Marc Kutten v. Sun Life Assurance Co.

Marc Kutten sued Sun Life Assurance Company of Canada, alleging that Sun

Life improperly denied him long-term disability benefits under a disability plan

governed by the Employee Retirement Income Security Act of 1974 (ERISA). Sun

Life and Kutten filed cross-motions for summary judgment. The district court denied

Sun Life's motion for summary judgment and granted Kutten's motion. We reverse.

I.

Kutten was the president and a co-owner of Property Solutions Group LLC.

In 1994, Kutten was diagnosed with retinitis pigmentosa, a progressive eye disease

that can eventually lead to blindness. At his doctor's direction and under his doctor's

supervision, Kutten took 15,000 units a day of a non-prescribed, over-the-counter

vitamin A palmitate supplement. J.A. 431. The National Eye Institute supported

Kutten's course of treatment, and, though his vitamin A supplements could not cure

his retinitis pigmentosa, they could slow the disease's rate of progression.

Prior to June 2010, Property Solutions Group offered a group disability benefit

plan through Aetna. The Aetna plan offered maximum gross benefits of $1,000 a

month. Effective June 1, 2010, Property Solutions Group purchased a new policy

with Sun Life. The Sun Life Plan (the Plan) offered maximum gross benefits of

$6,000 a month. The Plan also included an exclusion for pre-existing conditions:

No LTD benefit will be payable for any Total or Partial Disability that

is due to:

. . .

6. a Pre-Existing Condition.

Pre-Existing Condition means during the 3 months prior to the

Employee's Effective Date of Insurance the Employee received medical

treatment, care or services, including diagnostic measures, or took

prescribed drugs or medicines for the disabling condition.1

J.A. 133. If Sun Life determined that an employee had a pre-existing condition

according to the Pre-Existing Condition clause, then the employee was not entitled

A similar clause excluded coverage 1 for any "increases in amounts of

insurance.” J.A. 133.

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to the benefits under the Plan. The employee was still entitled, however, to the same

level of benefits available to the employee under the Aetna plan. J.A. 134.

On September 21, 2010, Kutten's eye condition forced him to stop working.

He applied for long-term disability 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 the increased amount of $6,000 a month under the Plan because his retinitis

pigmentosa constituted a pre-existing condition. According to Sun Life, Kutten's

daily use of vitamin A supplements at his doctor's direction qualified as a "medical

treatment.” Because Kutten received his "medical treatment” during the three-month

period prior to the Plan's effective date, the Pre-Existing Condition clause barred full

benefits.

Kutten filed suit in February 2012. Kutten and Sun Life filed cross-motions

for summary judgment. The district court granted Kutten's motion for summary

judgment, finding that Sun Life abused its discretion in construing the Pre-Existing

Condition clause to apply to Kutten's taking of supplements. According to the court,

Sun Life's broad interpretation of the phrase "medical treatment” was contrary to the

Plan's plain language and rendered portions of the clause meaningless and internally

inconsistent. Sun Life appealed.

II.

The parties agree that the Plan grants Sun Life discretionary authority to

construe its terms. We therefore review Sun Life's decision for abuse of discretion.

See King v. Hartford Life & Acc. Ins. Co., 414 F.3d 994, 998-99 (8th Cir. 2005) (en

banc). Applying the abuse-of-discretion standard, an "administrator's interpretation

of uncertain terms in a plan 'will not be disturbed if reasonable.'” Id. at 999 (quoting

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111 (1989)). In Finley v.

Special Agents Mut. Ben. Ass'n, 957 F.2d 617, 621 (8th Cir. 1992), our court

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developed factors to assess the reasonableness of an administrator's decision. Under

Finley, we consider whether the "administrator's interpretation (1) is consistent with

the plan's goals; (2) renders any of the plan language meaningless or internally

inconsistent; (3) conflicts with the substantive or procedural requirements of ERISA;

(4) has been followed similarly in the past; and (5) is contrary to the clear language

of the policy.” Khoury v. Grp. Health Plan, Inc., 615 F.3d 946, 954 (8th Cir. 2010)

(citing Finley, 957 F.2d at 621). Though these factors "inform our analysis,” "'[t]he

dispositive principle remains . . . that where plan fiduciaries have offered a

"reasonable interpretation” of disputed provisions, courts may not replace [it] with

an interpretation of their own—and therefore cannot disturb as an "abuse of

discretion” the challenged benefits determination.'” King, 414 F.3d at 999

(alterations in original) (quoting de Nobel v. Vitro Corp., 885 F.2d 1180, 1188 (4th

Cir. 1989)).

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 parties focus their attention on Finley factors two and five: whether the

administrator's interpretation renders language meaningless or internally inconsistent

and whether the interpretation is contrary to clear language of the policy. Because

these inquiries are closely related in this case, we will analyze them together.

Kutten urges us to adopt the district court's rationale, that because the Pre-

Existing Condition clause separates "medical treatment” from "prescribed drugs or

medicines” with the conjunction "or,” Sun Life intended to exclude all "drugs or

medicines” from the phrase "medical treatment.” Kutten argues if "prescribed drugs

or medicines” are excluded from the phrase "medical treatment,” then vitamin A

supplements must be excluded from the phrase as well because vitamin supplements

require even less medical intervention than "prescribed drugs or medicines.” To

construe the phrase "medical treatment” to include vitamin supplements but exclude

"prescribed drugs or medicines” would create an internal inconsistency in the Pre-

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Existing Condition clause, and to construe the phrase "medical treatment” as broad

enough to encompass both "prescribed drugs or medicines” and vitamin supplements

would render the phrase "prescribed drugs or medicines” meaningless.

We decline to adopt Kutten's rigid construction of the Pre-Existing Condition

clause. In Smith v. United Television, Inc. Special Severance Plan, 474 F.3d 1033

(8th Cir. 2007), our court refused to "mechanically interpret” every "or” contained in

an ERISA plan as disjunctive and instead opted to "interpret the word 'or' according

to context.” Id. at 1037 (internal quotation marks omitted). In a similar manner, we

cannot construe the Pre-Existing Condition clause to require all "prescribed drugs or

medicines” to fall outside of the phrase "medical treatment.” Drawing a sharp

distinction between "prescribed drugs or medicines” and "medical treatment” is a

virtually impossible task because "prescribed drugs or medicines,” as the words are

commonly understood, are forms of "medical treatment.” A doctor's given treatment

plan may simultaneously qualify as both. Extending Kutten's proposed interpretive

method—that every term in the Pre-Existing Condition clause must be given a

distinct meaning—to the entire clause would require us to give distinct meanings to

"treatment,” "care,” and "services” as well as to "drugs” and "medicines.” Focusing

on such semantics misses the larger purpose of the clause. These terms define and

clarify what constitutes a "Pre-Existing Condition” by casting a broad net over

potential types of medical intervention. See JA Apparel Corp. v. Abboud, 568 F.3d

390, 407 n.4 (2d Cir. 2009) (Sack, J., concurring) (reasoning that the "itemization of

terms” in a list "may reflect an intent to occupy a field of meaning, not to separate it

into differentiated parts” and concluding that the "rule against surplusage” should be

"applied with a grain or two of salt when examining a list of words having similar or

even overlapping meaning”).

Our search is not for the "best or preferable interpretation” of the Pre-Existing

Condition clause's terms. Hutchins v. Champion Int'l Corp., 110 F.3d 1341, 1344

(8th Cir. 1997). An interpretation of a term is reasonable if the interpretation

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conforms with ordinary meaning, which can be derived from "the dictionary

definition of the word and the context in which it is used.” Id.; see Khoury, 615 F.3d

at 955 ("'[R]ecourse to the ordinary, dictionary definition of words is not only

reasonable, but may be necessary.'” (quoting Finely, 957 F.2d at 622)). Webster's

Third New International Dictionary defines "Medical” as, "of, relating to, or

concerned . . . with the practice of medicine.” Webster's Third New International

Dictionary 1402 (3d ed. 2002). "Medicine,” as used in the definition of "medical,”

is defined as "the science and art dealing with the maintenance of health and the

prevention, alleviation, or cure of disease,” and "medicine,” as a substance, is defined

as "a substance or preparation used in treating disease.” Id. Treatment is defined as

"the action or manner of treating a patient medically or surgically,” and to "treat” is

"to care for (as a patient or part of the body) medically.” Id. at 2435. These

definitions support the conclusion that the ordinary meaning of the phrase "medical

treatment” would encompass Kutten's vitamin A supplements. The supplements are

"medical” in the sense that they prevented or alleviated the progression of Kutten's

retinitis pigmentosa. Further, Kutten's daily supplement regimen constituted a

"treatment” because it was the "manner,” in fact the only manner, by which Kutten

could "care for” his condition. Thus, each day he continued his doctor-recommended

regimen, he received medical treatment.

Kutten attempts to portray Sun Life's interpretation of the Pre-Existing

Condition clause as absurd by analogizing his vitamin regimen to other common, selfadministered

and seemingly mild forms of personal healthcare such as applying

suntan lotion or eating a high-fiber diet. These analogies, however, are flawed. The

controversy's context and the clause's purpose enlighten our assessment of Sun Life's

interpretation. See Hutchins, 110 F.3d at 1344. Kutten had a known, debilitating

disease for which he undertook the only treatment plan he could, at his doctor's

direction. Though the Pre-Existing Condition clause's literal language may not neatly

fit Kutten's course of treatment, no one disputes that Kutten had the disease and

treated it during the relevant time period. Kutten's analogies fail because they do not

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account for the fact that his treatments were in response to his retinitis pigmentosa,

a disease that otherwise qualified him for long-term disability benefits. It is

reasonable to conclude Sun Life designed the Pre-Existing Condition clause to

exclude coverage in circumstances similar to this case, where a substantial increase

in coverage coincided with a claim for long-term disability. In this sense, Sun Life's

interpretation is consistent with the broader goals of the Plan, supporting Finley

factor one. See Cash v. Wal-Mart Grp. Health Plan, 107 F.3d 637, 643 (8th Cir.

1997). As to the remaining factors, factors three and four, we have no indication that

Sun Life's interpretation contravenes ERISA's requirements or that Sun Life has

taken inconsistent positions in the past.

With the benefit of hindsight, Sun Life could have drafted the Pre-Existing

Condition clause to more clearly cover Kutten's supplement regimen. We return,

however, to the "dispositive principle” governing our abuse-of-discretion review:

"'[W]here plan fiduciaries have offered a 'reasonable interpretation' of disputed

provisions, courts may not replace [it] with an interpretation of their own.'” See

King, 414 F.3d at 999 (second alteration in original) (quoting de Nobel, 885 F.2d at

1188). In light of an ordinary understanding of what constitutes a "medical

treatment” and the purpose of the Pre-Existing Condition clause, we hold that Sun

Life did not abuse its discretion in denying Kutten's claim for benefits under the Plan.

III.

For the reasons stated, we reverse the district court's entry of summary

judgment and remand for the district court to enter summary judgment in favor of Sun

Life.

BYE, Circuit Judge, dissenting.

I believe the district court properly concluded Sun Life abused its discretion

in denying Kutten long-term disability benefits. It was unreasonable for Sun Life to

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conclude the use of a vitamin supplement constituted medical treatment. I therefore

respectfully dissent from the decision reversing the district court.

In my view, this is a simple case of an insurer issuing a poorly-drafted policy

and then going to significant lengths to evade its terms. My major concern is with the

expansive definition of the term "medical treatment” which the majority permits. To

me, the use of a vitamin supplement does not constitute medical treatment. While the

use of prescribed drugs and medicines generally require that a person have interacted

with a medical professional, the use of vitamin supplements requires no such medical

intervention as they are available over the counter and without a prescription. Under

Sun Life's expansive interpretation, it is hard to imagine a scenario which would not

be covered by its Pre-Existing Condition clause. Any time a medical official gave

advice it would be considered medical treatment under Sun Life's interpretation.

Even simple things such as getting eight hours of sleep a night, brushing one's teeth,

exercising thirty minutes a day, or taking an aspirin for a headache would be

encompassed by this interpretation.

The majority acknowledges "Sun Life could have drafted [its policy] to more

clearly cover Kutten's supplement regimen,” and the policy's "literal language may

not neatly fit Kutten's course of treatment.” It is for precisely these reasons the

district court properly concluded Sun Life abused its discretion in denying Kutten's

claim. The Pre-Existing Condition clause's language simply does not cover the use

of a vitamin supplement. Of course, in hindsight, Sun Life may wish it had drafted

the Pre-Existing Condition clause in a different manner so it would apply to

conditions such as Kutten's retinitis pigmentosa, but the clause's language cannot be

construed to apply here.

The flaw in the majority's reasoning as contained is its decision is to essentially

ignore the policy language and, instead, apply its own definition of what should be

included within the Pre-Existing Condition clause. Intuitively, it may seem Kutten's

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retinitis pigmentosa should fall within the ordinary definition of a pre-existing

condition. Indeed, I agree Kutten had a "pre-existing condition” in the ordinary

definition of that term. Nonetheless, Kutten did not have a "Pre-Existing Condition”

as defined by Sun Life's policy, and such is the critical distinction Sun Life and the

majority have failed to make. We are not free to use the ordinary definition. Instead,

we must apply the specific language of Sun Life's policy. For future policies, Sun

Life is free to revise its policy language to more clearly exclude conditions such as

retinitis pigmentosa, but in this case it should be bound by the bargain it entered into

with Kutten.

The majority notes, "[w]ith the benefit of hindsight, Sun Life could have

drafted the Pre-Existing Condition clause to more clearly cover Kutten's supplement

regimen.” Yet, hindsight is unnecessary when Sun Life can simply rely on a federal

court to retroactively fix its poorly-drafted policies. It is not this Court's prerogative

to assist a plan administrator in evading its own poorly-chosen policy language.

Instead, our responsibility is to confirm that the plan administrator interprets its

policies in a reasonable manner. Because I view Sun Life's expansive interpretation

of medical treatment as unreasonable, I respectfully dissent.

For the reasons stated, we reverse the district court’s entry of summary

judgment and remand for the district court to enter summary judgment in favor of Sun Life.