Opinion ID: 164315
Heading Depth: 3
Heading Rank: 2

Heading: Department of Labor's regulations and example

Text: 78 The Department of Labor's regulations also undermine UNUM's interpretation of the plan. Those regulations provide the following example regarding the scope of a pre-existing condition exclusion: 5 79 Example 4. (i) Individual D, who is subject to a preexisting exclusion imposed by Employer U's plan, has diabetes, as well as a foot condition caused by poor circulation and retinal degeneration (both of which are conditions that may be directly attributed to diabetes). After enrolling in the plan, D stumbles and breaks a leg. (ii) In this Example 4, the leg fracture is not a condition related to D's diabetes, even though poor circulation in D's extremities and poor vision may have contributed towards the accident. However, any additional medical services that may be needed because of D's preexisting diabetic condition that would not be needed by another patient with a broken leg who does not have diabetes may be subject to the preexisting condition exclusion imposed under Employer U's plan. 80 29 C.F.R. § 2590.701-3(a)(1)(i)(C), Example 4. 81 In addition, the Practicing Law Institute provided these guidelines in interpreting § 2590.701-3: 82 Thus, before imposing a preexisting condition limitation, plan sponsors must carefully evaluate whether a particular condition is directly attributable to the preexisting condition. Medical conditions which merely contribute towards accidents or illnesses, but are not directly attributable to the preexisting condition may not be excluded. This causal connection requirement will undoubtedly open the door for arguments that preexisting conditions were not the proximate cause of a particular injury or sickness — e.g., treatment of pneumonia for an individual who was previously diagnosed with AIDS. 83 John R. Hickman, Insurance Law: What Every Lawyer and Businessperson Needs to Know, HEALTH INSURANCE BASICS: ERISA, FMLA, ADA, ADEA, COBRA, HIPAA, AND PARCA, 584 PLI/Lit 413, 487 (May 1998). 84 When applying the above example from § 2590.701-3 to Ms. Fought's case, we determine that UNUM's expansive reading of the exclusion may be overly broad: The exclusion cannot merely require that the pre-existing condition be one in a series of factors that contributes to the disabling condition; the disabling condition must be substantially or directly attributable to the pre-existing condition. See also WEBSTER'S II NEW RIVERSIDE DICTIONARY 306 (defining contribute as to mean to act as a determining factor). Ms. Fought's staph infection is not a condition related to her coronary artery disease, even though her unstable angina, which was related to her coronary artery disease, undoubtedly contributed to the need for surgery. To read the exclusion as broadly as UNUM, counters the essential tenets of contract law: Exclusions must be interpreted narrowly. See 29 C.F.R. § 2590.701-3(a)(1)(i)(C), Example 4 (applying narrow definition of contributed towards); Frerking, 760 F.Supp. at 881 (noting that in the context of plans governed by ERISA, [i]t is also well-established that the burden is upon the insurer to demonstrate that the insured's claim falls within the terms of an exclusionary clause, and that such clauses are interpreted narrowly).