Opinion ID: 6200
Heading Depth: 2
Heading Rank: 2

Heading: Extension of the Group Policy Benefits

Text: 34 Colonial Life, in its cross-appeal, disputes the interpretation of the insurance policy given by Judge Barbour requiring the extension of medical coverage for Ramsey. Our first task in evaluating this contention is to determine the appropriate level of review. 35 For this endeavor, we turn to Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) where the Supreme Court laid out a scheme for determining the standard of review in ERISA litigation. The reviewing court, in entertaining a claim which questions, a denial of benefits ... under Sec. 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan. Bruch, 489 U.S. at 115, 109 S.Ct. at 956-7; Schultz v. Metropolitan Life Ins. Co., 872 F.2d 676, 678 (5th Cir.1989) (where [n]either party has pointed to any provision in the Plan which gives the administrator discretionary authority to determine benefit eligibility or to construe the plan terms ... the district court's review of the administrator's denial of the [plaintiff's] claim will be tested here based on a de novo review standard.); Wise v. El Paso Natural Gas Co., 986 F.2d 929, 934 (5th Cir.1993) (same). There has been no allegation that Colonial Life exercised its discretionary authority in denying Ramsey's benefits. We are therefore required to invoke a de novo evaluation of Colonial Life's decision to terminate Ramsey's coverage. 36 The district court ordered Colonial Life to continue Ramsey's medical coverage under the provisions of the extension of benefits clause. We need not evaluate the analysis propounded by Judge Barbour ignoring the subsection a. time limit based on a contradiction within the policy which he understands to mandate an extension of benefits. Instead, we hold that the language of section a. is inapplicable to Ramsey by its very terms and therefore we require Colonial Life to offer Ramsey an extension of his insurance benefits under the old policy. 37 The insurance policy in question commences with the following introductory definition,  'You' or 'yours' refers to the employee, not the policyholder. While the policy is not at this point clear whether you or yours includes dependents of the employee, a comprehensive look at the policy reveals a consistent differentiation between you and your dependents. For instance, the policy describes when [y]our insurance will end and when [d]ependents insurance will end as separate eventualities. The termination of the employee's insurance by definition terminates the dependent's insurance. 38 Recapitulating the text of the relevant Extension of Medical Benefits section, the opening sentence states that [i]f you or a dependent are totally disabled ... medical benefits will be continued, until the earlier of, followed by three possible conditions. The distinction between the employee and his or her dependents is thus maintained in the initial clause of the relevant section. 39 The most pertinent condition to the extension of benefits is set out in the following subsection which plainly states that the benefits will continue until, a. 12 months from the day you become disabled. (emphasis added). It is this section which Colonial claims precludes Ramsey from receiving continuing coverage as he was disabled more than twelve months prior to the termination. However, the clear language of this condition does not include dependents of the employee. The section is directed only at the employee him or herself. It therefore cannot be applied to Ramsey as a dependent. 40 By contrast, the third condition of the very same extension clause, subsection c., states just as plainly that benefits will continue until, c. you or the dependent are insured for similar medical benefits under another group plan. (emphasis added). Had Colonial Life intended subsection a. to cover Ramsey, it should have written it to mirror subsection c. In that case subsection a. would read, 12 months from the day you or your dependents become disabled. Because it did not, the subsection is not relevant here and will not terminate Ramsey's extension of benefits. 41 While this reading seems to elevate the picayune to the preposterous, we note that the language of these sections is absolutely clear: the section in the policy as a whole, and this clause in particular, continuously refer to you or the dependent while the clause limiting the extension to twelve months names only you. The intent of the drafters which arises from the plain wording of this sentence is pellucid in its simplicity: section a. does not apply to dependents, i.e. Ramsey. 42 Even if the policy was not entirely consistent in distinguishing between the employee and his or her dependents, the precise reference in this particular section would be, at best, ambiguous. We cognize that this circuit follows the contra proferentem rule of contract interpretation in the ERISA context. Hansen v. Continental Ins. Co., 940 F.2d 971 (5th Cir.1991); cf. Wise, 986 F.2d 929, 938 (rule of contract interpretation mandate[s] that we adopt the most pro-beneficiary interpretation). This rule has been adopted by various circuits. Kunin v. Benefit Trust Life Ins. Co., 910 F.2d 534 (9th Cir.1990) (cert. denied 498 U.S. 1013, 111 S.Ct. 581, 112 L.Ed.2d 587) (rule of contra proferentem applies); McNeilly v. Bankers United Life Assurance Co., 999 F.2d 1199, 1201 (7th Cir.1993) (when plan terms are ambiguous, we construe them strictly in favor of the insured.); Delk v. Durham Life Ins. Co., 959 F.2d 104 (8th Cir.1992) (adopting the contra insurer rule when the language remains ambiguous even when accorded its ordinary meaning). 43 In Hansen we wrote that [a]ny burden of uncertainty created by careless or inaccurate drafting of the summary must be placed on those who do the drafting, and who are most able to bear that burden, and not on the individual employee, who is powerless to affect the drafting of the summary or the policy and ill equipped to bear the financial hardship that might result from a misleading or confusing document. 940 F.2d at 982. In the instant case, we construe any confusion which may arise as to the ambiguous reference of you in subsection a. against the insurer and presume that it refers only to the employee and not his or her dependents. 44 Simple rules of contract interpretation demonstrate that the clause limiting the extension of benefits to 12 months from the day you became disabled does not apply to Ramsey. The extension of benefits granted to Ramsey should continue until either of the other two conditions set out in subsections b. and c. of the extension of benefits clause come to pass or until he reaches the policy limits. Thus, we hold that the district judge reached the correct result when he determined that Ramsey was entitled to continued medical coverage under the policy until such time as he finds other insurance, he is no longer paralyzed, or until the policy limit of $2,000,000 has been reached.