Submitted October 7, 2014
Appeal from United States District Court for the District of South Dakota - Sioux Falls.
For Karen Brake, Plaintiff - Appellant: Nosser Dean Nasser, Jr., Sioux Falls, SD.
For The Hutchinson Technology Incorporated Group Disability Income Insurance Plan, Defendant - Appellee: James Ellis Moore, WOODS & FULLER, Sioux Falls, SD; Eric Christian Tostrud, LOCKRIDGE & GRINDAL, Minneapolis, MN.
Before LOKEN, BEAM, and COLLOTON, Circuit Judges.
BEAM, Circuit Judge.
Karen Brake appeals the district court's adverse grant of summary judgment in favor of her employer's group disability plan in this Employee Retirement Income Security Act of 1974, 29 U.S.C. § § 1001 et seq., (ERISA) denial-of-enhanced benefits case. We affirm.
In 1988, Brake began working at Hutchinson Technology Incorporated (Hutchinson) in Sioux Falls, South Dakota. She was diagnosed with multiple sclerosis (MS) in 2000, but continued to work for Hutchinson until 2008. Hutchinson, which was based out of Minnesota, provided a group disability insurance plan for its employees and the plan provided long-term disability (LTD) insurance coverage and benefits to eligible employees. Brake first purchased disability insurance in 1988, but the current plan at issue became effective April 1, 2005, and was issued by CNA Group Life Assurance Company, which later changed its name to Hartford Life Group Insurance Company. In the group disability plan, Hutchinson, as the plan administrator, ceded sole discretionary authority to Hartford to construe the terms of the plan and make eligibility determinations. Brake was insured under the core plan (which provided benefits of up to 50% of an employee's monthly earnings or $7000, whichever was less), but on April 1, 2007, Brake purchased an option for " buy-up" coverage (which provided benefits of up to 70% of monthly income or $10,000, whichever was less). The buy-up provisions contained a pre-existing condition limitation which excluded buy-up coverage for a particular disability if medical treatment for that condition was rendered within twelve months prior to the effective date of the buy-up coverage. The pre-existing limitation dropped off after the buy-up coverage was in existence for a year without a disability claim. In Brake's case, this meant that if Brake was treated for her MS condition between April 1, 2006, and April 1, 2007, and then became disabled as a result of her MS prior to April 1, 2008, the pre-existing condition exclusion would limit her benefits to the core plan coverage. Of course, this is exactly what happened.
Brake began experiencing problems with her MS in April 2007, and started working part-time on July 26, 2007. She received short-term disability benefits from a separate short-term disability plan at that time. On March 25, 2008, she stopped working at Hutchinson entirely. In May 2008, she applied for LTD benefits, stating her onset of disability as July 27, 2007. In August 2008, Hartford informed her that her LTD benefits were approved, but not payable at the buy-up plan rate, because her July 2007 disability was due to a pre-existing medical condition (MS) that she received treatment for within twelve months prior to purchasing buy-up coverage on April 1, 2007. Brake contacted Hartford and explained that her two doctor visits during the twelve-month time frame were for a yearly pap smear and a
yearly routine MRI which she had received every year since her 2000 MS diagnosis. Hartford, in reply, pointed to these same medical records which indicated that Brake was increasingly less able to manage her MS conditions during the 12-month time-frame prior to the purchase of buy-up coverage. Brake exhausted her ...