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Schmitz v. Sun Life Assurance Co., of Canada

United States District Court, D. Minnesota

October 31, 2014

JEFF SCHMITZ, Plaintiff,
v.
SUN LIFE ASSURANCE COMPANY OF CANADA, Defendant

Page 1096

Mark M. Nolan NOLAN THOMPSON & LEIGHTON, Bloomington, MN, for plaintiff.

Mark E. Schmidtke, OGLETREE DEAKINS NASH SMOAK & STEWART PC, Valparaiso, IN, for defendant.

Page 1097

MEMORANDUM OPINION AND ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

JOHN R. TUNHEIM, United States District Judge.

Plaintiff Jeffrey Schmitz brings this action pursuant to the Employee Retirement Insurance Income Security Act of 1974 (" ERISA" ), 29 U.S.C. § § 1001 et seq., seeking long-term disability (" LTD" ) benefits under a policy issued to Schmitz's former employer, Banner Engineering Inc., (" Banner" ) by Defendant Sun Life Assurance Company of Canada (" Sun Life" ).

Schmitz began working at Banner in 1993 as a director of sales and marketing and later as a corporate business manager. Schmitz was terminated in July 2008 based on poor work performance. Schmitz's coverage under the LTD policy issued by Sun Life ceased at the time of his termination. In July 2011, Schmitz was diagnosed with multiple sclerosis, and in October 2011 he brought a claim for benefits under the LTD policy contending that the mental health issues and cognitive difficulties that resulted in his poor work performance and ultimately led to his termination were caused by multiple sclerosis.

Sun Life denied Schmitz's application for LTD benefits, and Schmitz filed this lawsuit contesting that denial. Both parties now move for summary judgment. Sun Life argues that it is entitled to summary judgment on numerous grounds including that its denial of LTD benefits was neither arbitrary nor capricious. Schmitz argues that Sun Life's denial was not supported by reasonable and substantial evidence. Because the Court concludes that Sun Life's denial of LTD benefits was supported by substantial evidence in the record, the Court will grant Sun Life's motion for summary judgment and dismiss Schmitz's ERISA claim.

BACKGROUND

I. THE POLICY

During Schmitz's employment, Banner sponsored LTD benefits to its employees under an employee disability benefit plan (" the Plan" ) pursuant to ERISA. LTD benefits under the Plan were funded in part by an insurance policy (" the Policy" ) issued by Sun Life to Banner. (Second Decl. of Mark E. Schmidtke, Ex. A (Administrative Record (" AR" )) at 65, Mar. 7, 2014, Docket Nos. 32-35.)[1]

A. Policy Benefits

Under the Policy all full-time employees were eligible for LTD coverage. (AR 67.)

Page 1098

With respect to that coverage, the Policy provides:

If Sun Life receives Notice and Proof of Claim that an Employee is Totally or Partially Disabled, a Net Monthly Benefit will be payable, subject to the Limitations and Exclusions.

To be eligible to receive a Net Monthly Benefit, the Employee must:

1. satisfy the Elimination Period with the required days of Total or Partial Disability;
2. provide proof of continued Total or Partial Disability; and
3. have regular and continuing care by a Physician who provides appropriate treatment and regular examination and testing in accordance with the disabling condition.

(AR 104.) The Policy defines the elimination period as " a period of continuous days of Total or Partial Disability for which no LTD Benefit is payable." (AR 81.) The elimination period specified in the LTD schedule of benefits is ninety days and begins on the first day of total or partial disability. (AR 72, 81.)

The Policy defines " Partial Disability or Partially Disabled" as meaning that " the Employee, because of Injury or Sickness, is unable to perform the Material and Substantial Duties of his Own Occupation and the Employee has Disability Earnings of less than 80% of his Indexed Total Monthly Earnings." (AR 82.) " Total Disability" or " Totally Disabled" means that " the Employee, because of Injury or Sickness, is unable to perform the Material and Substantial Duties of his Own Occupation." (AR 83.) For employees such as Schmitz that earned more than $100,000 annually, the Policy places no durational limit on the receipt of LTD benefits in the event those employees become totally disabled within the meaning of the Policy. (AR 101, 127.)

The Policy states that " Material and Substantial Duties means, but is not limited to, the essential tasks, functions, skills or responsibilities required by employers for the performance of the Employee's Own Occupation. Material and Substantial Duties does not include any tasks, functions, skills or responsibilities that could be reasonably modified or omitted from the Employee's Own Occupation." (AR 81.) The Policy defines " Own Occupation," in turn, as " the usual and customary employment, business, trade, profession or vocation that the Employee performed as it is generally recognized in the national economy immediately prior to the first date Total or Partial Disability began. Own Occupation is not limited to the job or position the Employee performed for the Employer or performed at any specific location." (AR 82.)

" Sickness" under the Policy " means illness, disease or pregnancy." (AR 76.) And the Policy specifies that " [a]ny disability, because of Sickness, must begin while the Employee is insured under this Policy." (AR 76.) The Policy includes coverage for mental illness but such coverage ceases after a period of twenty-four months unless the employee is " confined in a Hospital or Institution licensed to provide psychiatric treatment." (AR 110.)

B. Claims

With respect to claims, the Policy provides that " Sun Life must receive Notice and Proof of Claim prior to any payment under this Policy." (AR 122.) For LTD coverage, " written notice of claim must be given to Sun Life no later than 30 days before the end of the applicable Elimination Period or, within 30 days after the termination of this Policy, if earlier." (AR 122.) Notably, an employee ceases to be insured under the Policy on " the date employment terminates." (AR 114.) As for

Page 1099

proof of an LTD claim, the Policy provides that " proof of claim must be given to Sun Life no later than 90 days after the end of the Elimination Period." (AR 122.) With respect to the content of Proof of Claim, the Policy provides that:

Proof of Claim must consist of:

- a description of the loss or disability;
- the date the loss or disability ...

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