Court Opinion

ID: 1012300
Source: CourtListenerOpinion
Date Created: 2013-07-04 20:42:55.892231+00
Date Added: 2024-06-11T15:26:30.864277
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

PAUL N. KROP,                           
                 Plaintiff-Appellant,
                 v.                              No. 03-1388
AIG LIFE INSURANCE COMPANY,
               Defendant-Appellee.
                                        
           Appeal from the United States District Court
          for the Eastern District of Virginia, at Norfolk.
              F. Bradford Stillman, Magistrate Judge.
                          (CA-01-418-2)

                      Argued: December 3, 2003

                      Decided: January 23, 2004

     Before LUTTIG, MOTZ, and DUNCAN, Circuit Judges.

Affirmed by unpublished per curiam opinion.

                             COUNSEL

ARGUED: Robert Lee Samuel, Jr., WILLIAMS MULLEN, P.C.,
Virginia Beach, Virginia, for Appellant. John Andrew Basham,
MCKENRY, DANCIGERS, WARNER, DAWSON & LAKE, P.C.,
Norfolk, Virginia, for Appellee. ON BRIEF: George J. Dancigers,
MCKENRY, DANCIGERS, WARNER, DAWSON & LAKE, P.C.,
Norfolk, Virginia, for Appellee.
2                  KROP v. AIG LIFE INSURANCE CO.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                              OPINION

PER CURIAM:

   Appellant, Dr. Paul Krop, was insured under a group long-term dis-
ability policy issued by appellee, AIG Life Insurance Co. ("AIG").
Krop sustained a partial disability on January 1, 2000, and filed a
claim for disability benefits under the policy. After AIG denied
Krop’s claim, Krop sued AIG for breach of the policy and wrongful
denial of benefits under 29 U.S.C. § 1132, asserting that the policy
was an "employee welfare benefit plan" under 29 U.S.C. § 1002(1)
and that he was a "participant" in that plan under 29 U.S.C. § 1002(7).

    As is pertinent here, the policy defined an insured to be "disabled"
if, while unable to perform all the material duties of his regular occu-
pation or another occupation, the insured was performing at least one
of such duties and was earning less than 80% of his pre-disability
earnings. Krop qualified under this provision because, after his partial
disability, he was able to perform some, but not all, of the material
duties of his occupation, and his income was below the 80% thresh-
old. In June 2001, however, Krop’s income exceeded the 80% thresh-
old. After the completion of discovery, Krop and AIG reached a
partial settlement covering the period before June 2001, leaving unre-
solved the single stipulated issue of Krop’s entitlement to benefits
after June 2001.

   Pursuant to 28 U.S.C. § 636(c), the parties consented to trial before
a magistrate judge ("the district court"), who asserted jurisdiction over
the case under 28 U.S.C. § 1331 and 29 U.S.C. § 1132(e). The par-
ties’ dispute centered on the meaning of "cease" as used in the provi-
sions of the policy listed under the heading "TERMINATION OF
BENEFITS." Those provisions stated that:

    Disability benefits will cease on the earliest of:

    1. the date the insured is no longer disabled;
                    KROP v. AIG LIFE INSURANCE CO.                       3
     2. the date the insured dies;

     3. the end of the maximum benefit period; or

     4. the date the insured’s current earnings exceed 80% of
        his indexed pre-disability earnings.

J.A. 28 (emphasis added).

   Krop contended that in the context of this policy, "cease" was
ambiguous and, construing the policy against its drafter, AIG, should
be read to mean "temporarily suspend." According to Krop, that con-
struction entitled him to receive benefits for any month, including
those after June 2001, in which his income again fell below 80% of
his pre-disability income. In contrast, AIG asserted that, as used in the
policy, "cease" could only mean "to permanently terminate," and thus
contended that Krop’s entitlement to benefits ended permanently after
Krop’s income exceeded the 80% threshold.

   The district court observed that the policy was a plan governed by
ERISA in which the administrator (AIG) lacked interpretive discre-
tion. Accordingly, the district court reviewed the denial of benefits de
novo, applying ordinary rules of contract interpretation and noting the
requirement that ambiguous terms be construed in accordance with
the reasonable expectations of the insured, and against the drafter. See
Tester v. Reliance Standard Life Ins. Co., 228 F.3d 372, 375 (4th Cir.
2000). In a thorough opinion, the district court concluded that, as used
in the policy, "cease" was unambiguous, and accorded the term its
plain and ordinary meaning of "to end permanently." Consequently,
the court directed the entry of judgment in AIG’s favor. Krop v. AIG
Life Ins. Co., No. CA-01-418-2 (E.D. Va. Mar. 6, 2003).

   The district court provided several reasons for its decision. Despite
the conflicting definitions of "cease" offered by the parties, the district
court concluded that the context in which "cease" was used in the pol-
icy — i.e., as part of the "Termination of Benefits" section — "streng-
then[ed] AIG’s contention that the term [wa]s unambiguous and
indicate[d] a permanent cessation of benefits," in light of the plain
and ordinary meaning of "terminate." The district court also examined
4                  KROP v. AIG LIFE INSURANCE CO.
the three other conditions that would result in the termination of bene-
fits under the policy, and concluded that "[t]he finality and nonrecur-
ring nature of such events len[t] context to [the meaning of ‘cease’]
and support[ed] the conclusion" that "cease" should similarly be read
to indicate a permanent ending. Additionally, the court cited to sev-
eral decisions holding "cease" to be unambiguous when employed in
similar contexts, some of which had specifically rejected the argu-
ment that the term should be read as "to suspend."

   Finally, the district court pointed to the "Recurrent Disability" pro-
visions of the policy, which provided that a subsequent disability of
an insured would be treated as the continuation of a prior, related dis-
ability for which the insured received benefits under the policy if the
insured returned to his regular occupation on a full-time basis for less
than six months and performed all the material duties of his occupa-
tion. The district court concluded that interpreting "cease" to mean
that benefits are merely suspended would render this section of the
policy superfluous. For these reasons, the district court held that
Krop’s benefits ended permanently after June 2001, the month in
which his income exceeded 80% of his pre-disability earnings, and
thus that he was not entitled to disability benefits for any month there-
after in which his income failed to exceed that threshold. J.A. 130-35.

   Upon review of the parties’ briefs and consideration of their oral
arguments, we find no reversible error. Accordingly, we affirm the
judgment of the district court on the reasoning of that court.

                                                            AFFIRMED