Raynor v. United of Omaha Life Insurance Co.
2017 U.S. App. LEXIS 10015
| 9th Cir. | 2017Background
- Cynthia Raynor received long-term disability (LTD) benefits under a United of Omaha policy issued in Oregon; benefits were discontinued in December 2010 and Raynor exhausted internal appeals, then sued in March 2014 for wrongful termination.
- The Policy contains a three-year contractual limitations period measured from “the date written proof of loss is required,” but does not define that phrase precisely; a "Proof of Loss Requirements" clause requires claim forms within 90 days after the end of the elimination period (or within a year if delayed).
- Oregon’s Insurance Code (ORS 743.429 together with ORS 743.441) provides a three-year-plus-90-day limitations period measured from "the termination of the period for which the insurer is liable" for continuing-loss periodic payments.
- ORS 742.021 allows insurers to substitute nonstandard policy language if the Director of the Department of Consumer and Business Services approves it, but only if the substitute language is "not less favorable in any respect to the insured." Raynor argues the statutory standard is more favorable than the Policy; Omaha relies on Director approval.
- The district court granted summary judgment for Omaha, concluding the Policy’s limitation started on May 3, 2010, and barred Raynor’s suit; the Ninth Circuit certified two controlling questions of Oregon law to the Oregon Supreme Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. When the Director approves nonstandard policy language under ORS 742.021, may courts apply the Oregon Insurance Code’s standard provisions if those provisions are more favorable to the insured? | Raynor: Courts may (and should) apply the Insurance Code’s standard provisions when they are more favorable; approval by the Director does not bar judicial review of whether the approved wording is less favorable. | Omaha: Director approval precludes judicial substitution; approval conclusively establishes that the substituted wording is not less favorable, so the Policy controls. | Court certified the question to the Oregon Supreme Court (no definitive holding) and asked for authoritative guidance. |
| 2. If the statutory standard applies, when does the phrase "the period for which the insurer was liable" end under ORS 743.429 (i.e., when does the limitations period begin)? | Raynor: It ends when the claimant’s actual disability ends (so proof of loss and the limitations period may be tolled until disability termination), making timeliness a fact question. | Omaha: The period ends at a definable administrative or contractual milestone (e.g., the end of the two-year regular-occupation period or another objective date), so the suit is time-barred. | Court certified the question to the Oregon Supreme Court for resolution (no definitive holding). |
Key Cases Cited
- Providence Health Plan v. Winchester, 252 Or. App. 283 (Or. Ct. App.) (declined to decide whether contracts must comport with standard Insurance Code terms)
- Mid-Century Ins. Co. v. Turner, 219 Or. App. 44 (Or. Ct. App.) (courts may invoke ORS 742.021 to avoid policy constructions that are less favorable than the Insurance Code)
- Oglesby v. Penn Mut. Life Ins. Co., 877 F. Supp. 872 (D. Del. 1994) (majority authority reading "period for which insurer was liable" to mean the claimant’s actual disability period)
- Laidlaw v. Commercial Ins. Co. of Newark, 255 N.W.2d 807 (Minn.) (observes insureds are unlikely to delay filing proof of loss for strategic reasons)