Clark v. SILAC Ins. Co.

1

DAVID CLARK, as guardian and conservator for James W. Carroll and personal representative of the estate of Dorothy M. Carroll; DELLA CLARK, as guardian and conservator for James W. Carroll, Plaintiffs-Appellants, v. SILAC INSURANCE COMPANY, FDBA Equitable Life & Casualty Insurance Company; JOHN DOES, 1-20, Defendants-Appellees.

No. 22-35685

United States Court of Appeals, Ninth Circuit

September 15, 2023

NOT FOR PUBLICATION

Submitted August 25, 2023 ^[**] Portland, Oregon

Appeal from the United States District Court for the District of Montana Dana L. Christensen, District Judge, Presiding No 9:20-cv-00155-DLC

Before: BENNETT, VANDYKE, and H.A. THOMAS, Circuit Judges.

MEMORANDUM ^[*]

James and Dorothy Carroll (together, the Carrolls) took out a long-term care insurance policy and a home-care recovery policy issued by SILAC Insurance Company (SILAC).^[1] Following several hospital stays between 2018 and 2021, the Carrolls sought coverage for a variety of services under the two policies. After SILAC provided coverage for only some of the services, the Carrolls filed a complaint in state court alleging that SILAC denied them additional benefits that were due under the policies. SILAC removed the case to federal court. The parties cross-filed motions for summary judgment, and the district court granted SILAC's motion for summary judgment and denied the Carrolls' motion as moot.

We review a district court's grant of summary judgment de novo. Stephens v. Union Pac. R.R. Co., 935 F.3d 852, 854 (9th Cir. 2019). "In cases where state law applies, federal courts must 'ascertain from all the available data what the state law is and apply it.'" Lawson v. Grubhub, Inc., 13 F.4th 908, 913 (9th Cir. 2021) (quoting West v. Am. Tel. &Tel. Co., 311 U.S. 223, 237 (1940)). We have jurisdiction under 28 U.S.C. § 1291. We affirm.

Although the parties dispute whether Section 33-22-1115 of the Montana Code Annotated applies to the Carrolls' long-term care insurance policy, we need not resolve that dispute. As relevant here, the Carrolls' long-term care insurance policy describes a benefit-the Home Again Benefit-that contains a prior-institutionalization requirement. The Carrolls contend that the prior-institutionalization requirement is void under both Section 33-22-1115(3) and Section 33-22-1115(2) of the Montana Code. Even assuming Section 33-22-1115 applies, the Carrolls' argument does not succeed.

Section 33-22-1115(3) prohibits an insurance company from including a prior-institutionalization requirement in a long-term care insurance policy only when the "policy . . . contains a benefit advertised, marketed, or offered as a home health care benefit." Mont. Code. Ann. § 33-22-1115(3) (1989).^[2] The policy here contains no such benefit. Under Montana law, the definition of "home health care" is limited to "services provided by a licensed home health agency to an insured in the insured's place of residence that is prescribed by the insured's attending physician as part of a written plan of care." Id. § 33-22-1001. By contrast, the Home Again Benefit "will be paid regardless of who provides for [the insured's] care, including family members, friends, and home health agencies."^[3]

While an insured may thus elect to receive the care they need from a home health agency, the policy is-by its plain terms-not limited to the types of care that such an agency can provide. And in addition to permitting any person to provide the insured's care, the policy provides coverage for "any need" the insured may have, including "adult day care." Cf. id. (limiting "home health care" to services provided "in the insured's place of residence"). The distinction between a home health care benefit and the Home Again Benefit is further highlighted by the marketing material, which states that "[a]fter a long term care stay you may need assistance in your home to help in your recovery. Your Home Again [B]enefit is designed to do just that." Thus, the benefit offers a broader array of services in a narrower set of circumstances: when coming home again after a long-term care stay.

Section 33-22-1115(2) requires that a long-term care insurance policy label any limitations or conditions on eligibility in a separate paragraph entitled "Limitations or Conditions on Eligibility for Benefits." Id. § 33-22-1115(2) (1989).^[4] Although the Carrolls' policy does not disclose the institutionalization requirement in such a paragraph, SILAC nevertheless unambiguously and prominently disclosed that requirement on the second page of the policy. As such, the error is only a "technical violation" and does not invalidate the "unambiguous policy exclusion[]" here. See High Country Paving, Inc. v. United Fire & Cas. Co., 507 P.3d 1165, 1168 (Mont. 2022).

The Carrolls also contend that they were entitled to unlimited home-care benefits under their home-care recovery policy. But the first page of the policy states that it is a "LIMITED BENEFIT POLICY," and the second page of the policy explains that a beneficiary will receive benefits only under limited circumstances. Although the Carrolls argue that the description of the home-care benefits is ambiguous, the policy is not ambiguous or incomprehensible to an ordinary consumer. Nor could the fact that SILAC's call center representatives stated that the policy had an "unlimited timeframe for benefits" and characterized the policy as being "harder-to-understand" transform the policy into one with unlimited benefits. The policy itself states that "[n]o agent may change this Policy or waive any of its provisions."

Because the Carrolls' long-term care insurance policy and home-care recovery policy do not violate Montana law, the district court correctly dismissed the Carrolls' remaining claims for bad faith, breach of fiduciary duty, and fraud.^[5]

AFFIRMED.

BENNETT, Circuit Judge, dissenting in part:

I respectfully dissent, in part. I believe the Home Again Benefit violates the Montana Long-Term Care Act ("LTCA" or "Act"), see Mont. Code Ann. § 33-221103, et seq., and therefore would reverse summary judgment on this basis and remand to the district court. I would affirm the district court as to Plaintiffs' other claims.

First, the LTCA applies. Although most provisions of the Act became effective on March 28, 1989, the Montana legislature delayed the effective date of the section relevant here-§ 33-22-1115-until March 28, 1990. 1989 Mont. Laws 810. On March 27, 1990, James and Dorothy Carroll applied for a long-term care insurance policy offered by SILAC. As part of their application, the Carrolls signed a Medical Authorization that stated: "I understand and agree that the Policy applied for will not take effect until issued by the Company." On May 18, 1990, SILAC decided to underwrite the Carrolls' policy, and on or around May 24, 1990, SILAC's Policy Issue Department completed the last step in the policy issuing process. But upon issuing the policy to the Carrolls, SILAC backdated it, stating that the policy's effective date was March 27, 1990.

SILAC now claims that because the policy's effective date occurred one day before § 33-22-1115 became effective, that provision cannot apply.^[1] But the language of § 33-22-1115 states that it applies to policies "delivered or issued for delivery" on or after March 28, 1990. See Mont. Code Ann. § 33-22-1115(1) (1989); 1989 Mont. Laws 810. Although the Carrolls' policy was backdated, it cannot have been "delivered or issued for delivery" before SILAC decided to underwrite it. In other words, though the Carrolls applied for the policy on March 27, 1990, the policy was not actually issued for delivery until after May 24, 1990- regardless of its "effective date." Thus, § 33-22-1115 applies.

Second, both the marketing materials associated with the Home Again Benefit and the language of the policy show that the policy "contains a benefit advertised, marketed, or offered as a home health care benefit." Mont. Code. Ann. § 33-22-1115(3) (1989) (emphasis added). Accordingly, it was unlawful for the policy to "condition receipt of a benefit on a prior institutionalization requirement." Id.

According to the Act, "home health care" is a defined term with five requirements. That term covers: (1) services (2) provided by a licensed home health agency (3) to an insured (4) in the insured's place of residence (5) as prescribed by a physician as part of a written plan of care. Mont. Code. Ann. § 33 22-1001. Examples of services provided by home health care are listed in the statute.^[2] Id.

The policy issued to the Carrolls states, in part:

To help in Your recovery following a Long Term Care stay, We will pay a benefit when You come home again. Home Again Benefits will be paid regardless of who provides for Your care, including family members, friends, and home health agencies. Benefits may be used for any need You may have, including adult day care or respite care.

We will pay the Home Again Benefit when:

1) You come home again following a Long Term Care stay of more than 30 days;^[3] and 2) Your Doctor certifies Home Again Care is reasonable and necessary to provide for Your health and safety.^[4]

SILAC advertised this benefit by promising consumers: "We will pay for care received from family, friends, home health agencies or anyone you choose- even respite care and adult day care are covered." This marketing aligned with the policy, which states that the Home Again Benefit "will be paid regardless of who provides for Your care, including family members, friends, and home health agencies."

Both the marketing and the policy give rise to violations under Section 3322-1115(3), which states: "A long-term care insurance policy that contains a benefit advertised marketed, or offered as a...