Opinion
No. 99 C 5869
March 28, 2001
MEMORANDUM AND ORDER
This matter comes before this Court on Defendants CNA Financial and Continental Casualty Company's (collectively, "Continental") motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the following reasons the motion is GRANTED.
On March 17, 2000, after Mr. Tipton failed to respond to Continental's motion for summary judgment, this Court granted Continental's motion to consider its motion for summary judgment without opposition.
BACKGROUND
The facts in the Background section are derived from the Continental's Local Rule 56.1(a) Statement. Because Mr. Tipton did not submit a Local Rule 56.1(b) statement, all the facts in Continental's Local Rule 56.1(a) statement are deemed true and admitted. Midwest Imports, Ltd. v. Coval, 71 F.3d 1311, 1313 (7th Cir. 1995).
This action stems from a long-term disability insurance policy ("the Policy") issued to the Mead Corporation ("Mead") on January 1, 1984 by Continental. Plaintiff David Tipton, a former Mead employee, brought this action after Continental denied Mr. Tipton's claim for long-term disability under the Policy.
A. Relevant Policy Provisions
At issue in this case is whether Mr. Tipton submitted adequate medical documentation in his "proof of loss" to show the he was "totally disabled" as set forth in the Policy. The Policy defines "total disability" in two ways.
Total Disability means that, during the Elimination Period [(six months)] and the Insured Employee Occupation Period shown in Statement 4 [(twenty-four months)] of the Application, the Insured Employee, because of Injury or Sickness, is:
(1) continuously unable to perform the substantial and material duties the substantial and material duties of his regular occupation;
(2) under the regular care of a licensed physician other than himself; and
(3) not gainfully employed in any occupation for which he is or becomes qualified by education, training, or experience.
After the Monthly Benefits have been payable for the Insured Employee Occupation Period shown in Statement 4 [(twenty-four months)]of the Application, "Total Disability" means that, because of Injury or Sickness, the Insured Employee is:
(1) continuously unable to engage in any occupation for which he is or becomes qualified by education, training or experience; and
(2) under the regular care of a licensed physician other than himself.
Therefore, the Policy's first definition of total disability is referred to as being totally disabled from one's own occupation, while the Policy's second definition of disability is referred to as being permanently disabled from any occupation for which one is qualified.
The Policy's "Proof of Loss" section provides that
[w]ritten proof of loss must be furnished to Us within 90 days after the end of a period for which We are liable. If it is not possible to give the proof within 90 days, the claim is not affected if the proof is given as soon as reasonably possible. Unless the insured is legally incapacitated, written proof must be given within 1 year of the time it is otherwise due.
B. First Claim for Long-Term Disability
In November 1995, Mr. Tipton filed a claim for permanent disability under the Policy alleging that he suffered a heart attack on June 15, 1995. Continental received Mr. Tipton's medical records in early January, and on January 24, 1996, Continental submitted the medical records for an independent examination. The attending physician diagnosised Mr. Tipton with "ischemic heart disease." Mr. Tipton's symptoms included heart palpitations, dizziness, and recurrent V-tachycardia.
In a letter dated January 26, 1996, Continental denied Mr. Titpton's claim for "Total Disability" based on the medical records in Continental's possession at that time. Continental stated that without the results of a stress test that Mr. Tipton's doctor recommended there was no evidence to support Mr. Tipton's claim for total disability or to assess his condition.
Mr. Tipton appealed this denial to Continental. In June 1996, Continental reversed its initial decision and found Mr. Tipton totally disabled from his own occupation from December 11, 1995 through December 11, 1997. After considering integration with social security benefits, Continental offered Mr. Tipton $17,781.60 for the twenty-four months of disability in settlement of his claim. In addition to its settlement offer, Continental's June 1996 decision stated that Continental did not find Mr. Tipton "continuously unable to engage in any occupation for which he is or becomes qualified by education, training or experience." Therefore, Continental denied Mr. Tipton's claim for permanent disability for all occupations. In response, Mr. Tipton retained legal counsel and a request for an October 30, 1996 extension to submit medical information was granted.
Under the Policy, Mr. Tipton was only eligible for twenty-four months of compensation for a claim of disability from his own occupation.
In a letter dated November 14, 1996, Continental closed Mr. Tipton's appeal because it received no further medical information on or before October 30, 1996. One year later, on November 6, 1997, Mr. Tipton filed a complaint for a declaratory judgment in the Circuit Court of Cook County.
The parties eventually stipulated to a dismissal of the case with an agreement that Mr. Tipton submit additional records to Continental to support his permanent disability claim.
C. Second Claim for Long-Term Disability
In February 1998 Mr. Tipton supplied Continental with additional medical records to support his claim for total disability from all occupations. On April 17, 1998, Continental again informed Mr. Tipton that the medical records in its possession only supported that he was totally disabled from his own occupation and not that he was permanently disabled from all occupations for which he was qualified. Continental indicated that to make a determination on permanent disability from all occupations it needed a functional capacity evaluation and other information requested but never received from Mr. Tipton's physicians. Continental received additional medical records on March 3, 1999. This was the first documentation received since the April 17, 1998 letter. On April 26, 1999, Continental informed Mr. Tipton the administrative record was closed and would no longer be reviewed because the additional records submitted on March 3, 1999 did not contain the information requested in the April 17, 1996 letter and because the March 3, 1999 records did not support Mr. Tipton's contention that he no longer could perform sedentary work.
D. Procedural History
Mr. Tipton filed a complaint in the Circuit Court of Cook County on August 3, 1999 seeking: (1) a declaration that he is eligible under the Policy for long-term disability benefits until he reaches the age of 65 (Count I); and (2) damages for Continental's alleged improper claims practices in violation of the Illinois Insurance Code ( 215 ILCS 5/154.6) (Count II). Continental removed the case to the United States District Court of the Northern District of Illinois, Eastern Division based on 28 U.S.C. § 1441 and 1446 because Mr. Tipton's complaint invokes federal question jurisdiction under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1002 et seq. Continental now moves for summary judgment.
STANDARD OF REVIEW
Continental moves the court for summary judgment pursuant to Federal Rule of Civil Procedure 56. Summary judgment is appropriate "if the pleadings, deposition, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). See also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265, (1986); Cheek v. Western Southern Life Ins. Co., 31 F.3d 497, 500 (7th Cir. 1994). A genuine issue of material fact is one that might affect the outcome of the lawsuit, and factual disputes that are irrelevant will not be considered. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In determining whether a genuine issue of material fact exists, the court must construe the alleged facts in a light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Dale v. Chicago Tribune Co., 797 F.2d 458, 460 (7th Cir. 1986).
The moving party carries the initial burden of establishing that no genuine issue of material fact exists. Fed.R.Civ.P. 56(c); Celotex Corp., 477 U.S. at 323. Once the moving party has met its burden, the nonmoving party must set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Becker v. Tenenbaum Hill Assoc., Inc., 914 F.2d 107, 110 (7th Cir. 1990). The nonmoving party must do more than "show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Cop., 475 U.S. 574, 586 (1986). The nonmoving party may not merely rest upon the allegations or denials in its pleading, but instead, must "set fourth specific facts showing that there is a genuine issue for trial." See Anderson, 477 U.S. at 248. If the evidence presented is "merely colorable" or is not "significantly probative," summary judgment may be granted. Id. at 250-51 (citations omitted).
Generally, the court considers the record as a whole, and draws all reasonable inferences in the light most favorable to the nonmoving party. Regner v. City of Chicago, 789 F.2d 534, 536 (7th Cir. 1986). However, in this case, Mr. Tipton violated Local Rule 56.1(b) because he failed to respond to Continental's Local Rule 56.1(a) statement of uncontested facts and because he failed to submit any additional facts that require denial of summary judgment. Local Rule 56.1(b). Therefore, the court accepts all material facts contained in the Defendants' 56.1(a) statement as true. Johnson v. Gudmundsson, 35 F.3d 1104, 1108 (7th Cir. 1994). A district court has no obligation to search through the record to make the case of a party who does not respond to the moving party's motion for summary judgment. Herman v. City of Chicago, 870 F.2d 400, 404 (7th Cir. 1989).
ANALYSIS
Continental presents two arguments in support of its motion for summary judgment. First, Continental contends that Mr. Tipton breached the Policy's written proof of loss requirement because he failed to provide Continental with a sufficient written proof of loss within 90 days after the end of a period for which Continental was liable. Second, Continental argues that Mr. Tipton's claim is barred under the doctrine of laches because Mr. Tipton's delay in bringing his action has prejudiced Continental. The court will address each of these arguments in turn.
I. Written Proof of Loss Requirement Under the Policy
The Policy's "Proof of Loss" section provides that
[w]ritten proof of loss must be furnished to Us within 90 days after the end of a period for which We are liable. If it is not possible to give the proof within 90 days, the claim is not affected if the proof is given as soon as reasonably possible. Unless the insured is legally incapacitated, written proof must be given within 1 year of the time it is otherwise due.
Continental contends that Mr. Tipton breached the Policy's written proof of loss requirement because he failed to provide Continental with sufficient medical records in his written proof of loss to show that he was totally disabled "from any occupation for which [he] is or becomes qualified [for] by education, training or experience."
Continental contends that as the Claims Administrator of Mead's disability plan, it has discretion to determine whether Mr. Tipton is "totally disabled" under the Policy's definition. Normally, district courts review decisions of administrators of ERISA plans de novo unless the plan unambiguously confers discretion to the administrator, in which case, the courts review the decision under an arbitrary and capricious standard. Herzberger v. Standard Ins. Co., 205 F.3d 327, 331 (7th Cir. 2000). Here, Continental does not point to and this Court does not find such unambiguous language in the Policy. In Saliamonas v. CNA, Inc., 2001 WL 40990 (N.D.Ill. Jan. 10, 2001), the court held that language similar to that in the Policy here was insufficient to overcome the presumption of plenary review. Consequently, this Court will review Continental's decision to deny Mr. Tipton's claim de novo.
Regardless of which standard this Court applies, without Mr. Tipton's Local Rule 56.1(b) statement to contest Continental's Local Rule 56.1(a) statement, this Court must accept as true that Mr. Tipton's medical submissions to Continental were insufficient to prove total disability from "any occupation for which [Mr. Tipton] is or becomes qualified [for] by education, training or experience." See Auston v. Hartford Life Accident Ins., 2000 WL 816790, at *1-2 (N.D.Ill. May 23, 2000) (granting summary judgment for an insurer where the insured did not submit any Local Rule 56.1 materials, the court held that insurer's decision that the insured failed to "provide a complete and valid proof of loss was reasonable"); De Coninck v. Provident Life and Accident Ins. Co., 747 F. Supp. 627, 632-33 (D.Kan. 1990) (granting summary judgment for defendant insurer where the medical documents submitted with the insured's proof of loss did not show that the insured was totally disabled as defined in the policy). Therefore, summary judgment as to Count I (declaratory judgment) of Mr. Tipton's complaint is granted.
II. Laches
Continental also contends that Mr. Tipton's claim is barred under the doctrine of laches because Mr. Tipton's delay in bringing his action has prejudiced Continental. The doctrine of laches is applicable when an inexcusable delay prejudices a defendant. Dickinson v. Indiana State Election Bd., 933 F.2d 497, 502 (7th Cir. 1991). However, the passage of time alone does not amount to laches. Day v. Wall, 112 F. Supp.2d 833, 839 (E.D.Wis. 2000). The delay must be unreasonable and inexcusable. Id. Even if the plaintiff has no adequate excuse for the delay in filing, "the action is still viable if the defendant does not then bear its burden of showing prejudice." Union Carbide v. State Bd. of Tax Comm'rs, 992 F.2d 119, 123 (7th Cir. 1993).
Here, Mr. Tipton filed the instant action four months after Continental's final decision to deny of his disability claim. In addition, Mr. Tipton had filed a complaint on November 6, 1997, which the parties stipulated to dismiss based on Mr. Tipton being allowed to submit additional documents to Continental to prove his permanent disability. By making this agreement, Continental extended its review process and delayed any suit for a denial of benefits. Consequently, this Court finds that Mr. Tipton did not inexcusably delay his filing of the instant action.
Even if the court were to find an inexcusable delay, Continental has not met its burden of showing prejudice. To show prejudice, Continental relies on Franklin v. Continental Assurance Co., 1988 U.S. Dist. Lexis 16660 (N.D.Ill. Oct. 12, 1988). However, Franklin can be distinguished from this case. The court in Franklin found laches applicable because documentary and testimonial evidence was lost. Id. at *12-13. In Franklin, the plaintiff's treating physician had died and the insurer had destroyed the records pertaining to the plaintiff's claim.
Unlike the defendant's allegations in Franklin, Continental's allegations do not amount to prejudice. Continental alleges prejudice because Mr. Tipton's delay and failure to provide requested documentation has prevented Continental from adequately investigating and evaluating his claim. Continental also claims prejudice resulting from Mr. Tipton withdrawing authorization for Continental to obtain medical records directly from Mr. Tipton's physician. Even if accepted as true, these allegations, unlike the facts in Franklin, do not constitute prejudice. Mr. Tipton is claiming a continuous disability that prevents him from working in any occupation. Because Mr. Tipton claims that his disability still exists, an assessment of his health can still be made. Nor is there any suggestion that any medical records or documents in connection with Mr. Tipton's claim have been lost or destroyed.
Therefore, this Court finds that Continental has failed to meet its burden of showing prejudice.
III. Exercise of Supplemental Jurisdiction over Remaining State Law Claim Where the Court has Dismissed the Sole Federal Claim
It is well settled that federal courts "must make every reasonable effort to confine [themselves] to the exercise of those powers that the Constitution and Congress have [granted]," and therefore, federal courts must always ensure that the court has jurisdiction over the claims before it. Wisconsin Knife Works v. Nat'l Metal Crafters, 781 F.2d 1280, 1282 (7th Cir. 1986). In addition, pursuant to Rule 12(h)(3), "[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action." Fed.R.Civ.P. 12(h)(3).
Here, the Court's original jurisdiction over Count I (ERISA) was based on 28 U.S.C. § 1331. Section 1331 grants federal district courts original jurisdiction over cases "arising under the Constitution, laws, or treaties of the United States." The court's jurisdiction over Mr. Tipton's state law claim (Count II) was based 28 U.S.C. § 1367(a) which provides as follows:
The district courts shall have supplemental jurisdiction overall other claims that are so related to claims in the action within such original [federal] jurisdiction that they form part of the same case or controversy under Art. III of the United States Constitution.
However, this Court has granted Continental's motion for summary judgment as to Mr. Tipton's ERISA claim (Count I). Because the remaining state law claim (Count II) is based on Illinois law, this court must reassess whether it has jurisdiction to hear the remaining claim under this court's supplemental jurisdiction pursuant to 28 U.S.C. § 1367.
According to section 1367(b)(3), a district court may decline to exercise supplemental jurisdiction over pendent state law claims if the district court has dismissed all the claims on which the court's original jurisdiction was based. 28 U.S.C. § 1367(b)(3). A district court should balance the factors of judicial economy, convenience, fairness, and comity in deciding whether to exercise supplemental jurisdiction over state law claims. Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350, (1988). However, when the court dismisses all federal claims before trial, the general rule is that the district court should relinquish jurisdiction over the remaining state law claims rather than resolving them on the merits. Wright v. Associated Ins. Co. Inc., 29 F.3d 1244, 1251 (7th Cir. 1994); Hentosh v. Herman M. Finch Univ. of Health Sciences, 167 F.3d 1170, 1173 (7th Cir. 1999) (stating "[t]he district court properly recognized that in order to minimize judicial involvement in matters of state law, federal courts should not retain jurisdiction over supplemental state claims when all the federal claims have been dismissed").
In Wright, 29 F.3d at 1251, the court identified three specific situations where a district court should not relinquish supplemental jurisdiction over the state law claims after dismissing all the federal law claims: (1) when the statute of limitation on the state law claim prevents a separate filing in state court; (2) if relinquishing jurisdiction will result in the substantial duplication of effort in the state court; and (3) where the state claim is frivolous or the court decided a dispositive issue of the state claim when deciding the federal claim.
Here, the statute of limitation does not preclude Mr. Tipton from filing the state law claim in a state court. Moreover, this Court has not decided any substantive issues to this point and the dismissal of the state law claim will not lead to the duplication of effort by the state court if Mr. Tipton refiles his state law claim. Consequently, this Court chooses to follow the general rule and exercise its discretion to not retain supplemental jurisdiction over the remaining state law claim. Therefore, the court dismisses Count II without prejudice pursuant to Federal Rule of Civil Procedure 12(h)(3).
CONCLUSION
For the foregoing reasons, Defendants CNA Financial and Continental Casualty Company's motion for summary judgment [17-1] is GRANTED as to Count I of Plaintiff David Tipton's complaint. Additionally, because Count I represents the sole basis for this court's federal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(h)(3) and 28 U.S.C. § 1367, this Court dismisses Count II without prejudice. The court, having disposed of all of the litigants' claims, directs the clerk of the court to enter a Rule 58 judgment and terminate this case from the court's docket. It is so ordered.