Marc Kutten v. Sun Life Assurance Co.
759 F.3d 942
| 8th Cir. | 2014Background
- Marc Kutten, president/co-owner of Property Solutions Group, diagnosed with retinitis pigmentosa in 1994 and, under his doctor’s direction, took high-dose over-the-counter vitamin A palmitate to slow disease progression.
- Employer switched group LTD insurers from Aetna (max $1,000/mo) to Sun Life (max $6,000/mo) effective June 1, 2010; Sun Life’s plan contained a Pre-Existing Condition exclusion covering conditions for which the employee received "medical treatment, care or services, including diagnostic measures, or took prescribed drugs or medicines" in the 3 months prior to coverage.
- Kutten stopped working Sept. 21, 2010, applied for LTD Oct. 6, 2010; Sun Life initially denied but on appeal found him "Totally Disabled" and denied the increased Sun Life benefit as a pre-existing condition because he had been taking vitamin A.
- District court granted Kutten summary judgment, finding Sun Life abused its discretion by treating OTC vitamin use as "medical treatment"; Sun Life appealed.
- Eighth Circuit majority reversed, applying abuse-of-discretion review (plan grants administrator discretionary authority) and held it was reasonable to classify the doctor-directed vitamin regimen as "medical treatment," so Sun Life did not abuse its discretion.
- Judge Bye dissented, arguing the policy language does not encompass OTC vitamin use and that Sun Life’s interpretation is unreasonably expansive and effectively rewrites poorly drafted policy language.
Issues
| Issue | Plaintiff's Argument (Kutten) | Defendant's Argument (Sun Life) | Held |
|---|---|---|---|
| Whether Kutten’s doctor-recommended OTC vitamin A regimen is "medical treatment" under the Pre-Existing Condition clause | "Medical treatment" should not include OTC vitamin supplements; the clause separates "medical treatment" from "prescribed drugs or medicines," so supplements fall outside | The regimen was doctor-directed care intended to prevent/alleviate disease progression and thus is "medical treatment" within the clause | Majority: Sun Life’s interpretation reasonable; regimen qualifies as "medical treatment," so pre-existing exclusion applies; reverse district court |
| Standard of review for Sun Life’s interpretation | (Implicit) Defer to district court’s abuse-of-discretion finding | Plan grants Sun Life discretionary authority; review is for abuse of discretion | Court applied abuse-of-discretion; administrator’s reasonable interpretation stands |
| Whether construing "medical treatment" to include vitamin regimen renders other clause language meaningless or internally inconsistent | Inclusion would make "prescribed drugs or medicines" redundant and create internal inconsistency | Terms overlap; list intended to cast a broad net, not require discrete non-overlapping meanings | Majority: overlap is permissible; context and ordinary meaning support inclusion |
| Whether Sun Life’s interpretation conflicts with ERISA or past inconsistent practice | (No ERISA conflict argued by Kutten) | No conflict with ERISA; no evidence of inconsistent past positions | Court found no ERISA conflict or inconsistent application |
Key Cases Cited
- King v. Hartford Life & Acc. Ins. Co., 414 F.3d 994 (8th Cir. 2005) (abuse-of-discretion review for administrators with discretionary authority)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (U.S. 1989) (ERISA plan interpretations subject to judicial review; deference principles explained)
- Finley v. Special Agents Mut. Ben. Ass’n, 957 F.2d 617 (8th Cir. 1992) (factors to assess reasonableness of administrator’s interpretation)
- Khoury v. Grp. Health Plan, Inc., 615 F.3d 946 (8th Cir. 2010) (application of Finley factors)
- Smith v. United Television, Inc. Special Severance Plan, 474 F.3d 1033 (8th Cir. 2007) (interpret "or" by context; avoid mechanical dissection of lists)
- Hutchins v. Champion Int’l Corp., 110 F.3d 1341 (8th Cir. 1997) (ordinary/dictionary meaning informs reasonableness of plan term interpretation)
- JA Apparel Corp. v. Abboud, 568 F.3d 390 (2d Cir. 2009) (lists may be intended to occupy a field and include overlapping terms)
- Cash v. Wal-Mart Grp. Health Plan, 107 F.3d 637 (8th Cir. 1997) (consideration of plan goals in construing exclusions)
- de Nobel v. Vitro Corp., 885 F.2d 1180 (4th Cir. 1989) (courts should not replace reasonable administrator interpretations)