Sailor Decl., RS0166.) 19 also asked that Redlands Hospital refund to Plaintiff 20 any premium Ms. Dietrich paid via payroll deduction for 21 such coverage. (Exh. 1 to Upon receipt of proof (Exh. 9 to Sailor Decl., RS0045.) On (Exh. 1 to Reliance Standard asked Reliance Standard (Id.) 22 23 On May 18, 2011, Plaintiff appealed Reliance 24 Standard’s denial of her claim for supplemental life 25 insurance benefits. 26 0175.) 27 denial of Plaintiff’s claim based on the finding that (Exh. 1 to Kassan Decl., RS0173- On July 22, 2011, Reliance Standard upheld its 28 16 1 since Ms. Dietrich failed to submit proof of good 2 health, her coverage never went into effect. 3 RS0144-0149.) (Id. at 4 5 C. Standard of Review 6 7 “[A] denial of benefits challenged under § 8 1132(a)(1)(B) is to be reviewed under a de novo 9 standard unless the benefit plan gives the 10 administrator or fiduciary discretionary authority to 11 determine eligibility for benefits or to construe the 12 terms of the plan.” 13 Bruch, 489 U.S. 101, 115 (1989). 14 the administrator or fiduciary discretionary authority, 15 [the court] review[s] the denial of benefits for abuse 16 of discretion.” 17 F.3d 388, 391 (9th Cir. 1998) (internal citation 18 omitted). 19 review from the default of de novo to the more lenient 20 abuse of discretion, the plan must unambiguously 21 provide discretion to the administrator.” 22 Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th 23 Cir. 2006) (en banc) (internal citation omitted). Firestone Tire and Rubber Co. v. “If the plan gives Burrey v. Pac. Gas and Elec. Co., 159 “[F]or a plan to alter the standard of Abatie v. 24 25 Here, the parties do not dispute that the Plan 26 confers discretion on Reliance Standard. 27 provides: 28 17 The Plan 1 [Reliance Standard] shall serve as the claims 2 review fiduciary with respect to the insurance 3 policy and the Plan. 4 fiduciary has the discretionary authority to 5 interpret the Plan and the insurance policy and 6 to determine eligibility for benefits. 7 Decisions by the claims review fiduciary shall 8 be complete, final and binding on all parties. 9 The claims review (Exh. 1 to Sailor Decl., RS0023.) The grant of 10 discretionary authority would, normally, require an 11 abuse of discretion review. 12 13 However, the issue before the Court on this Motion 14 for Summary Judgment is whether the incontestability 15 clause bars Reliance Standard from denying payment of 16 life insurance benefits. 17 law, the Court applies a de novo review and the summary 18 judgment standard applies. 19 (applying de novo review where there is a question of 20 law); Tremain v. Bell Industries, Inc., 196 F.3d 970, 21 977-78 (9th Cir. 1999) (where the plaintiff sued under 22 ERISA and the court determined that there was a 23 conflict of interests warranting a de novo review and 24 decided the case by summary judgment). Since this is a question of See Burrey, 159 F.3d at 392 25 26 27 28 18 1 D. Incontestability Provision 2 3 The gravamen of Plaintiff’s Motion is that the 4 incontestability clause in the Plan precludes Reliance 5 Standard from denying payment of the supplemental life 6 insurance benefits. 7 the incontestability clause does not bar the denial of 8 supplemental benefits since the supplemental life 9 insurance coverage never went into effect. Reliance Standard responds that 10 11 “A condition precedent refers to an act, condition 12 or event that must occur before the insurance contract 13 becomes effective or binding on the parties.” 14 Way Cellular, Inc. v. Travelers Property Casualty Co. 15 of Am., 216 Cal. App. 4th 1040, 1054 (2013) (internal 16 citations and quotations omitted). 17 conditions neither confer nor exclude coverage for a 18 particular risk but, rather, impose certain duties on 19 the insured in order to obtain the coverage provided by 20 the policy.” 21 omitted). 22 conditions precedent.” 23 Ins. Co., 218 F. Supp. 2d 1197, 1201 (C.D. Cal. 2002) 24 (finding that a good health provision in a life 25 insurance policy, which required a prospective 26 insured’s health condition remain the same between 27 application and policy delivery dates, to be an American “In general, Id. (internal citations and quotations “Good health provisions are enforceable Willard v. Valley Forge Life 28 19 1 enforceable condition precedent to coverage under 2 California law). 3 4 Based on the language of the Plan, the required 5 proof of good health qualifies as a condition 6 precedent. 7 insurance will go into effect on the date an individual 8 applies, if within 31 days of becoming eligible. 9 1 to Sailor Decl., RS0015.) The Plan provides that supplemental life (Exh. The Plan contains a 90-day 10 waiting period of continuous employment for employees 11 in the eligible class. 12 RS0009.) 13 individual effective date is the date immediately 14 following completion of the waiting period. 15 an individual applies after the expiration of the 31 16 days, the Policy will go into effect on the date 17 Reliance Standard approves any required proof of good 18 health. (Exh. 1 to Kassan Decl., The Plan explicitly states that the (Id.) If (Exh. 1 to Sailor Decl., RS0015.) 19 20 Here, Ms. Dietrich commenced her employment with 21 Redlands Hospital on June 12, 2006. (Exh. 1 to Kassan 22 Decl., RS0147.) 23 on September 10, 2006. 24 RS0009.) 25 insurance coverage on October 30, 2006, more than 31 26 days after September 10, 2006. 27 Decl., RS0103, RS0104.) 28 required to submit proof of good health. The Plan’s 90-day waiting period ended (See Exh. 1 to Sailor Decl., Ms. Dietrich applied for supplemental life (Exh. 1 to Kassan Therefore, Ms. Dietrich was 20 (Exh. 1 to 1 Sailor Decl., RS0015.) 2 of the Plan, the Policy would only go into effect on 3 the date Reliance Standard approves the required proof 4 of good health. 5 Ms. Dietrich never submitted proof of good health. 6 (Exh. 1 to Kassan Decl., RS0139.) 7 facts, Ms. Dietrich did not fulfill a condition 8 precedent required by the Plan. (Id.) Pursuant to the plain language There is no dispute here that Based on these 9 In Amex Life Assurance Co. v. Super. Ct., 14 Cal. 10 11 4th 1231 (1997), the plaintiff brought an action 12 against Amex Life Assurance Company (“Amex”), the life 13 insurance company that denied his claim. 14 4th 1234-35. 15 clause that barred any contest after the policy has 16 been in force for two years. 17 knew that he was HIV positive when he applied for life 18 insurance but lied on his application for insurance and 19 sent an imposter to take the mandatory medical 20 examination. 21 more than two years until the insured died. 22 Thereafter, Amex discovered the fraud after the 23 beneficiary filed a claim, and it denied the claim. 24 Id. Amex, 14 Cal. The plan contained an incontestability Id. at 1234. Id. at 1233. The insured Amex collected premiums for Id. 25 26 Amex argued that it can contest the existence of 27 the contract because the medical examination was a 28 condition precedent to its formation. 21 Id. at 1245. 1 The court held that Amex’s defense that the insured was 2 not in good health at the time of the delivery of the 3 policy was “within the scope of the [incontestability] 4 clause which makes the policy incontestable after one 5 year from its date if all due premiums shall have been 6 paid, without by its terms excluding any ground of 7 defense.” 8 incontestability clause protects the insured against 9 any defense of a breach of a condition precedent where Id. at 1245-46. The Court noted that “the 10 he has paid premiums beyond the period of 11 contestability.” 12 quotations omitted). Id. at 1246 (internal citations and 13 14 15 Here, the Plan contains an incontestability clause which states, in part: 16 Any statement made in your application will be 17 deemed a representation, not a warranty. 18 cannot contest this Policy after it has been in 19 force for two (2) years from the date of issue, 20 except for non-payment of premium. We 21 (Exh. 1 to Kassan Decl., RS0013.) 22 completed the Group Benefit Enrollment Form for basic 23 and supplemental life insurance coverage on October 30, 24 2006. 25 Dietrich made all premium payments from October 2006 to 26 her death in March 2010. 27 Reliance Standard objects to Plaintiff’s claim and 28 evidence cited in its support, Reliance Standard does (Id. at RS0103-0104.) Ms. Dietrich Plaintiff claims that Ms. (Id. at RS0146-0147.) 22 While 1 not offer any evidence to show that Ms. Dietrich did 2 not make the premium payments. 3 the contrary, Reliance Standard admits that upon denial 4 of Plaintiff’s claim for supplemental life insurance 5 benefits, it advised Redlands Hospital to confirm the 6 premiums remitted on Ms. Dietrich’s behalf for 7 supplemental coverage so that any applicable refund 8 could be issued. 9 RS0147.) (Def. SGD, ¶ 22.) On (Id., Exh. 11 to Sailor Decl., Reliance Standard does not deny that it 10 collected premiums for more than three years until Ms. 11 Dietrich died. 12 Dietrich made all the premium payments between October 13 2006 and March 2010 is uncontroverted. Accordingly, Plaintiff’s claim that Ms. 14 15 Based on the standard set forth in Amex, Reliance 16 Standard’s claim that Ms. Dietrich failed to provide 17 proof of good health qualifies as a defense of a breach 18 of a condition precedent that falls within the scope of 19 the incontestability clause. 20 period expired and Ms. Dietrich fulfilled her 21 obligation to pay the required premium payments, the 22 incontestability clause applies in this case and bars 23 Reliance Standard from contesting the Policy. 24 court in Amex stated, “[t]o hold otherwise would be to 25 permit such a clause in its unqualified form to remain 26 in a policy as a deceptive inducement to the insured.” 27 Amex, 14 Cal. 4th at 1246. Since the contestability 28 23 As the 1 The Court’s decision comports with the public 2 policy considerations behind incorporating the 3 incontestability clause in life insurance policies. 4 The purpose of the incontestability clause is to give 5 “the insured a guaranty against possible expensive 6 litigation to defeat his claim after the lapse of many 7 years, and at the same time gives the company time and 8 opportunity for investigation, to ascertain whether the 9 contract should be in force.” Amex, 14 Cal. 4th at 10 1238 (internal citations and quotations omitted). “The 11 need for such protection becomes especially clear for 12 life insurance policies, where the contest is usually 13 made after the named insured has died, robbing the 14 beneficiaries of their most potent witness.” 15 (internal quotations omitted). Id. 16 17 Here, Reliance Standard had more than three years 18 to investigate whether the Policy should be in force as 19 to Ms. Dietrich. 20 such investigation and only investigated the 21 eligibility of Ms. Dietrich for supplemental life 22 insurance coverage after her death. 23 Sailor Decl., RS0153-0155.) 24 the protection afforded by the incontestability clause 25 is highest here, where Ms. Dietrich fulfilled her 26 obligation to pay the insurance premiums for more than 27 three years, the beneficiary’s most potent witness is Reliance Standard did not conduct any (See Exh. 3 to Therefore, the need for 28 24 1 deceased, and Reliance Standard had ample opportunity 2 to conduct an investigation. 3 Reliance Standard argues that the incontestability 4 5 provision is inapplicable because there is no “contest” 6 within the meaning of the provision. 7 First, Reliance Standard contends that it is not 8 contesting the validity of the underlying Group Plan. 9 Second, Reliance Standard contends that it is not (Opp. at 16-17.) 10 contesting Ms. Dietrich’s supplemental coverage within 11 the meaning of the incontestability clause because it 12 did not deny liability by reason of fraud or 13 misrepresentation. 14 the incontestability clause applies to a contest based 15 on breach of a condition precedent. 16 at 1246. 17 that its denial of benefits is not a “contest” within 18 the meaning of the incontestability clause fails. However, as the court in Amex held, Amex, 14 Cal. 4th Accordingly, Reliance Standard’s argument 19 For the reasons set forth above, the Court finds 20 21 that the incontestability clause precludes Reliance 22 Standard from denying Plaintiff’s claim for 23 supplemental life insurance benefits. 24 25 / 26 / 27 / 28 25 1 IV. CONCLUSION 2 3 4 5 For the reasons set forth above, the Court GRANTS Plaintiff’s Motion for Summary Adjudication. 6 7 8 Dated: 12/4/13 ____________________________ Jesus G. Bernal 9 10 United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26
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