Opinion ID: 2981314
Heading Depth: 3
Heading Rank: 1

Heading: Extension of the Conversion Period

Text: Mrs. Moss first asserts that Unum, through its letter dated September 10, 2008, extended the conversion period. Unum’s letter to Mr. Moss on September 10, 2008, stated: Dear Mr. Moss: Thank you for electing to convert your Whole Life Conversion coverage, a feature of your group plan. Before we can confirm your coverage, we will need the following information or requirements: You are also requesting Conversion coverage for your spouse. This requires you to complete two separate enrollment forms. We have enclosed the appropriate forms to review and return to us. We know you realize the importance of this valuable protection and would like to provide you with the opportunity to maintain your coverage. We would like to share some information with you concerning the enrollment period. Due to 3 The parties disagree as to the appropriate standard of review. Mrs. Moss believes de novo review is appropriate, contending that the Plan’s discretionary clause may be disapproved pursuant to an advisory opinion on discretionary clauses issued by the Kentucky Department of Insurance as to life insurance policies sold within the state. (Advisory Op. 2010-01, R. 75-6, at 1. “It is the Department’s position that discretionary clauses deceptively affect the risk purported to be assumed in any policy and as such, any forms containing discretionary clauses may be disapproved.”) The opinion, however, notes that it is advisory and “not legally binding on either the Department or the reader.” (Id.) The opinion does not expressly prohibit the use of discretionary clauses, but rather provides guidance as to how such clauses will be reviewed. Regardless, we note that this is not a close case. The standard of review to be applied—whether de novo or arbitrary and capricious—does not change the outcome. 13 No. 11-6017 Rose Moss, et al. v. Unum Life Insurance Co., et al. contractual requirements regarding the time limits for eligibility, it is important that we receive your reply in our office by September 26, 2008. Please note, there will be no further communications if we do not receive a response by the requested date. If the requirements are not received within the given grace period; portability will no longer be an option and the check submitted with your initial application will be voided and subsequently destroyed after a certain amount of time. It is important to note that this offer to accept late requirements is not an extension of benefits. Your life insurance coverage under your employer’s group policy remains in effect for 31 days after the date of termination or reduction of coverage. If you have any questions or if we can be of further assistance, please contact a representative at the address shown above. Please address all correspondence to the attention of the Portability/Conversion Unit. (R. 24-13, at 1–2 (emphasis added).) This letter was sent to Mr. Moss because he had not completed the separate enrollment forms for himself and his wife in order to convert his basic coverage. A denial letter sent to Mrs. Moss’s attorney on December 22, 2009 explained this in further detail: I have completed the claim review and determined that the supplemental life insurance benefits in the amount of $293,000 are not payable and would like to take this opportunity to explain to you how I arrived at my decision. Gary Moss terminated employment with ServiceMaster on August 5, 2008. On August 7, 2008, ServiceMaster sent a Health & Welfare Benefit Plan Conversion/Portability Notice to Gary Moss at his home address. This Conversion/Portability notice included both the basic coverage, $110,000, and the supplemental coverage, $293,000, that Mr. Moss was eligible to continue. Mr. Moss was responsible for submitting the application to Unum within the later of 31 days from the date of termination or 15 days from the date of notification. The application for Whole Life Conversion coverage which Mr. Moss submitted to Unum on September 2, 2008 included both Gary Moss and his spouse, Rose Moss. The application requested $110,000 in basic life coverage for Gary Moss and $50,000 of coverage for Rose Moss. The application was signed by both applicants. Unum requires a separate enrollment form for each insured requesting coverage, as Whole Life Conversion is administered at an individual level. 14 No. 11-6017 Rose Moss, et al. v. Unum Life Insurance Co., et al. ... On September 10, 2008, we returned the application submitted by Gary Moss to his address on file and requested separate completed applications for the insured and spouse by September 26, 2008. The appropriate forms were enclosed to be signed by each applicant. The letter further advised: “It is important to note that this offer to accept late requirements is not an extension of benefits.” (R. 56-3, at 8–7 (emphasis in original).) Mrs. Moss’s contention that the September 10, 2008 letter extended the conversion period ignores the clear language of the September 10, 2008 letter, which is highlighted in the denial letter sent to Mrs. Moss’s attorney on December 22, 2009. The language specifically stated that there was no extension of coverage. The language further referenced the thirty-one-day conversion period through which benefits would continue. (R. 24-13, at 1. “Your life insurance coverage under your employer’s group policy remains in effect for 31 days after the date of termination or reduction of coverage.”) The September 26, 2008 deadline followed an explanation of the enrollment forms to be completed by Mr. Moss and his wife in order to convert his coverage. It did not constitute an extension of the deadline to convert, as Mrs. Moss argues. Moreover, Mr. and Mrs. Moss affirmatively responded to Unum as to the $110,000 basic life insurance policy on Mr. Moss. This policy has been paid in full by Unum. The only other policy sought to be converted by the Mosses was a $50,000 policy on Mrs. Moss, which is not at issue in this case. The August 7, 2008 conversion/portability notice from ServiceMaster, to which the Mosses responded, referred to both the $110,000 basic life insurance policy and the $293,000 supplemental life insurance policy. Mr. Moss responded only with respect to the $110,000 basic life insurance policy. 15 No. 11-6017 Rose Moss, et al. v. Unum Life Insurance Co., et al. The purpose of the letter was to allow Mr. Moss and his wife to complete the proper enrollment forms in order to convert their coverage. It did not extend the thirty-one-day period allowed for them to convert. The deadline to convert remained September 5, 2008. Accordingly, Mrs. Moss’s argument that Unum extended the conversion period does not support the claim that Unum’s decision was arbitrary and capricious.