Select Circuit Court Case Summaries

Article by Jeffrey E. Ammons , Timothy M. Iannettoni and Christopher T. Horner II Edited by Kimberly J. Ruppel

First Circuit - De Novo Review Focuses On Procedural Errors

Scibelli v. Prudential Ins. Co. of America., 666 F.3d 32 (1st Cir. 2012)

Although Prudential determined that the insured was totally disabled for the purposes of waiving the premium for an individually purchased life insurance policy, the insurer denied his estate's claim for proceeds under a group life insurance policy, based on the conclusion that the insured was not totally disabled when he stopped working for the plan sponsor, and therefore was not eligible for a premium waiver. Prudential argued that the definition of disability under the Group Policy was different than that of the Individual Policy, but in its initial determination cited a definition of disability different than that of the Group Policy at issue. Further, Prudential's initial determination was rendered over a year after the insured's employer forwarded his claim, and was only communicated to the employer - not to the insured. Seven years later, the insured inquired as to his coverage and was advised by his employer that it had received notice of a denial of the claim from the insurer.

Because Prudential was unable to prove that the insured was informed of the denial, it agreed to allow an appeal of the decision at that time. However, by that time, Prudential no longer had copies of the majority of the medical records relied upon for its original denial, nor did the insured's providers, who followed a policy of routinely destroying records after seven years. As a result, Prudential upheld its denial, based on the lack of medical records to establish that the insured was disabled when he stopped working.

The First Circuit found that the plaintiffs were "prejudiced by Prudential's seven-year delay in giving Jajuga notice that his claim had been denied." Explaining that "had Jajuga been informed within ninety days of the denial of his September 1998 claim, the additional records of his medical condition as of May 1997 would not have been routinely destroyed." Id. at 33-34. Further, the Court rejected Prudential's argument that the definitions of disability in the Individual Policy (disabled from "any gainful work") under which benefits were paid, and the Group Policy (disabled from "any job") under which benefits were denied, were materially different. Ultimately, the Court found the relevant evidence in...