Court: Court of Appeals for the Ninth Circuit; May 20, 1997; Federal Appellate Court
Gregery D. Williams appealed the summary judgment granted to UNUM Life Insurance Company, which dismissed his ERISA action for disability benefits on the grounds that his claim was barred by the statute of limitations. Williams had worked for Storz Surgical Instruments since May 1987 and had long-term disability insurance from UNUM. He initially stopped working due to a back injury from an automobile accident on July 31, 1987, and underwent spinal fusion surgery on September 22, 1988, returning to work on February 1, 1989. Shortly after returning, he was involved in a second accident on March 26, 1989, which led to further complications and ultimately his total and permanent disability.
Williams submitted a claim to UNUM for the disability from the first accident on January 6, 1989, and notified them of the second accident on May 24, 1989, without having resolved the first claim. During this call, he was not informed that a new claim was necessary, only advised to have his doctors submit reports. UNUM later sent a letter on June 21, 1989, warning that they would assume he was withdrawing his request for benefits if they did not receive information within 30 days. In July, two of Williams' physicians provided letters about his condition but did not specifically address UNUM's questions regarding the second accident's disability period.
Both parties were unclear whether the second disability was a new claim or a recurrence of the first. Williams did not submit a new claim form for the second disability, nor did UNUM request one, focusing instead on obtaining medical proof of continued disability without specifying the relevant period. The court ultimately reversed the district court's decision and remanded for further proceedings.
On August 1, 1989, UNUM notified Williams that his long-term disability benefits request had been granted, specifically for his first disability period from December 12, 1988, to February 1, 1989. The letter requested additional medical verification for any inability to return to work after February 20, 1989. Williams believed his physicians’ letters from July 1989 satisfied this requirement and did not submit further documentation, interpreting the letter as an approval for his second disability period. However, UNUM's records indicated no formal decision on the second claim and, on September 27, 1989, they closed Williams' file without notifying him of a denial.
Williams did not communicate with UNUM for four years and submitted a second claim form to his employer in November 1989, after which he began receiving disability payments from Aetna, not UNUM. Upon learning from Storz that UNUM should be providing benefits due to his permanent disability, Williams re-approached UNUM with a claim for the second disability period on June 15, 1993, which was denied on August 5, 1993, as untimely because it was submitted more than one year after his disability recurred.
Williams appealed UNUM's decision but was formally denied on January 18, 1994. He initiated legal action against UNUM under ERISA on June 17, 1994, but the district court ruled in favor of UNUM, citing that the statute of limitations had expired. The court determined that Williams' claim accrued by September 1, 1989, nearly five years prior to his filing, and concluded that equitable tolling did not apply due to a lack of due diligence. The legal standards regarding the interpretation and review of ERISA claims were also noted, emphasizing that such interpretations are reviewed de novo.
ERISA does not specify a statute of limitations for actions regarding benefits under a plan, leading federal courts to adopt the most analogous state statute. In California, the applicable statute mandates that actions must be filed within three years of accrual, which begins when the claimant knows or has reason to know of their injury. Under federal common law, a cause of action accrues upon awareness of the injury, but California's Insurance Code specifies that for ERISA disability claims, accrual occurs when written proof of loss is due. In the case of Williams, whether he provided adequate proof of disability to UNUM is a factual question that remains unresolved. If Williams did provide sufficient proof, his claim would be timely if filed within three years of knowing or having reason to know of the denial. The district court prematurely ruled that he had reason to know of the denial more than three years prior to filing, granting summary judgment to UNUM. However, summary judgment is only appropriate when the undisputed evidence leads to one reasonable inference, and all evidence must be viewed in the light most favorable to the nonmoving party, suggesting that material factual issues exist that require trial.
Material disputed questions exist regarding whether Williams adequately filed a claim and when he became aware that UNUM denied his claim. Williams asserts that he believed his claim was approved in August 1989 and that he diligently pursued it upon discovering it was not approved. The district court ruled that nearly four years had elapsed since the onset of Williams’ second disability, concluding no reasonable fact-finder could believe Williams reasonably thought his claim was approved or not denied. However, this decision was challenged due to UNUM's vague communications, which did not instruct Williams to file a new claim but rather requested letters from his physicians. Following compliance, Williams received a letter from UNUM indicating his request for benefits was granted and continued to receive disability checks, leading him to assume they were from UNUM or substitutes for those payments. The reasonableness of this assumption is a factual question. The case is remanded for a fact-finder to ascertain when Williams knew his claim was denied.
Additionally, regarding the proof of loss requirement, if Williams failed to provide adequate proof of disability, the cause of action would accrue when he was supposed to provide such proof. UNUM claims the last explicit request for proof was made on August 1, 1989, and argues the statute of limitations began on September 1, 1989. However, California law, specifically Insurance Code section 10350.7, mandates that written proof of loss must be provided within 90 days after the termination of the insurer's liability. This provision may conflict with UNUM's policy terms. Since Williams raised the argument about the policy's non-compliance with California law for the first time on appeal, the district court is instructed to determine compliance on remand. If the policy is found non-compliant, California Insurance Code section 10350.7 will be incorporated into the UNUM policy, and the rolling accrual rule established in Nikaido will apply.
In the case of Nikaido, the court interpreted a policy's proof of loss provision, determining that for a 'continuing loss' due to disability, proof must be provided within 90 days after each monthly period of insurance liability. This interpretation establishes that a new cause of action—and a new three-year statute of limitations—accrues monthly for each instance of disability where payment is not made. Applying this to Williams' case, he was required to submit proof of loss for his ongoing disability after each relevant period. Consequently, any claims he could make for the three years preceding his lawsuit would not be barred by the statute of limitations, even if initial proof of loss was inadequate.
The district court's summary judgment in favor of UNUM was deemed erroneous due to unresolved factual issues regarding Williams' proof of disability and his awareness of the claim denial. Additionally, if the UNUM policy violates California Insurance law, Williams' claims remain valid for the preceding three years. The court thus reversed the lower court's decision and remanded the case for further proceedings. Furthermore, while UNUM argued that Williams' claims were time-barred, the court rejected this notion, referencing a precedent that requires insurers to notify employees of coverage denials to avoid limitations issues.
