Anderson v. Sun Life Assurance of Canada, Inc.

FILED
NOT FOR PUBLICATION
APR 06 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

DIANA C. ANDERSON, No. 13-17594

Plaintiff - Appellant, D.C. No. 4:12-cv-00145-CKJ

v.
MEMORANDUM*
SUN LIFE ASSURANCE OF CANADA,
INC. And COMMUNITY HEALTH
SYSTEMS INCORPORATED,

Defendants - Appellees.

Appeal from the United States District Court
for the District of Arizona
Cindy K. Jorgenson, District Judge, Presiding

Argued and Submitted March 15, 2016
San Francisco, California

Before: McKEOWN, WARDLAW, and TALLMAN, Circuit Judges.

Diana Anderson appeals from the summary judgment entered in favor of

Sun Life Assurance Co. (“Sun Life”) and CHS/Community Health Systems, Inc.

(“CHS”). Sun Life served as the claims administrator for an employee welfare

*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
benefit plan (“Plan”) in which Anderson participated, and CHS served as the plan

administrator. Anderson brought this action for declaratory and equitable relief

pursuant to 29 U.S.C. § 1132(a)(1)(B), a provision of the Employee Retirement

Income Security Act of 1974 (“ERISA”).1 Anderson contends CHS and Sun Life

improperly denied her long-term partial disability benefits to which she was

entitled under an insurance policy (“Policy”) that funded certain benefits for the

Plan.

We review de novo the district court’s decision on cross-motions for

summary judgment. Barboza v. Cal. Ass’n of Prof’l Firefighters, 799 F.3d 1257,

1263 (9th Cir. 2015). Likewise, in the absence of a discretionary clause, we review

de novo the claims administrator’s interpretation of the Policy and decision to deny

benefits. Standard Ins. Co. v. Morrison, 584 F.3d 837, 840 (9th Cir. 2009). We

have jurisdiction pursuant to 28 U.S.C. § 1291, and we reverse in part and remand.

1. The district court correctly entered judgment in favor of CHS. “[P]roper

defendants under § 1132(a)(1)(B) for improper denial of benefits at least include

ERISA plans, formally designated plan administrators, insurers or other entities

responsible for payment of benefits, and de facto plan administrators that

1
Anderson does not appeal the dismissal of her claim for statutory
damages under 29 U.S.C. § 1132(c).
2
improperly deny or cause improper denial of benefits.” Spinedex Physical Therapy

USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1297 (9th Cir. 2014)

(citing Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202 (9th Cir. 2011) (en

banc)). It is undisputed that CHS delegated to Sun Life all authority to administer

claims, fund benefits, and determine eligibility for long-term disability benefits

under the Plan. There was no evidence that, following this delegation, CHS had

any involvement in the payment or denial of benefits. Thus, the district court

correctly determined that CHS was not a proper defendant.2

2. The district court erred in entering summary judgment in favor of Sun Life.

Subject to certain exceptions that do not apply, ambiguous terms in an insurance

policy governed by ERISA are interpreted in the insured’s favor. Blankenship v.

Liberty Life Assur. Co. of Boston, 486 F.3d 620, 625 (9th Cir. 2007).

Construing the interlocking Policy definitions of “Partial Disability,”

“Material and Substantial Duties,” and “Own Occupation,” the district court held

that for an employee to obtain benefits based on the income she earned from a

particular occupation, the Policy unambiguously requires the employee to lose at

least 20% of her income at the same time that she becomes unable to perform the

duties of her occupation. The court found that Anderson was not eligible for

2
Anderson did not name the Plan as a defendant.
3
benefits because she became unable to perform the duties of a Registered Nurse in

2008, but did not lose income until August 2009, as the hospital that employed her

had placed her in accommodated positions that each paid a full nurse’s salary until

that time.

We disagree with the district court’s conclusion. We conclude that the

Policy was ambiguous as to whether it requires that the loss of income and

inability to perform the duties of one’s occupation occur simultaneously. An

equally reasonable construction of the policy terms allows an employee to make a

claim for long-term partial disability benefits even if the loss of income occurs

after the onset of the inability to perform. Because the Policy was “fairly

susceptible” of this interpretation, under which Anderson was eligible for benefits,

the district court erred in adopting the more restrictive interpretation. Id.3

3. Nor is there merit to Sun Life’s position that the Policy, effective January 1,

2009, unambiguously prevented Anderson from making a claim based on her

injury in 2008. The Policy provides that a covered “Injury” “must occur and any

3
While not dispositive of the result, public policy favors a construction
of the Policy that encourages partially disabled individuals to continue working,
even at a lower salary. Under Sun Life’s construction, a worker has an incentive to
withdraw from the workforce when she is injured, rather than risk a claims
adjudication that a lower-paid, accommodated position is her “Own Occupation”
under the Policy.
4
disability must begin while the Employee is insured under this Policy.” As Sun

Life acknowledges, at the time Anderson was injured, she was covered under the

Policy pursuant to a Continuity of Coverage provision. Sun Life contends

coverage under this provision is distinct from eligibility for benefits. However, the

definition of “Injury” is ambiguous as to whether the period for which an employee

is “insured under this Policy” includes the effective period of the immediately prior

policy, to which the Continuity of Coverage provision issued by Sun Life extends

coverage. Construing this ambiguity in favor of coverage, id., the definition of

“Injury” does not bar Anderson’s 2009 claim based on the disabling injury that

occurred in 2008.

4. We remand with instructions to enter summary judgment in favor of

Anderson and against Sun Life, and direct the district court to calculate the past

and future benefits to which Anderson is entitled.4

Each party shall bear its own costs and fees on appeal.

AFFIRMED IN PART; REVERSED IN PART; REMANDED WITH

INSTRUCTIONS.

4
Because we remand for a determination of benefits, we need not reach
Anderson’s claim for breach of fiduciary duty.
5