Court Opinion

ID: 4699702
Source: CourtListenerOpinion
Date Created: 2021-06-30 00:01:08.795123+00
Date Added: 2024-06-11T08:06:05.201411
License: Public Domain

Case: 20-50953     Document: 00515919054         Page: 1    Date Filed: 06/29/2021

           United States Court of Appeals
                for the Fifth Circuit                              United States Court of Appeals
                                                                            Fifth Circuit

                                                                          FILED
                                                                      June 29, 2021
                                  No. 20-50953
                                                                     Lyle W. Cayce
                                                                          Clerk
   Enrique Talamantes,

                                                           Plaintiff—Appellant,

                                      versus

   Metropolitan Life Insurance Company,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                       for the Western District of Texas
                            USDC No. 1:18-CV-904

   Before Davis, Duncan, and Oldham, Circuit Judges.
   W. Eugene Davis, Circuit Judge:
         Plaintiff filed this ERISA suit to recover long-term disability benefits
   from MetLife, which denied coverage. The district court severed the
   coverage issue from the remaining issues in this case. The decision on
   coverage narrowed to whether Standard Insurance Co., the carrier for
   calendar year 2016, or MetLife, the carrier for 2017, provided coverage. The
   district court granted summary judgment in favor of MetLife and entered a
   final judgment dismissing the case. The court concluded that Standard,
   which had been previously dismissed, covered this claim. We disagree. Our
   reading of the Standard and MetLife policies leads us to conclude that
Case: 20-50953         Document: 00515919054              Page: 2       Date Filed: 06/29/2021

                                          No. 20-50953

   Standard provided no coverage, and coverage was afforded to Plaintiff under
   MetLife’s policy. We REVERSE and REMAND.
                                    I. BACKGROUND
           Plaintiff, Enrique Talamantes, was a Product Development Engineer
   for Becton, Dickinson and Company (“BD”). BD provided its employees
   with a group life and health plan (“the Plan”) which is governed by ERISA.
   The Plan provides long-term disability (“LTD”) coverage to BD’s eligible
   employees, including Plaintiff. During the relevant time period, BD used two
   insurers, Standard Insurance Co. (“Standard”) for the 2016 calendar year
   and MetLife Insurance Co. (“MetLife”) for the 2017 calendar year, to fund
   LTD payments under the Plan.
           On November 9, 2016, Plaintiff became disabled due to trigeminal
   neuralgia 1 and underwent microvascular decompression surgery. In light of
   this disability, Plaintiff was approved for and paid short-term disability
   (“STD”) benefits for 34 days under the Plan from November 18, 2016
   through December 22, 2016. The Plan’s STD benefits were paid by BD and
   administered by Sedgwick Claims Management Services (“Sedgwick”) and
   did not involve Standard or MetLife. On December 23, 2016, Plaintiff
   returned to full-time active work. Standard’s policy terminated on December
   31, 2016, and MetLife’s policy became effective on January 1, 2017. On
   January 12, 2017, Plaintiff stopped working and again became disabled
   because of a relapse in his trigeminal neuralgia symptoms.
           After a minor dispute over reinstating the STD benefits, Sedgwick
   approved Plaintiff for the maximum amount of STD benefits (146 days) from
   January 12, 2017 through June 7, 2017. When added to the 34 days of STD

           1
            Trigeminal neuralgia is a disease that affects trigeminal nerves in the face causing
   chronic pain.

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                                     No. 20-50953

   benefits paid earlier, these benefits were paid by BD for a total of 180 days.
   After the STD benefits were exhausted, Sedgwick forwarded Plaintiff’s claim
   for LTD benefits to Standard, the LTD benefits insurer for 2016—the year
   Plaintiff’s disability began. Without addressing the merits of Plaintiff’s
   disability, Standard denied Plaintiff’s LTD claim on the basis that it was not
   covered under its policy.
          Following denial, Plaintiff made a LTD benefits claim against MetLife
   in June 2018. MetLife was the LTD benefits insurer for calendar year 2017—
   the year Plaintiff’s disability relapsed. After receiving no response, Plaintiff
   filed the instant lawsuit against the Plan, Standard, and MetLife on October
   22, 2018, alleging that Plaintiff was entitled to recover LTD benefits under
   the civil enforcement provisions of ERISA.
          On May 30, 2019, Plaintiff settled with Standard resulting in its
   dismissal. After resolving discovery issues related to the settlement, Plaintiff,
   MetLife, and the Plan stipulated to the dismissal of the Plan leaving Plaintiff
   and MetLife the only parties in this suit. Plaintiff and MetLife then jointly
   moved to bifurcate the trial on the issue of coverage and the merits of
   Plaintiff’s disability claim under the policy. The district court granted the
   motion, and Plaintiff and MetLife jointly submitted a stipulation of the
   material facts relevant to the coverage issue. The parties filed cross motions
   for summary judgment asking the district court to decide whether MetLife
   provided coverage to Plaintiff under the terms of the policy.
          The district court granted summary judgment in favor of MetLife
   concluding that “a harmonious reading of Standard’s and MetLife’s
   insurance policies shows that MetLife owes no payable benefits to Plaintiff.”
   Plaintiff timely appealed.

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Case: 20-50953                 Document: 00515919054           Page: 4      Date Filed: 06/29/2021

                                               No. 20-50953

                                          II. DISCUSSION
             A. Standard of Review
             ERISA cases are governed by standard summary judgment rules. 2
   Therefore, a district court’s grant of summary judgment is reviewed de
   novo. 3 Summary judgment is appropriate when “there is no genuine dispute
   as to any material fact and the movant is entitled to judgment as a matter of
   law.” 4
             Interpretations of policy provisions in ERISA-regulated plans are
   governed by federal common law. 5 “When construing ERISA plan
   provisions, courts are to give the language of an insurance contract its
   ordinary and generally accepted meaning if such a meaning exists.” 6 “Only
   if the plan terms remain ambiguous after applying ordinary principles of
   contract interpretation are we compelled to apply the rule of contra
   proferentum and construe the terms strictly in favor of the insured.” 7
             B. Coverage Under the Policies
             MetLife contends it does not cover Plaintiff’s claim because the
   Standard policy provides the necessary coverage. The MetLife policy
   excludes payment of benefits if the claim is covered by another policy. 8 Both

             2
                 Green v. Life Ins. Co. of N. Am., 754 F.3d 324, 329 (5th Cir. 2014).
             3
                 Id.
             4
                 Id. (quoting Fed. R. Civ. P. 56(a)).
             5
                 Id. at 331.
             6
            Id. (quoting Provident Life & Accident Ins. Co. v. Sharpless, 364 F.3d 634, 641 (5th
   Cir. 2004)).
             7
                 Id. (quoting Wegner v. Standard Ins. Co., 129 F.3d 814, 818 (5th Cir. 1997)).
             8
            “Any benefits paid for such Disability will be equal to those that would have been
   payable to You under the Prior Plan less any amount for which the prior carrier is liable.”

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                                    No. 20-50953

   policies cover Plaintiff under the general coverage provisions of the
   respective policies. Standard’s policy states in its insuring clause, “If you
   become Disabled while insured under the Group Policy, we will pay LTD
   Benefits according to the terms of the Group Policy after we receive Proof of
   Loss.” MetLife’s policy describes when its insurance takes effect and
   provides coverage when an employee was covered under a prior plan: “If You
   are Actively at Work on the day before the Replacement Date, You will
   become insured for Disability Income Insurance under this certificate on the
   Replacement Date.” The Replacement Date is January 1, 2017, and it is
   undisputed that Plaintiff was “Actively at Work” the day before the new
   policy attached. The parties agree that MetLife will not provide coverage for
   benefits due if coverage is provided by Standard’s policy.
          MetLife argues that two general provisions in Standard’s policy
   continue to provide coverage for Plaintiff. The first is the insuring clause
   discussed previously. The second is the general rule for coverage after
   Standard’s policy ends or is changed:
          During each period of continuous Disability, we will pay LTD
          Benefits according to the terms of the Group Policy in effect on
          the date you become Disabled. Your right to receive LTD
          Benefits will not be affected by . . .
          Termination of the Group Policy after you become Disabled.
   Fortunately, the policies have more specific provisions that apply to the
   situation in this case—a transition from one policy to another during a period
   of temporary recovery.
          Plaintiff relies on a specific provision in Standard’s policy that
   excludes coverage when an employee experiences a temporary recovery.
   That specific provision describing the rules for a “Temporary Recovery”
   acknowledges:

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                                          No. 20-50953

           You may temporarily recover from your Disability and then
           become Disabled again from the same cause or causes without
           having to serve a new Benefit Waiting Period. 9 Temporary
           Recovery means you cease to be Disabled for no longer than
           the applicable Allowable Period.
   It is undisputed that Plaintiff met the conditions described above to be
   temporarily recovered. The Standard policy next details the effects of a
   Temporary Recovery. Herein lies the exclusion:
           B. Effect of Temporary Recovery
           If your Temporary Recovery does not exceed the Allowable
           Periods [90 days], the following will apply.
           1. The Predisability Earnings used to determine your LTD
           Benefit will not change.
           2. The period of Temporary Recovery will not count toward
           your Benefit Waiting Period, your Maximum Benefit Period or
           your Own Occupation Period.
           3. No LTD Benefits will be payable for the period of
           Temporary Recovery.
           4. No LTD Benefits will be payable after benefits become
           payable to you under any other disability insurance plan under
           which you become insured during your period of Temporary
           Recovery.
           5. Except as stated above, the provisions of the Group Policy
           will be applied as if there had been no interruption of your
           Disability. 10

           9
              A Benefit Waiting Period is “the period you must be continuously Disabled before
   LTD Benefits become payable.” This period is defined as “Through the end date of any
   Employer-sponsored short term disability benefits or salary continuation program, or 180
   days, if longer.” During the Benefit Waiting Period, Standard does not pay LTD benefits.
           10
                Emphasis to policy language added.

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                                     No. 20-50953

   We agree with Plaintiff that paragraph four in Standard’s policy under the
   “Effect of Temporary Recovery” clause primes the general insuring clauses
   relied on by MetLife and excludes coverage for LTD benefits under the
   precise circumstances of this case. Because Plaintiff became insured under
   MetLife’s policy during his temporary recovery, the above exclusion in
   Standard’s policy applies, and MetLife provides LTD benefits coverage.
   MetLife’s provision specifically affording coverage when an employee is
   actively at work during the transition period fits the facts here perfectly and
   provides coverage to Plaintiff.
          MetLife makes much of the fact that paragraph four says, “after
   benefits become payable” and argues that this is not the same as being merely
   eligible for coverage under a new policy. 11 This argument, however,
   overlooks the fact that whether the benefits are payable is dependent on the
   merits of Plaintiff’s disability claim. To accept MetLife’s argument that
   benefits were not payable under its policy would leave the claimant in the
   dark about whether he had coverage until he litigated his disability claim. The
   parties agreed to bifurcate the coverage and merits issues, and on remand,
   MetLife is free to litigate the disability issue and any other contested issues
   other than coverage.
          Finally, MetLife’s argument that Plaintiff’s relapse in disability makes
   the disability “continuous” and triggers paragraph five of Standard’s policy,
   captioned “Effect of Temporary Recovery,” is similarly unavailing.
   Paragraph five contains an important qualifier: “Except as stated above, the
   provisions of the Group Policy will be applied as if there had been no
   interruption of your Disability.” 12 In other words, when there is a temporary

          11
               Emphasis added.
          12
               Emphasis added.

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                                          No. 20-50953

   recovery and allowable relapse, Standard considers no interruption (thus
   continuous disability) except when, under paragraph four, the employee
   becomes insured and benefits become payable under a new policy that affords
   coverage during the temporary recovery.
           C. The Waiting Period
           Both policies provide for a waiting period during which an employee
   must be disabled before LTD benefits are triggered. The Standard policy
   required Plaintiff to be disabled for 180 days before becoming eligible for
   LTD benefits. In the event that MetLife provides a replacement policy,
   MetLife agrees to adopt the previous policy’s waiting period and waive its
   own waiting period so long as five conditions are met. 13
           Plaintiff was paid STD benefits for 180 days. It is unclear to us what,
   if any, issue is presented as to whether Plaintiff met the waiting period under
   MetLife’s waiting period waiver clause. Because this is a merits issue, we
   leave this determination to the district court to reconsider on remand.
                                    III. CONCLUSION
           The Standard and MetLife policies outline how to transition coverage
   between old and new policies, as well as provide special rules for employees

           13
              “Special Rules for Groups Previously Insured Under a Plan of Disability Income
   Insurance.” “Rules for Temporary Recovery from a Disability under the Prior Plan.” “We
   will waive the Elimination Period that would otherwise apply to a Disability under this
   certificate if You: 1. received benefits for a disability that began under the Prior Plan; 2.
   returned to work as an active Full-Time employee prior to the Replacement Date; 3.
   become Disabled, as defined in this certificate after the Replacement Date and within 90
   days of Your return to work due to a sickness or accidental injury that is the same as or
   related to the Prior Plan’s disability; 4. are no longer entitled to benefit payments for the
   Prior Plan’s disability since You are no longer insured under such Plan; and 5. would have
   been entitled to benefit payments with no further elimination period under the Prior Plan,
   had it remained in force.

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                                    No. 20-50953

   who temporarily recover during a transition. The plain language of the
   policies make it clear that Plaintiff’s benefits coverage for his alleged long-
   term disability shifted from Standard to MetLife. Based on the foregoing we
   REVERSE and REMAND for further proceedings not inconsistent with
   this opinion.

                                         9