Hughes v. Boston Mutual Life Insurance

United States Court of Appeals
For the First Circuit

No. 93-2077

GEORGE A. HUGHES,

Plaintiff, Appellant,

v.

BOSTON MUTUAL LIFE INSURANCE COMPANY,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Douglas P. Woodlock, U.S. District Judge]

Before

Torruella and Stahl, Circuit Judges,

and Carter,* District Judge.

John Silvia, Jr. with whom Long & Silvia was on brief for

appellant.
Ralph C. Copeland, with whom Copeland & Hession was on brief for

appellee.

July 18, 1994

*Of the District of Maine, sitting by designation.

STAHL, Circuit Judge. In this appeal, plaintiff-

appellant George Hughes ("Hughes") contends that the district

court erred in granting summary judgment for defendant-

appellee Boston Mutual Life Insurance Company ("Boston

Mutual") on Hughes' claim of entitlement to disability

benefits under a group insurance plan. The lower court

allowed the motion on the basis that Hughes' receipt of

medical treatment for symptoms of multiple sclerosis

triggered the "pre-existing condition" exclusion in the

insurance policy issued to Hughes by Boston Mutual. We

vacate and remand for further proceedings.

I.

BACKGROUND

Multiple sclerosis ("MS") is a grave disorder of

the nervous system. See generally Cury v. Colonial Life Ins.

Co. of America, 737 F. Supp. 847, 850 (E.D. Pa. 1990). The

cause of MS remains shrouded in mystery and a cure still lies

beyond the grasp of medical science. Symptoms of MS include

weakness, fatigue, incoordination, and
difficulty walking. Another common
symptom of multiple sclerosis is spastic
paraparesis which is a stiffness,
weakness, or spasticity in the lower
extremities. Finally, depression is very
common in multiple sclerosis patients.

Id.

MS "follows a slow, progressive course marked by a

history of exacerbations and remissions." Id. The disease

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cannot be diagnosed with certainty during the life of the

patient. Thus, depending on the results of observation and

sophisticated testing, a physician may make a diagnosis of

"most likely," "likely [or probable]," or "possible" MS. See

id.

The circumstances leading to Hughes' claim for

disability caused by MS are relatively straightforward.

Hughes became a permanent employee of the University of

Massachusetts in November 1987, and later applied to enroll

in a group disability insurance plan available to University

of Massachusetts employees through Boston Mutual. Boston

Mutual approved the application, designating February 1, 1988

as the effective date of coverage.

The disability insurance policy ("the Policy")

contains the following language setting forth an exclusion of

coverage for disability arising from a pre-existing

condition:

This policy will not cover any total
disability:

1. which is caused or contributed to by,
or results from a pre-existing condition;
and

2. which begins in the first 12 months
after the insured's effective date ["the
probationary period"], unless he received
no treatment of the condition for 6
consecutive months after his effective
date.

"Treatment" means consultation, care or
services provided by a physician

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including diagnostic measures and taking
prescribed drugs and medicines.

"Pre-existing Condition" means a sickness
or injury for which the insured received
treatment within 6 months prior to the
insured's effective date ["the pre-
probationary period"].

The events that occurred within each of the

relevant periods are essentially undisputed. During the pre-

probationary period (August 1, 1987 to February 1, 1988),

Hughes experienced a number of symptoms consistent with MS.

In August 1987, Hughes visited Dr. Daniel Sullivan,

complaining of numbness in both lower extremities, loss of

balance, and gastrointestinal problems. Dr. Sullivan

prescribed medication for the gastrointestinal symptoms, but

made no diagnosis of MS.

Although the record contains an unrebutted after-

the-fact diagnosis from Dr. David Dawson that Hughes was

"suffering from multiple sclerosis" in August 1987,

deposition testimony from Dr. Dawson and other physicians

suggests that Hughes' condition was not amenable to any type

of clinical diagnosis during the pre-probationary period.

Dr. Sullivan testified that the symptoms he observed in the

summer of 1987 "would not create the impression of multiple

sclerosis." Dr. Jeremy Worthington (who, in March 1988,

diagnosed Hughes as having MS) confirmed that the loss of

balance reported to Dr. Sullivan in August 1987 is "a very

non-specific complaint," which is "not enough to establish .

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. . [a]nything." Dr. Dawson initially testified that he had

"no opinion about the diagnosability of multiple sclerosis in

1987." Dr. Dawson did testify that Hughes' condition could

have been diagnosed as "clinically probable multiple

sclerosis" in February 19881 (after the expiration of the

pre-probationary period), but did not advance an opinion as

to the diagnosability of MS during the pre-probationary

period. Finally, Dr. Dunn, an ophthalmologist who treated

Hughes in June 1987 (before the pre-probationary period)

wrote "possible MS" in his notes, but there is no evidence

that Dr. Dunn communicated his hypothesis either to Hughes or

to any treating physician during the pre-probationary period.

During the first six months of the probationary

period (February 1, 1988 to July 1, 1988), Hughes received

1. Although Dr. Dawson actually testified that Hughes could
have been diagnosed as suffering from "probable MS" in
February 1987 (before the commencement of the pre-

probationary period), the record suggests that Dr. Dawson may
have intended to refer to February 1988. The reference to
1987 seems to spring from Dr. Dawson's understanding of a
letter he wrote to Dr. Worthington on May 31, 1988
summarizing Hughes' medical history. The typewritten text of
that letter (attached as part of Exhibit 5 to Boston Mutual's
motion for summary judgment) contains a paragraph describing
an outbreak of suspicious symptoms to February 1988, although
it appears that either the author or the recipient used a pen
or pencil to change "1987" to "1988" as well as to cross out
the paragraph recounting a second issue. To add to the
confusion, the briefs of both parties adopt the district
court's findings, which do not mention an episode in February
1987. In light of this contrary evidence and our duty to
view the evidence in the light most favorable to Hughes, we
infer that February 1988 should be the date of Dr. Dawson's
retrospective diagnosis.

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additional medical attention. On March 1, Hughes experienced

various symptoms, including "extreme fatigue, inability to

maintain balance, double vision, lack of coordination with

walking, and slurring of speech." On March 10, Dr. Jeremy

Worthington diagnosed Hughes as suffering from MS. On April

5, Hughes underwent Magnetic Resonance Imagery ("MRI")

testing, which confirmed the Worthington diagnosis.

Later in the probationary period, Hughes' worsening

condition made it increasingly difficult for him to work. At

the suggestion of Dr. Sullivan, Hughes terminated his

employment with the University of Massachusetts on July 6,

1988, and filed a disability claim with Boston Mutual.

Boston Mutual denied the claim in November 1988,

prompting Hughes to file this action in Massachusetts

Superior Court.2 Because the Policy is a group insurance

plan regulated by the Employee Retirement Income Security Act

of 1974, as amended, 29 U.S.C. 1001 et seq. (1988 & Supp.

1992) ("ERISA"), Boston Mutual removed the action to the

United States District Court for the District of

Massachusetts pursuant to 28 U.S.C. 1441 (1988 & Supp.

1992). The district court granted Boston Mutual's motion for

2. Although Count I refers simply to a breach of contract
claim, the complaint plainly seeks to recover benefits under
an ERISA-regulated plan pursuant to 29 U.S.C. 1132(a)(1)(B)
(1988). Federal and state courts have concurrent
jurisdiction over such claims. 29 U.S.C. 1132(e)(1)
(1988).

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summary judgment, Hughes v. Boston Mut. Life Ins. Co., No.

91-10179-WD (D. Mass. Aug. 27, 1993), and this appeal

followed.

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II.

PROCEDURAL PRINCIPLES

Where, as here, the administrator of an ERISA-

regulated plan does not allege that it has discretion under

the plan to interpret the terms of the insurance policy,

judicial review of a denial of benefits entails no deference

to the administrator's explanation of the plan and follows

the familiar course of an action for breach of an insurance

contract. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S.

101, 115 (1989); Allen v. Adage, Inc., 967 F.2d 695, 697-98

(1st Cir. 1992).

Similarly, an appellate court independently weighs

the merits of a motion for summary judgment, without

deference to the reasoning of the district court. See Bird

v. Centennial Ins. Co., 11 F.3d 228, 231 (1st Cir. 1993).

Summary judgment is appropriate if "there is no genuine issue

as to any material fact and . . . the moving party is

entitled to a judgment as a matter of law." Fed. R. Civ. P.

56(c). The party opposing summary judgment "may not rest

upon the mere allegations or denials of [its] pleading[s],

but . . . must set forth specific facts showing that there is

a genuine issue for trial." Fed. R. Civ. P. 56(e). See also

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986);

LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 841-42 (1st Cir.

1993), cert. denied, 114 S. Ct. 1398 (1994). Moreover, where

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the non-moving party bears the burden of persuasion at trial,

it can only avert summary judgment with a display of evidence

"sufficient to establish the existence of [the] element[s]

essential to [its] case." Celotex Corp. v. Catrett, 477 U.S.

317, 322-23 (1986). Finally, a court deciding a motion for

summary judgment cannot assume the skepticism of the fact-

finder, but must draw all reasonable inferences in favor of

the non-moving party. See Levy v. FDIC, 7 F.3d 1054, 1056

(1st Cir. 1993).

III.

DISCUSSION

While we normally look to the law of a particular

state to guide our construction of a contract, "a federal

common law of rights and obligations" governs the

interpretation of an ERISA-regulated group insurance plan.

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56 (1987);

Burnham v. Guardian Life Ins. Co. of America, 873 F.2d 486,

489 (1st Cir. 1989). The need for federal uniformity in this

area does not, however, require federal rules at variance

with the general law of the states. Indeed, we have noted

that the emerging federal common law "must embody common-

sense canons of contract interpretation," id., of which state

law is the "richest source," Rodriguez-Abreu v. Chase

Manhattan Bank, N.A., 986 F.2d 580, 585 (1st Cir. 1993).

Thus, "straightforward language in an ERISA-regulated

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insurance policy should be given its natural meaning."

Burnham, 873 F.2d at 489. Similarly, in keeping with the

rule of contra proferentem, ambiguous terms should be

strictly construed against the insurer. Rodriguez-Abreu, 986

F.2d at 586; see also Lee v. Blue Cross/Blue Shield, 10 F.3d

1547, 1551 (11th Cir. 1994) (collecting cases to demonstrate

that contra proferentem rule "has been widely adopted" among

circuit courts for resolution of ambiguities in ERISA-

regulated insurance contracts); cf. Allen, 967 F.2d at 701

n.6 (holding that contra proferentem principle does not apply

to ERISA contracts beyond the insurance context). But cf.

Brewer v. Lincoln Nat'l Life Ins. Co., 921 F.2d 150, 153-54

(8th Cir. 1990) (holding that state law policy of construing

ambiguities in favor of the insured could not govern

interpretation of ERISA policy), cert. denied, 111 S. Ct.

2872 (1991); McMahan v. New England Mut. Life Ins. Co., 888

F.2d 426, 429-30 (6th Cir. 1989) (same).3 Nevertheless,

3. Brewer and McMahan primarily involve the question of

whether a state law rule of contract construction controls
the interpretation of an ERISA contract. It is unclear
whether either court actually rejects the contra proferentem

principle as a rule of federal common law. The court in
Brewer comes closest to doing so, citing as support the

Supreme Court's statement that courts should construe
provisions in ERISA plans "`without deferring to either

party's interpretation.'" 921 F.2d at 154 (emphasis in
original) (quoting Bruch, 489 U.S. at 112). The quotation

from Bruch is accurate, but cannot support the holding in

Brewer. Bruch concerns the standard for judicial review of

benefit determinations by fiduciaries or plan administrators
under ERISA. 489 U.S. at 105. The Court's preference for de

novo review of nondiscretionary decisions, id. at 115, in no

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sympathy for either party cannot justify sophistry.

"[C]ourts have no right to torture language in an attempt to

force particular results or to convey delitescent nuances the

contracting parties neither intended nor imagined." Burnham,

873 F.2d at 489.

The exclusion clause at issue here does not apply

to pre-existing conditions in the ordinary sense. A routine

pre-existing condition clause aims to bar coverage for claims

arising from conditions existing before the effective date of

an insurance policy; such policies focus on the prior

origination or prior manifestation of the condition. See

generally 1B John Alan Appleman & Jean Appleman, Insurance

Law and Practice, 396 (1981 & Supp. 1993). The clause in

Hughes' policy might be described more accurately as a

"recent treatment" exclusion because it prohibits coverage

for any total disability which occurs during a probationary

period and is attributable to a condition for which the

insured received medical treatment just prior to the

probationary period.

way limits a court's ability to select appropriate rules of
contract interpretation in aid of its independent

construction of disputed terms. In any event, the Eighth
Circuit has since construed Brewer as allowing the

application of contra proferentem to an ERISA-regulated

insurance plan, but only after the court attempts to resolve
an apparent ambiguity by favoring the "ordinary" meaning of a
disputed term. See Delk v. Durham Life Ins. Co., 959 F.2d

104, 105-06 (8th Cir. 1992) (per curiam).

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Unlike the standard pre-existing condition clause,

the recent treatment exclusion is not strictly designed to

weed out known insurance risks; it would even permit activity

which, if not reported on an application for a policy with a

standard pre-existing condition clause, might suggest fraud.

For example, as counsel for Boston Mutual suggested at oral

argument, an insured who was disabled within the probationary

period and did not receive medical treatment for a condition

contributing to the disability during the pre-probationary

period would be entitled to coverage even if she (1) received

treatment for such a condition before (but not during) the

pre-probationary period, (2) knowingly suffered from symptoms

of the condition during the pre-probationary period without

seeking medical attention, or (3) received treatment during

the pre-probationary period for a broken arm (not a symptom

of MS) caused by a fall attributable to loss of balance

resulting from undiagnosed MS.

We also note that the exclusion is not triggered by

any medical treatment, only by treatment "for" a "sickness or

injury" (the "[c]ondition") which "caused or contributed to .

. . or results" in a "total disability." As several other

courts interpreting similar language have observed, the

exclusion does not explicitly require diagnosis. Marshall v.

UNUM Life Ins. Co., No. A3-91-201, 1992 WL 554314, at *2

(D.N.D. Nov. 6, 1992), aff'd, 13 F.3d 282 (8th Cir. 1994);

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Cury, 737 F. Supp. at 854. But neither does the exclusion

explain what constitutes treatment "for" a particular

condition. Boston Mutual suggests that treatment "for" a

condition refers to treatment of any symptom which in

hindsight appears to be a manifestation of the condition. We

acknowledge that this would be one reasonable interpretation

of the exclusion. See Bullwinkel v. New England Mut. Life

Ins. Co., 18 F.3d 429, 432-33 (7th Cir. 1994) (holding that

treatment of malignant breast lump in pre-probationary period

triggered recent treatment exclusion although lump was not

definitively diagnosed as cancer until later time); Cury, 737

F. Supp. at 854-55 (holding that treatment for symptoms of

undiagnosed multiple sclerosis in critical period activated

recent treatment exclusion). But Boston Mutual's

interpretation is not the only plausible one. Hughes

reasonably suggests that the exclusion requires some

awareness on the part of the physician or the insured that

the insured is receiving treatment for the condition itself.

See Ross v. Western Fidelity Ins. Co., 881 F.2d 142, 144 (5th

Cir. 1989) ("[T]here is at least a reasonable argument that,

under [a recent treatment exclusion], treatment for a

specific condition cannot be received unless the specific

condition is known.") (emphasis in original); Karagon v.

Aetna Life Ins. Co., 228 N.W.2d 515, 516 (Mich. Ct. App.

1975) (holding that treatment of symptoms of undiagnosed

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multiple sclerosis did not trigger recent treatment exclusion

where disease did not manifest itself with sufficient clarity

to allow reasonably accurate diagnosis and treatment).4 Nor

is there extrinsic evidence which would allow us to choose

one plausible interpretation over the other as a matter of

law. Because the exclusion is susceptible to "reasonable but

differing interpretations," we find it to be ambiguous.

Rodriguez-Abreu, 986 F.2d at 586.5 And, because we

interpret ambiguities against the insurer, id.; Lee, 10 F.3d

4. We note that Ross is not irreconcilable with Bullwinkel,

in which the court may not have had the occasion to address
the ambiguity alleged here and in Ross. Indeed, the Seventh

Circuit specifically stated that "this case is unique because
the Bullwinkels' attorney really rested his entire appeal on
the argument that a court may not infer that a lump
discovered to be cancerous in one month was also cancerous
two months before. . . . We make no statement about what
might happen if an attorney in a future case presents
different arguments and authority to the court." 18 F.3d at
433.

5. In so stating, we obviously reject the reasoning of some
other courts that have construed similar language by focusing
exclusively on the absence of a requirement for diagnosis
without seriously considering whether the language concerning
treatment "for" a particular condition is ambiguous. See

Marshall, 1992 WL 554314, at *2 ("[T]he language of the

policy in the instant case is clear and unambiguous;
diagnosis is not required by the policy for a finding that
there is a pre-existing condition."); Cury, 737 F. Supp. at

854 ("There is no requirement that a diagnosis, definite or
otherwise, of the pre-existing condition must be made during
the pre-existing condition period."). Under the
interpretation suggested by Hughes, a physician's awareness
of the sickness would probably require at least a tentative
diagnosis; however, it may be that no diagnosis would be
necessary if the insured was already aware of the condition.

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at 1551, we adopt for purposes of summary judgment the

construction offered by Hughes.6

The sole remaining task is to apply the exclusion

to the facts at hand. The parties have identified MS as the

"[c]ondition" which "caused or contributed to . . . or

result[ed]" in Hughes' "total disability." E.g., Appellee's

Br. at 14. At this stage, it is undisputed that neither

Hughes nor the physicians who treated his symptoms during the

pre-probationary period were aware that he was being treated

for "most likely MS," "probable MS," or even "possible MS."

Therefore, we cannot say as a matter of law that Hughes

received treatment "for" MS during the critical six months

before the effective date of the Policy.

IV.

6. The trier of fact must resolve any ambiguities in an
ERISA contract identified by the court and incapable of
definitive resolution on the existing record. See Allen, 967

F.2d at 698; see also Jos. Schlitz Brewing Co. v. Milwaukee

Brewery Workers' Pension Plan, 3 F.3d 994, 999 (7th Cir.

1993); Teamsters Indus. Employees Welfare Fund v. Rolls-Royce

Motor Cars, Inc., 989 F.2d 132, 135 n.2 (3rd Cir. 1993);

D.E.W., Inc. v. Local 93, Laborers' Int'l Union, 957 F.2d

196, 199 (5th Cir. 1992). Moreover, despite any interpretive
presumption favoring the insured, an insurer may seek to
overcome that presumption with probative evidence. See

Stephen L. Liebo, 13 Appleman's Insurance Law and Practice

7403, at 75 (Supp. 1993) ("Where a policy is ambiguous,
grounds, including appropriate extrinsic evidence, may be
found to show that the interpretation unfavorable to an
insured was the one reasonably understood by both parties; it
is only when the ambiguity still remains after the resort to
such extrinsic evidence that an ambiguous provision is to be
construed against the insurer."). Therefore, Boston Mutual
would remain free to introduce evidence at trial that its
interpretation is the more reasonable one.

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CONCLUSION

For the foregoing reasons, we vacate the judgment

below and remand for further proceedings consistent with this

opinion.

So ordered.

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