Court Opinion

ID: 9464158
Source: CourtListenerOpinion
Date Created: 2023-08-04 23:26:38.81054+00
Date Added: 2024-06-11T17:38:29.465494
License: Public Domain

*1038LAY, Circuit Judge,
dissenting.
I respectfully dissent. The majority’s construction of the insurance policy is unreasonable, contrary to settled law, and violative of the spirit of the statutory provisions mandating the extension of death benefits during the thirty-one day conversion period.
The experienced district judge found that a regularly scheduled and periodic suspension of work, such as a lunchbreak or a weekend, was not a cessation of active work in the “plain, ordinary, and popular sense,” and that a contrary interpretation would be “unduly strained and hypertechnical.” Judge Larson’s interpretation comports with the popular understanding of the phrase “cessation of active work.” He noted: “Certainly the average employee would be astonished to learn that he ceased actively working for his employer every time he went home at night.” Judge Larson properly held that if there is any doubt as to the interpretation of a phrase in an insurance policy, it is to be resolved in favor of the insured and against the insurer.
Nothing in the majority opinion assails this reasoning. The majority opinion relies on numerous decisions in support of the conclusion that the phrase “cessation of active work" means “when the actual work ceases, and not some later date.” However, because none of the cases relied on by the majority involved a claim that the policy was ambiguous and subject to interpretation by the court, they are not controlling under the facts of this case.
In Calio v. Equitable Life Assurance Society of America, 169 So.2d 502, 505 (Fla.Dist.Ct.App.1964), the principal case cited by the majority, the Florida court did not deal with any claim of ambiguity. Rather, in light of a state statute requiring a thirty-one day conversion period following termination, that court decided the insurance company was authorized to define the phrase “termination of employment” as being the last day worked. 169 So.2d at 504. Similarly, in several of the other cases cited, beneficiaries conceded that active work ceased on the day alleged by insurance companies but asserted that decedents were insured because: (1) the last premium deduction covered a period after termination; 1 (2) decedent’s employment terminated on a subsequent date because of accumulated vacation time or pay;2 or, (3) a condition precedent to termination was not met.3
Furthermore, in the cited cases termination of employment was held to have occurred on the date assigned by the employer in its notice of termination,4 or the date on which the employee quit,5 was discharged,6 was laid off,7 voluntarily resigned,8 or suffered disabling heart attack.9 None of these cases dealt with the disappearance of an employee after the completion of his regularly scheduled work period.
Two cases dealing with disappearing employees more appropriately control the instant case. While neither opinion indicates how the phrase “termination of employment” was defined, if it was defined at all, both hold that a disappearing employee’s employment did not terminate on the last day he worked but on a subsequent date. In Aetna Life Ins. Co. v. Robertson, 195 Ark. 237, 112 S.W.2d 436 (1937), the insured disappeared on February 7, 1935, and the *1039last day he worked was February 6, 1935. The court held, without discussion, that the insured’s employment terminated on February 7, the day he disappeared, not on February 6, the last day he worked. In Wells v. Equitable Life Assurance Society, 130 Neb. 722, 266 N.W. 597 (1936), the last day the insured worked was Saturday, June 5,1926, and he was next scheduled to work the following Monday. The insured disappeared on Sunday and his employer dropped him from the rolls on June 14, 1926. The insurance company asserted that the insured’s employment terminated the last day he worked, June 5. The trial court, however, instructed the jury that his employment terminated on the day his name was dropped from the employment rolls, June 14. On appeal the Supreme Court of Nebraska held that “this instruction states the law correctly, and was proper under the evidence in this case.” Id. at 725, 266 N.W. at 599 (emphasis added).
After reviewing these authorities, I remain convinced that Judge Larson’s conclusion that cessation of active work occurs “either when the employer terminated the employee or when the employee ceases reporting to work,” is correct and should be upheld.
The trial court should be sustained for another reason. The majority’s interpretation of the policy violates the spirit of statutory provisions requiring the extension of death benefits during a thirty-one day conversion period.
Arguably the law of four states, Minnesota, New York, Nevada and California, could control this case.10 However, I find it unnecessary to determine which law applies as all four states have statutory provisions requiring the extension of death benefits during the thirty-one day conversion period following the termination of employment.11
I agree with the decisions in Calió v. Equitable Life Assurance Society of America, supra, and Cheek v. Vulcan Life & Accident Ins. Co., 52 Ala.App. 192, 290 So.2d 654 (1973), writ denied, 290 So.2d 658 (Ala.S.Ct. 1974), that, in the absence of a statutory definition, an insurance company can define the phrase “termination of employment” provided the definition is reasonable and consistent with the spirit of the statutory provision. However, a definition of termination of employment in terms of cessation of active work, as construed by the majori*1040ty, violates the spirit of the statutory provisions applicable here.
The group policy expressly excludes periods of illness and authorized absence from the definition of cessation of active work. However, under the majority’s construction a regularly scheduled break between work periods, such as a weekend, would not be excluded. There exists no rational basis for excluding an authorized absence, such as a vacation, from the running of the thirty-one day period, but not excluding a regularly scheduled suspension of work, such as a weekend. More importantly, this differentiation runs counter to the normal expectations of employees and prejudices their opportunity to take full advantage of the statutorily mandated conversion period. These statutes represent the announced public policy of the state, and insurance provisions written in compliance with these statutes should be construed to fully effectuate this public policy. Any policy provision which attempts to restrict or inhibit the employee’s right to convert must be set aside. While the statutes mandating a conversion privilege may not require actual notice,12 they do require that the computation of the conversion period not be counter to normal expectations.
Appellee argues that this rationale may be appropriate in construing a conversion privilege since such a provision requires affirmative action by the employee, but that it is inappropriate in construing a provision for the extension of death benefits where no affirmative action by the employee is required. The defect in this argument is that under the statutory scheme the period for the extension of death benefits is defined as the conversion period. Thus a determination of the conversion period is necessary in order to determine whether the beneficiary is entitled to the death benefits.
I would affirm the district court.

. Ardery v. Union Underwear Co., 293 Ky. 439, 169 S.W.2d 45, 46 (1943).

. Wyatt v. Security Benefit Life Ins. Co., 178 Kan. 91, 283 P.2d 243, 247 (1955); Palmer v. Capitol Life Ins. Co., 157 Neb. 760, 61 N.W.2d 396, 398-400 (1953).

. Cheek v. Vulcan Life & Accident Ins. Co., 52 Ala.App. 192, 290 So.2d 654, 657 (1973), writ denied, 290 So.2d 658 (Ala.S.Ct.1974).

. Wyatt v. Security Benefit Life Ins. Co., supra.

. Ardery v. Union Underwear Co., supra.

. Costelle v. Metropolitan Life Ins. Co., 164 S.W.2d 75 (Mo.App.1942).

. Trucken v. Metropolitan Life Ins. Co., 303 Mass. 501, 22 N.E.2d 120 (1939).

. Palmer v. Capitol Life Ins. Co., supra.

. McGinnis v. Bankers Life Co., 39 A.D.2d 393, 334 N.Y.S.2d 270 (1972).

. The issuer of the group policy, appellee, is a New York corporation. Computer Sciences Corporation (CSC), decedent’s employer, is a Nevada corporation. The policy contains no choice of law provision, but does state that it was executed in California. The policy included within its coverage CSC’s branch in Saigon, South Viet Nam. Decedent, originally a native of Minnesota and then a resident of California, resided in Saigon for the last eight years of his life. The beneficiary, decedent’s father, is a Minnesota resident.

. Cal. Ins. Code § 10209 (West 1972); Minn. Stat.Ann. § 61A.09 (West Supp. 1976); N.Y. Ins. Law § 161(l)(e) (McKinney Supp. 1976); Nev.Rev.Stat. §§ 688B.120 and 688B.140 (1973). None of these statutes define termination of employment. The Minnesota statute is representative of all the provisions:
(g) In the case of a group term insurance policy if the policy provides that insurance of certificate holder will terminate, in case of a policy issued to an employer, by reason of termination of the certificate holder’s employment, or in the case of a policy issued to an organization of which the certificate holder is a member, by reason of termination of his membership, a provision to the effect that in case of termination of employment or membership the certificate holder shall be entitled to have issued to him by the insurer, without evidence of insurability, upon application made to the insurer within 31 days after termination of employment or membership, and upon payment of the premium applicable to the class of risk to which he belongs and to the form and amount of the policy at his then attained age, a policy of life insurance only, in any one of the forms customarily issued by the insurer except term insurance, in an amount equal to the amount of his life insurance protection under such group insurance policy at the time of such termination; and shall contain a further provision to the effect that upon the death of the certificate holder during such 31-day period and before any such individual policy has become effective, the amount of insurance for which the certificate holder was entitled to make application shall be payable as a death benefit by the insurer.
Minn.Stat.Ann. § 61A.09 (West Supp. 1976) (emphasis added).

. California, New York and Nevada all require that an employee be notified of his or her right to convert. See Cal. Ins. Code § 10209 (West 1972); N.Y. Ins. Law § 204(3) (McKinney Supp. 1976); Nev.Rev.Stat. § 688B.160 (1973).