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11th Cir. – Unpublished – Pre-existing Exclusion

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  • 11th Cir. – Unpublished – Pre-existing Exclusion

    Here’s a new case out of the Eleventh Circuit, unpublished, titled Julissa Bradshaw v. Reliance Standard Life Insurance Company. This is a very lengthy and detailed opinion and I believe it is very plaintiff friendly. This case involves a pre-existing exclusion under an LTD policy applied to a pregnancy. The plaintiff here had a healthy pregnancy at the time she purchased the policy, but later in the pregnancy developed mild preeclampsia. Nine (9) days after she gave birth to a healthy baby girl, she suffered a massive stroke. The hospital that performed surgery determined that “there was likely some residual deficit from her preeclamptic childbirth.” Reliance Standard’s reviewing physician determined that during the three (3) month lookback period “preeclampsia was in no way present nor could it have been affectively predicted during the lookback period,” but that “pregnancy is required for preeclampsia to develop, and certainly preeclampsia contributed to, if not caused, her neurovascular accident.”

    The court first determines on a procedural issue that the plaintiff was not presenting a new issue on appeal, determining that a party can better articulate a previously presented issue on appeal.

    While the manner in which Bradshaw presents her arguments on appeal is not precisely the same as it was at the district court level, it need not be. A party may take a “new approach” to an issue preserved for appeal; she may improve how she articulated the same arguments when she was before the district court, and a good attorney often does. “Once a federal claim is properly presented, a party can make any argument in support of that claim; parties are not limited to the precise arguments they made below.” Yee v. City of Escondido, Cal., 503 U.S. 519, 534 (1992) (citations omitted). While new claims or issues may not be raised for the first time on appeal, new arguments relating to preserved claims may. Pugliese v. Pukka Dev., Inc., 550 F.3d 1299, 1304 n.3 (11th Cir. 2008) (citing Yee, 503 U.S. at 534).
    Next, turning to the merits, the court finds that Florida law should be part of ERISA common law.

    With these guidelines in mind, we turn to Florida law. Under Florida law, we must construe insurance contracts “in accordance with the plain language of the policies as bargained for by the parties.” Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). When interpreting insurance contracts, “the language of the policy is the most important factor.” Taurus Holdings, Inc. v. U. S. Fid. and Guar. Co., 913 So. 2d 528, 537 (Fla. 2005). The plain meaning of the provision and how an ordinary person would read the provision govern. See Union Am. Ins. Co. v. Maynard, 752 So. 2d 1266, 1268 (Fla. 4th Dist. Ct. App. 2000). The insurer must make clear what is excluded from coverage. Id. (citation omitted). And under ERISA, clauses that exclude coverage are interpreted narrowly. See Fought v. UNUM Life Ins. Co. of Am., 379 F.3d 997, 1011 (10th Cir. 2004) (per curiam) (citing 29 C.F.R. § 2590.701-3(a)(1)(i)(C)), abrogated in part on other grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008); Critchlow v. First UNUM Life Ins. Co. of Am., 378 F.3d 246, 256 (2d Cir. 2004).

    Here, the Policy permits Reliance to deny long-term disability benefits for a total disability that was “caused by,” “contributed to by,” or “resulting from” a pre-existing condition unless the insured has been actively at work for a full year. Reliance claims that it reasonably applied the exclusion because Bradshaw had not been employed for a full year, was pregnant during the “look-back period,” and her pregnancy “played a part in producing” the stroke. More specifically, Reliance justifies its denial of Bradshaw’s claim since it views her pregnancy as having “contributed to” her stroke.

    We disagree and find Reliance’s interpretation of the pre-existing-condition clause and, in particular, the phrase “contributed to,” to be both unreasonable as a matter of law and at odds with the goals of ERISA.
    The court agrees with the substantially contributed test articulated by the Fourth Circuit.

    We considered whether, and to what extent, language in an ERISA policy requiring loss “directly and from no other causes” precluded recovery for accidental injury where some pre-existing condition was a “contributing factor” to the loss. Id. at 1183. After reviewing other circuits’ approaches to an inquiry of this nature, we noted our agreement with the reasoning of the Fourth Circuit in Adkins v. Reliance Standard Life Ins. Co., 917 F.2d 794 (4th Cir. 1990). The Fourth Circuit explained—and we agreed—that “adopt[ing] a strict and unambiguous interpretation of ‘directly and independent of all other causes’ would yield untenable results.” Dixon, 389 F.3d at 1184. We approvingly noted the Fourth Circuit’s reasoning: “[T]o recover under such policies as the one here involved, and with such a stringent construction, a claimant would have to be in perfect health at the time of his most recent injury before the policy would benefit him, and that, of course, is a condition hardly obtained, however devoutly to be wished.” Id. (quoting Adkins, 917 F.2d at 796) (quotation marks omitted).

    Based on Adkins’s analysis, we then adopted a “substantially contributed” test. Under this test, the language “directly and from no other causes” precludes recovery for otherwise covered events only where another condition “substantially contributed” to the loss. Id. So the mere fact that another factor contributed to the loss in some way is not enough to trigger the exclusionary clause. As we explained, “The ‘substantially contributed’ test gives this exclusionary language reasonable content without unreasonably limiting coverage. And, it advances ERISA’s purpose to promote the interests of employees and their beneficiaries.” Id.

    The exclusion in the Policy at issue here suffers from the same problem as that at issue in Dixon. Just as the language of the Dixon policy—“directly and from no other causes”—strictly construed, required the ruling out entirely of any health conditions that in some way might have contributed to the loss, the language of the Policy here—excluding coverage if the loss is “(1) caused by; (2) contributed to by; or (3) resulting from a Pre-existing Condition”—strictly construed purports to preclude coverage if any pre-existing health conditions in some way—no matter how remote—might have contributed to the loss. So like the Fourth Circuit noted about the policy language at issue there, and as we agreed in Dixon, the Policy language at issue here would essentially require a claimant “to be in perfect health at the time of [obtaining the policy] before the policy would benefit him [during the succeeding twelve months], and that, of course, is a condition hardly obtained, however devoutly to be wished.” Dixon, 389 F.3d at 1184 (quoting Adkins, 917 F.2d at 796).
    Also agreeing with the Tenth Circuit approach, the court finds:

    Here, Reliance attempts to make a similar “but-for” argument: it asserts that but for Bradshaw’s pregnancy, she would not have developed high blood pressure; and but for her high blood pressure, she would not have developed preeclampsia; and but for her preeclampsia, she would not have suffered a stroke; and finally, but for her stroke, Bradshaw would not have become totally disabled. Like in Fought, multiple stages intervened between Bradshaw’s healthy pregnancy and her total disability. We reject Reliance’s position for the same reasons the Tenth Circuit found Fought’s insurer’s argument unconvincing and because such a broad construction of the exclusion runs directly counter to ERISA’s central goal of protecting the interests of employees and their beneficiaries in employee benefit plans. See Dixon, 389 F.3d at 1184–85.
    The court concludes that the causal link between a healthy pregnancy and the stroke is too far of a reach and Reliance, therefore, reached an arbitrary and capricious denial.

    Bradshaw’s pregnancy was progressing well, with no sign of difficulty or complication at all during the “look-back period.” She had no symptoms of stroke, did not suffer from high blood pressure, and did not have preeclampsia. During the relevant period, even Bradshaw’s doctors did not suspect that she would develop high blood pressure, then experience preeclampsia, and then suffer a stroke. Indeed, during the look-back period, the chances of stroke were so remote, they were not even a consideration based on Bradshaw’s healthy pregnancy. Pregnancy is neither a necessary precursor to stroke nor does pregnancy normally develop or progress into stroke. To be sure, preeclampsia is a complication that can occur during pregnancy, but stroke is not a condition typically associated with a healthy pregnancy, like Bradshaw had at the time of the look-back period.

    Connecting Bradshaw’s healthy pregnancy during the look-back period to her ultimate disabling condition requires four links. On this record, that’s too many. To view Bradshaw’s healthy pregnancy as a substantially contributing factor to her disability simply requires too much attenuation. See, e.g., Fought, 379 F.3d at 1010 (finding five intervening stages between disease and disability to be too attenuated). And because it cannot fairly be said that Bradshaw’s healthy pregnancy substantially contributed to her disability, Reliance’s use of the pre-existing condition exclusion to deny Bradshaw benefits was unreasonable.
    The opinion is attached below.
    Attached Files
    Last edited by Nathan Bax; 09-08-2017, 09:56 AM.