ERISA-Eighth Circuit Holds That Insurer’s Interpretation Of Plan’s Pre-Existing Condition Is Reasonable, And Therefore Upheld The Insurer’s Denial Of Long-Term Disability Benefits

In Kutten v. Sun Life Assurance Company of Canada, No. 13-2559 (8th Cir. 2014), the plaintiff, Marc Kutten (“Kutten”) sued Sun Life Assurance Company of Canada (“Sun Life”), alleging that SunLife improperly denied him long-term disability (“LTD”) benefits under a disability plan governed by ERISA. The district court granted Kutten’s motion for summary judgment, and Sun Life appeals.

In this case, in 1994,Kutten was diagnosed with retinitis pigmentosa, a progressive eye disease that can eventually lead to blindness. Effective June 1, 2010, his company purchased a new disability policy with SunLife (the “Plan”). The Plan included an exclusion for “pre-existing conditions”, defined in the Plan as a condition for which, during the 3 months prior to the Plan’s effective date, the employee received medical treatment, care or services, including diagnostic measures, or took prescribed drugs or medicines for the disabling condition. On September 21, 2010, Kutten’s eye condition forced him to stop working. He applied for LTD benefits under the Plan on October 6, 2010. After initially denying Kutten’s claim, Sun Life concluded on appeal that Kutten was “Totally Disabled.” Nevertheless, Sun Life determined that Kutten was not entitled to LTD benefits under the Plan, due to his use of vitamin A supplements at his doctor’s direction being a “medical treatment” which invoked the pre-existing condition exclusion. Kutten then filed this suit, seeking the LTD benefits.

In analyzing the case, the Eighth Circuit Court of Appeals (the “Court”) noted that, due to Sun Life’s discretionary authority to construe the Plan’s terms, the Court will review Sun Life’s decision to deny the LTD benefits for abuse of discretion. It then said that this case turns on a narrow question: Was it reasonable for Sun Life to conclude that Kutten’s vitamin A supplements constituted a “medical treatment”? The Court said that Sun Life offered a reasonable interpretation of the Plan, based on the purpose of the pre-existing condition exclusion and the normal understanding of what constitutes “medical treatment”. As such Sun Life’s conclusion as to the applicability of the pre-existing condition exclusion is reasonable. Therefore, the Court reversed the district court’s summary judgment, and remanded the case for the district court to enter summary judgment in favor of Sun Life.

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