COX v. ALLIN CORPORATION PLAN (2021)

United States Court of Appeals, Ninth Circuit.2021-02-17No. No. 16-15231, No. 18-16975

Summary · law.co

Holding. The court reversed and remanded because the 2005 California Settlement Agreement's prohibition on self-reported symptoms limitations applies to the Allin Plan, as it qualifies as a California Contract subject to California Department of Insurance jurisdiction.

Cox sought long-term disability benefits from Unum for vertigo and dizziness but was denied after 24 months based on a policy limitation excluding benefits for self-reported symptoms. The district court upheld the denial, finding that a 2005 settlement agreement between Unum and California's insurance regulator did not apply to the Allin Plan. On appeal, the court examined whether the plan constituted a 'California Contract' under that settlement agreement. The court concluded that because the coverage was issued in California to a California employee at a California subsidiary, and California law requires all disability insurance issued in the state to be approved by the Department of Insurance, the plan fell within the settlement agreement's scope. The court also noted that Unum itself had acknowledged California regulatory jurisdiction by directing Cox to file complaints with the California Department of Insurance.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether an ERISA disability plan is subject to a settlement agreement prohibiting self-reported symptoms limitations
Whether an insurance plan issued in California is subject to California Department of Insurance jurisdiction
Applicability of state insurance regulations to employer-sponsored disability plans

Procedural posture

Cox appealed the district court's judgment affirming Unum's denial of long-term disability benefits under ERISA.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

MEMORANDUM **

Elgin Cox (Cox) appeals the district courts judgment in favor of Unum Life Insurance Company (Unum) in his suit for long term disability (LTD) benefits brought pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1132. Cox, a former employee of Allin Corporation (Allin), submitted claims for LTD benefits based on his diagnoses of vertigo and dizziness. However, Unum, the plan administrator for the Allin Plan, terminated benefits after 24 months under the policys self-reported symptoms limitation. The district court affirmed Unums denial of LTD benefits, and Cox appealed. Because the parties are fully familiar with the facts and record, we recite only those facts relevant to our decision.

The district court had jurisdiction pursuant to 29 U.S.C. § 1132(a), and we have jurisdiction under 28 U.S.C. § 1291. We review the district courts underlying findings of fact for clear error, Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 962 (9th Cir. 2006), and mixed questions of fact and law, including contract interpretation, de novo, Tyler v. Cuomo, 236 F.3d 1124, 1134 (9th Cir. 2000) (citation omitted). We review the denial of benefits for abuse of discretion. See Demer v. IBM Corp. LTD Plan, 835 F.3d 893, 896 (9th Cir. 2016). We REVERSE and REMAND.

The district court erred in finding that Unums 2005 California Settlement Agreement (CSA) with the California Department of Insurance (CDOI) did not apply to the Allin Plan and thus that the CSAs prohibition on self-reported symptoms limitations did not apply. The CSA provides that LTD policy limitations on self-reported conditions “shall not be applied in existing California Contracts.”

The CSA defines a “California Contract” as “a policy of disability income insurance issued by a Respondent which is subject to the jurisdiction of and approved by the Department.” Unum argues, and the district court found, that the Allin Plan was not subject to the jurisdiction of CDOI. This was an error.

The Allin Plan is a California Contract subject to the CSAs prohibition on self-reported symptoms limitations. California law is clear that insurance provided in California is subject to the jurisdiction of CDOI. “All insurance” in California is governed by the California Insurance Code. Cal. Ins. Code § 41. All “transaction of insurance business” requires admission and certification by CDOI, and certification “shall not be granted until the applicant conforms to the requirements of this code and of the laws of this state” or face criminal penalties. Cal. Ins. Code § 700(a)–(b). Further, “[n]o group disability policy shall be issued or delivered in this state nor ․ shall an insurer provide or agree to provide group disability coverage until a copy of the form of the policy is filed with the commissioner and approved by him.” Cal Ins. Code § 10270.9. The California Insurance Code thus explicitly prohibits the provision of group disability coverage in California unless the policy is approved by CDOI. Cal. Ins. Code § 10270.9.

Here, the coverage was provided in California to a California resident at a California subsidiary of Allin. Unum recognized Cox as a California employee. Unums claims documents for Cox described his policy subgroup as “Employees of Allin Consulting of California” and specifically noted: “Our agreement: Employees of Allin Consulting of California.” The Allin Plan itself differentiates between divisions or subsidiaries of Allin Corporation, including “Allin Consulting of California” and provides different coverage for employees of Allin Consulting of California. Moreover, Unum understood that it was subject to the jurisdiction of CDOI: in its letters denying Coxs claim, it directed him to CDOI for review of the denial. The denial letters informed Cox that he “may also contact the California Department of Insurance if you wish to have them review your [ ] claim,” and provided contact information for CDOI. Unum cannot now argue that the Allin Plan is not subject to the jurisdiction of CDOI. It is irrelevant that the Allin Plan states that it is governed by Pennsylvania law because the CSA applies to all California Contracts, without regard to the policys stated governing jurisdiction. The CSAs prohibition on self-reported symptoms limitations applies to the Allin Plan.

Because we conclude that the CSA prohibits application of the Allin Plans self-reported symptoms limitation, we do not reach Coxs other arguments.

We REVERSE and REMAND for further proceedings consistent with this disposition.

FOOTNOTES

. The CSA applies to California contracts renewed “following the CSA Effective Date or December 31, 2007.” Because the 1997 Allin Plan was renewed on June 30, 2008, the CSA applies to the Allin Plan if it is a California Contract.