Opinion
Civ. File No. 02-4750 (PAM/RLE)
April 8, 2004
MEMORANDUM AND ORDER
This matter is before the Court on Defendant's Motion to Dismiss or, in the alternative, for Summary Judgment. For the reasons that follow, the Motion is granted.
BACKGROUND
Plaintiff John P. Hungelmann, Jr., has been an independent insurance agent and broker since the early 1970s. Until 1997, he ran his own insurance agency, Jack Hungelmann Insurance, Inc. From 1996 through 1999, Hungelmann's agency had a disability insurance policy for its employees through Defendant Metropolitan Life Insurance Company ("Met Life").
In 1996, Hungelmann began to suffer from cardiac disease and Parkinson's disease. He had a heart attack in December 1996. The effects of his heart condition and Parkinson's caused him to close his agency in 1997 and to relocate to another agency which could provide him with administrative support. It appears as though he continues to sell insurance, although he works only part-time.
The disability insurance policy Hungelmann had with Met Life defined "disabled" in pertinent part as:
[D]ue to an Injury or Sickness, you require the regular care and attendance of a Doctor and:
1. you are unable to perform each of the material duties of your regular job; [or]
3. you, while unable to perform all of the material duties of your regular job on a full-time basis, are:
a. performing at least one of the material duties of your regular job or any other gainful work or service on a part-time or full-time basis; and
b. earning currently at least 20% less per month than your Indexed Basic Monthly Earnings due to that same Injury or Sickness.
(Mohs Aff. Ex. A at 8.)
Hungelmann applied for disability benefits in July 2001, alleging a disability onset date of November 1997. Met Life denied his application both initially and on appeal. Met Life's reasons for denying the application included that the application was untimely within the policy definitions and that the lateness of the application prejudiced Met Life because it could not adequately investigate his claim.
The policy provides that an application for benefits must be made "not later than 90 days following the end of the Elimination Period." (Id. at 17.) The policy defines Elimination Period as beginning on the first date of disability and running for 90 days. (Id. at 8.) Thus, a claimant has 180 days from the onset of disability to provide Met Life with a written notice of his claim. However, the policy further provides that, "[i]f notice or proof is not given on time, the delay will not cause a claim to be denied or reduced as long as the notice or proof is given as soon as possible." (Id. at 17.) The policy also purports to set a statute of limitations for lawsuits, providing that, "[n]o lawsuit may be started more than 3 years after the time proof must be given."
Met life contends that Hungelmann's application for disability benefits was untimely under the policy's provision for notice of claim, that the lawsuit is untimely under the policy's statute of limitations provision, and that, even if the claim and the lawsuit are not untimely, Met Life acted reasonably in denying benefits.
Hungelmann contends that his notice of claim was timely because he did not discover until July 2001 that his earnings for 1997 and 1998 had been reduced by at least 20% per month as a result of his illness. Even if the notice was not filed within 180 days of the date he was disabled within the policy terms, Hungelmann argues that the policy provides that a late notice of claim will not automatically result in a denial of benefits because the notice was given "as soon as possible." Although he does not mention the standard of review for Met Life's decision, he appears to be arguing that Met Life abused its discretion by denying the claim in light of the policy provision that states that a late notice will not cause a claim to be denied or reduced if notice is given as soon as possible.
DISCUSSION
There is no dispute that the disability insurance policy at issue is governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. The policy gives Met Life the discretion to determine benefits and interpret policy terms, and thus this Court's review of Met Life's decision is limited to determining whether Met Life abused its discretion. Tillery v. Hoffinan Enclosures. Inc., 280 F.3d 1192, 1197 (8th Cir. 2002). Hungelmann makes no argument that Met Life was operating under a conflict of interest that would justify a less-deferential review. See Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998). Thus, he appears to concede that the abuse-of-discretion standard applies.
Met Life's decision to deny benefits is a reasonable one within the terms of the plan. Under the usual definition of disability, you are disabled when you become unable to work. However, the Met Life policy also covers a person who is able to do some work but whose earnings are reduced by at least 20% as a result of a disability. Hungelmann relies on this provision to establish that the date of his disability was not until he knew that his earnings had been reduced. He argues that, under the terms of the policy, he was not disabled until his earnings were reduced, and he could not file a notice of claim until he knew that his earnings were reduced. Because he allegedly did not know until July 2001 that his income had been reduced, his notice of claim was within the 180-day period.
As Met Life points out, however, Hungelmann should have known long before July 2001 that his earnings for 1997 and 1998 had been reduced by 20%. Because he had to file income taxes, he should have known by April 1999 (when his taxes for 1998 were due) that his income had been reduced. Indeed, Hungelmann seems to admit that he knew that his income was reduced prior to July 2001, but that it was not until July 2001 that he realized that the policy covered such an earnings reduction. (See Sullivan Aff. Ex. 1 at AR00073 ("I filed this claim within 10 days of realizing the policy covered income loss caused by medical problems.").) His lack of knowledge of the policy terms, especially in light of the fact that he is a insurance broker, cannot excuse his late filing of the notice of claim.
Moreover, although the policy does not require automatic denial of late-filed claims, the policy clearly states that a late-filed claim will be accepted only if notice is filed "as soon as possible." If Hungelmann knew that his income had been reduced in April 1999, his filing of a claim in July 2001 is certainly not "as soon as possible." Met Life acted reasonably in denying Hungelmann's claim.
Met Life's determination that Hungelmann's claim was untimely under the terms of the policy and its decision to deny benefits on that basis were not an abuse of Met Life's discretion. The Motion is granted.
CONCLUSION
Accordingly, IT IS HEREBY ORDERED that Defendant's Motion to Dismiss or for Summary Judgment (Clerk Doc. No. 10) is GRANTED.