Montoya v. Reliance Standard Life Insurance Company et al, No. 3:2014cv02740 - Document 95 (N.D. Cal. 2016)

Court Description: ORDER ON DISPUTES RE FINAL JUDGMENT. The parties shall submit an agreed-to form of judgment no later than January 6, 2017. Signed by Judge William H. Orrick on 12/19/2016. (jmdS, COURT STAFF) (Filed on 12/19/2016)
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MARLON MONTOYA, Case No. 14-cv-02740-WHO Plaintiff, 8 v. ORDER ON DISPUTES RE FINAL JUDGMENT 9 10 United States District Court Northern District of California 11 12 RELIANCE STANDARD LIFE INSURANCE COMPANY, et al., Re: Dkt. Nos. 89, 90, 92, 93 Defendants. The parties cannot agree on the terms of the final judgment in this matter because of 13 disputes regarding: (i) the beginning date of the Elimination Period; (ii) the prejudgment interest 14 rate; and (iii) offsets. Dkt. No. 83. This Order resolves them. 15 1. Elimination Period 16 Under the Policy, benefits were due to start after the Elimination Period, defined as “90 17 consecutive days of Total Disability.” Reliance argues that the Elimination Period began on June 18 26, 2012, which was the first day plaintiff claimed he was totally disabled, therefore payments 19 should have begun on September 24, 2014. Dkt. No. 89. Montoya argues that under the Policy’s 20 somewhat ambiguous provisions, because he returned to work part-time from August 1, 2012 21 through September 28, 2012, the Elimination Period did not begin until September 28th and ended 22 on December 28, 2012. Both sides agree the date the Elimination Period starts and ends affects 23 the potential offsets and, thus, the amount of benefits owed. 24 25 26 27 28 I conclude that Montoya’s brief return to part-time work means that Montoya was “residually disabled” under the Plan, where “residual disability” means being “partially disabled” (able to performing his material duties on a part-time basis) and residual disability is considered “Total Disability” and does not break or suspend the Elimination Period. There is no evidence that Montoya was unable to perform his material duties, albeit on a part-time basis for that period 1 of time. The return to work was temporary and Montoya could not sustain it, further evidencing 2 his own position that he was Totally Disabled as of June 26, 2012.1 (Which, as pointed out by 3 Reliance, is also consistent with Montoya’s collection of California State Disability Insurance 4 Benefits “CASDI” during those months). Therefore, the Elimination Period ended on September 5 23, 2012 and benefits were due as of September 24, 2012.2 6 2. Amount of Benefits Recoverable 7 Montoya agrees with Reliance that the monthly benefit before offset is $2,602.44. Dkt. 8 No. 90 at 3.3 3. Offset 9 Both parties agree that the benefits due to Montoya are offset by the CASDI benefits he 10 United States District Court Northern District of California 11 received.4 There is no debate about the amount of the CASDI payments, but instead, about how 12 much of the CASDI benefits should be offset in light of the Elimination Period. Having decided 13 the Elimination Period, from September 24, 2012 through June 2013, plaintiff is entitled to the 14 Policy minimum of $100 per month. There is also no dispute that from August 1, 2013 through September 24, 2014, plaintiff is 15 16 entitled to the full monthly benefit of $2,602.44. The only dispute is for the month of July 2013 – where plaintiff contends the offset is less 17 18 because the CASDI payments were lower. Reliance does not respond to that argument. In the 19 1 20 21 22 I am not persuaded by Montoya’s argument, relying on the Plan’s definition of “Actively at Work.” That provision appears to extend benefits to those insured who have gone to a part-time schedule as a matter of course, unrelated to a period of Total Disability similar to what Montoya alleges. See, e.g., AR 7 (defining Active Work, as excluding time off as a result of “injury or sickness”). 2 23 24 25 26 Construing the Plan as Montoya argues might benefit Montoya, because it would exclude a period of CASDI payments from the offset, but that interpretation is contrary to the benefit of insureds generally because the later the Elimination Period runs, the longer Reliance avoids having to pay benefits. 3 Montoya agrees to Reliance’s estimate, but misstates it in his opening brief as $2,602.33. I will use Reliance’s slightly higher amount of $2,602.44. Dkt. No. 89 at 5. 4 27 28 Reliance initially contended an offset for Social Security payments – which Montoya had applied for – should also apply. Since receiving confirmation from the Social Security Administration that Montoya’s application was denied on appeal, Reliance has dropped that claimed offset. Dkt. No. 92 at 6. 2 1 face of Reliance’s failure to address it, I adopt Montoya’s calculation of what he was owed for 2 July 2013. 3 4. Prejudgment Interest 4 Reliance argues that the prejudgment interest rate is set by 28 U.S.C. § 1961, and absent 5 substantial evidence supporting a departure from that rate in light of the equities (which Reliance 6 believe has not been shown here), that interest rate should govern. See Grosz-Salomon v. Paul 7 Revere Life Ins. Co., 237 F.3d 1154, 1164 (9th Cir. 2001). Montoya acknowledges that in the 8 Ninth Circuit the presumptive rate is provided in § 1961 and “this Court lacks authority to 9 overrule it.” Dkt. No. 90 at 4. Montoya nevertheless points to other Circuits who apply interest rates taken from state law. He also argues that because the rate provided in § 1961 is 11 United States District Court Northern District of California 10 exceptionally low and because the equities in this case warrant it (e.g., because Reliance had the 12 information it needed, yet refused to pay Montoya’s claim earlier), Reliance’s conduct justifies a 13 higher rate. Specifically Montoya argues for prejudgment interest at the 10% rate provided by the 14 California Insurance Code § 10111.2. Montoya submits a declaration establishing how during the 15 relevant timeframe he had to incur and pay higher interest rates payments on his student loans and 16 credit cards. Dkt. No. 90-4. I will not, absent authority from the Ninth Circuit, depart from the presumptive use of § 17 18 1961 for an award under ERISA. I also do not find substantial evidence exists that would support 19 an upward departure from that rate based on the equities of this case. I note that this case has 20 taken an abnormally long time to litigate. Those delays were not caused by Montoya personally, 21 but instead by strategic decisions taken by his counsel (e.g., refusing to attend the physical IME 22 without counsel, arguing plaintiff was entitled to review the IME reports before Reliance could 23 make its final administrative determination). I do not find that Reliance’s positions were frivolous 24 or without basis, and given the delays that occurred in the litigation in light of the strategic 25 decisions of plaintiff’s counsel, it would not be equitable to impose a higher prejudgment rate of 26 interest on Reliance.5 However, plaintiff is entitled to prejudgment interest at the rate set under 28 27 5 28 But see Oster v. Standard Ins. Co., 768 F. Supp. 2d 1026, 1040 (N.D. Cal. 2011) (awarding a higher rate of interest where insurer treated claimant as an adversary” during the claims process 3 1 U.S.C. § 1961. Conclusion 2 3 4 5 6 7 8 Now that I have resolved the disputes presented, the parties shall submit an agreed-to form of judgment no later than January 6, 2017. IT IS SO ORDERED. Dated: December 19, 2016 ______________________________________ WILLIAM H. ORRICK United States District Judge 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and abandoned its role as his fiduciary, and then withheld payment of benefits for six years). 4