United States District Court, E.D. Wisconsin
JILL M. LUNDSTEN, Plaintiff,
CREATIVE COMMUNITY LIVING SERVICES, Inc. LONG TERM DISABILITY PLAN, CREATIVE COMMUNITY LIVING SERVICES, Inc., and AETNA LIFE INSURANCE COMPANY, Defendants
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Jill M Lundsten, Plaintiff, Counter Defendant: Thomas
Armstrong, LEAD ATTORNEY, von Briesen & Roper SC, Milwaukee,
WI; John C Cabaniss, Cabaniss Law, Milwaukee, WI.
Creative Community Living Services, Creative Community Living
Services Long Term Disability Plan, Aetna Life Insurance
Company, Defendants: Elizabeth A McDuffie, Gonzalez Saggio &
Harlan LLP, Milwaukee, WI.
Aetna Life Insurance Company, Creative Community Living
Services Long Term Disability Plan, Counter Claimants:
Elizabeth A McDuffie, Gonzalez Saggio & Harlan LLP,
RUDOLPH T. RANDA, United States District Judge.
matter comes before the Court on Jill M. Lundsten's
motion to alter or amend the Court's judgment dismissing
her action to recover long-term disability benefits under the
Creative Community Living Services, Inc. (" CCLS" )
Long Term Disability Plan (" the Plan" ).
Fed.R.Civ.P. 59(e). On cross-motions for summary judgment,
the Court held that Lundsten's claim was untimely
pursuant to the contractual limitations period set forth in
the Plan. 2015 WL 1143114 (E.D. Wis. March 13, 2015).
Court now agrees, contrary to its prior ruling, that
Lundsten's claim is not time-barred. This error -- and
the waste of time and resources that it engendered -- was
avoidable, and not only because the defendants'
timeliness argument is wrong. More perplexing is
Lundsten's failure to counter that argument, as she now
has, with the point that state law provides the applicable
limitations period, not the Plan language.
well-worn territory that Rule 59(e) should not be used to
present arguments that could have been presented before the
initial entry of judgment. Caisse Nationale de Credit
Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1270 (7th
Cir. 1996). This is not to say that district courts
cannot consider newly-raised post-judgment
arguments. As one court observed, Rule 59(e) " accords
no right to make untimely post-judgment arguments," but
it does not impose " a limit on a trial court's
discretion to consider such arguments." In re UAL
Corp., 360 B.R. 780, 784 (Bankr. N.D.Ill. 2007). The
to make the correct decision, not hide its head in the sand
in the name of procedural formality. To that end, and for the
reasons that follow, Lundsten's motion to alter or amend
the Court's judgment is granted.
Lundsten's action is not time-barred, the Court
re-visited the substantive arguments in the parties'
cross-motions for summary judgment. The Court now finds that
Lundsten is entitled to summary judgment on her claim that
the Plan's denial of benefits was arbitrary and
capricious. Lundsten is also entitled to an award of
attorney's fees and costs under ERISA's fee-shifting
statute. Defendants, as previously held, are entitled to
summary judgment on Lundsten's claim that CCLS failed to
provide Plan documents in a timely manner. Defendants are
also entitled to summary judgment on their claim to recover
social security disability benefits under the Plan's
offset provision. Contrary to the Court's prior ruling,
however, the defendants are not entitled to an award of fees
accordance with the foregoing and the analysis that follows,
this matter is remanded to the Plan administrator for further
proceedings consistent with this opinion.
Motion to alter or amend
ruling that Lundsten's claim was time-barred, the Court
relied upon the contractual limitations period set forth in
the Plan documents. In so doing, the Court was not aware --
because neither party highlighted this fact in their summary
judgment papers -- that the Plan is insured, not self-funded.
See Amended Complaint, ¶ 5 (" Creative
contracted with Aetna [Life Insurance Company] to pay LTD
benefits under the Plan through a policy of insurance Aetna
issued to Creative" ). More to the point, Lundsten did
not argue, in opposition to the defendants' timeliness
argument, that insured (as opposed to self-funded) plans are
subject to state insurance regulations that apply in the
relevant here, Wisconsin law provides that an " action
on disability insurance coverage must be commenced within 3
years from the time written proof of loss is required to be
furnished," Wis. Stat. § 631.83(1)(b), and
moreover, that no insurance policy may " Limit the time
for beginning an action on the policy to a time less than
that authorized by the statutes." § 631.83(3)(a).
These statutory provisions are not preempted by ERISA because
they regulate insurance within the meaning of ERISA's
savings clause. 29 U.S.C. § 1144(b)(2)(A).
determine whether a state law regulates insurance, courts
first ask whether it does so from a " common-sense view
of the matter." Unum Life Ins. Co. of Am. v.
Ward, 526 U.S. 358, 367, 119 S.Ct. 1380, 143 L.Ed.2d 462
(1999). Then, courts consider three factors to determine
whether the regulation fits within the " business of
insurance" as that phrase is used in the
McCarran-Ferguson Act, 15 U.S.C. § 1011 et seq.: first,
whether the practice has the effect of transferring or
spreading a policyholder's risk; second, whether the
practice is an integral part of the policy relationship
between the insurer and the insured; and third, whether the
practice is limited to entities within the insurance
industry. Ward, 526 U.S. at 367. These factors are
" guideposts, not separate essential elements ... that
must each be satisfied to save the State's law."
Id. at 374.
common-sense standpoint, the imposition of a minimum
limitations period for disability insurance claims involves
the regulation of disability insurance. This conclusion is
bolstered by the
three guideposts. First, a limitations period that cannot be
contractually lowered has the effect of transferring more
risk to insurance companies. Second, the statute is an
integral part of the policy relationship because it "
dictates the terms of the relationship between the insurer
and the insured, ..." Id. at 374-75. Finally,
the rule is limited to the insurance industry; indeed it is
" aimed at it." Id. at 375.
saved from preemption may still be preempted if it falls
within ERISA's " deemer clause." §
1144(b)(2)(B). State laws that purport to regulate insurance
by " deeming" a plan to be an insurance are outside
the saving clause and remain subject to preemption,
Ward at 367 n.2., but insured plans, such as the
CCLS Plan, are " subject to indirect state insurance
regulation. An insurance company that insures a plan remains
an insurer for purposes of state laws 'purporting to
regulate insurance' after application of the deemer
clause." FMC Corp. v. Holliday, 498 U.S. 52,
61, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990); see also
Moran v. Rush Prudential HMO, Inc., 230 F.3d 959,
970 (7th Cir. 2000) (" The Supreme Court's
interpretation of the deemer clause 'makes clear that if
a plan is insured, a State may regulate it indirectly through
regulation of its insurer and its insurer's insurance
contracts'" (quoting FMC Corp., 498 U.S. at
64). Accordingly, Wisconsin's regulation of insured
disability plans is not preempted under the deemer clause.
Court held that Lundsten's claim is untimely because the
Plan's three-year limitations period began running in
December of 2009 and expired in December of 2012 (Lundsten
filed suit over a month later). 2015 WL 1143114, at *1. The
Court reasoned as follows:
Lundsten argues that her claim for benefits under the
'any reasonable occupation' standard should be
treated as separate from her claim under the 'own
occupation' standard. This is incorrect because the
deadline for filing claims is defined in relation to the
elimination period, and the elimination period references a
single 'period of disability.' Accordingly, Lundsten
was asked to provide additional documentation to support the
continuation of benefits that were initially granted under
the own occupation standard. The any occupation standard
references the same period of disability that is referenced
in the elimination period. Put another way, there is no
new elimination period when the standard shifts from own
occupation to any occupation.
Id. (internal citations omitted) (emphasis added).
argues now, as she did before, that the limitation periods
for " own occupation" and " any
occupation" claims should be separate. Put another way,
and in the language of the statute, she argues that the
limitations period should run from " the time written
proof of loss is required to be furnished," §
631.83(1)(b), Wis. Stats., on her claim for benefits under
the " any reasonable occupation"
standard. The Court agrees. Unlike the Plan,
§ 631.83(1)(b) does not tie its 3-year limitations
period to a single elimination period/period of disability.
By referencing " proof of loss," the limitations
period on a claim for " any occupation" disability
benefits begins to run when the Plan requires proof of loss
on a claim for those benefits.
Therefore, Lundsten's claim is timely, and the Court must
address the substantive arguments presented in the
parties' cross-motions for summary judgment.
Motions for summary judgment
judgment is appropriate if the record evidence reveals no
genuinely disputed material fact for trial and the movant is
entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).
The Court views the evidence in the light most favorable to
the nonmoving party. Rosario v. Brawn, 670 F.3d 816,
820 (7th Cir. 2012). On cross-motions for summary judgment,
the Court is required to adopt a " Janus-like
perspective, viewing the facts for purposes of each motion
through the lens most favorable to the non-moving
party." Moore v. Watson, 738 F.Supp.2d 817, 827
(N.D.Ill. 2010). Thus, the Court " construes all
inferences in favor of the party against whom the motion
under consideration is made." Kort v. Diversified
Coll. Servs., Inc., 394 F.3d 530, 536 (7th Cir. 2005).
was employed by CCLS as a benefits coordinator in the human
resources department. Lundsten was born in 1963, has a high
school education, and began her employment with CCLS on April
16, 1996, working full time until June 23, 2009.
Lundsten's job duties included the following: providing
clerical support to the vice president of human resources;
communicating employee status changes to company sponsored
benefit plan providers; ensuring accuracy in registers and
account balances of participants in Section 125 for health
and dental plans; securing completion of all forms to compile
year-end plan data for purposes of tax completion; informing
staff on a monthly basis his/her eligibility for dental
coverage, enrollment, changes, and waiver forms; auditing
monthly benefit plan billings and preparing payment; and
verifying total hours worked of employees per pay period to
ensure status coincides.
August of 2009, Lundsten applied for disability benefits
under the CCLS Long Term Disability Plan. Lundsten indicated
that her disability was fibromyalgia, degenerative disc
disease, and arthritis. Lundsten's application was
granted under the Plan's " own occupation"
disability standard. See Plaintiff's Proposed
Findings of Fact (" PPFF" ), ¶ 4 (" From
the date that you first become disabled and until Monthly
Benefits are payable for 24 months, you will be deemed to be
disabled on any day" if you are " not able to
perform the material duties of your own occupation solely
because of: disease or injury" and your " work
earnings are 80% or less of your adjusted pre-disability
October 6, 2010, Aetna notified Lundsten that her 24-month
" own occupation" disability period would end
September 20, 2011, and that in order to be entitled to LTD
benefits after this period she must be considered disabled
from performing any reasonable occupation. Aetna requested
updated medical records evidencing Lundsten's inability
to perform " any reasonable occupation." The Plan
defines a reasonable occupation as " any gainful
activity for which you are, or may reasonably become fitted
by: education; training; or experience; and which results ...