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Bolles v. Principal Life Insurance Co.

United States District Court, D. Colorado

September 12, 2018

GENE E. BOLLES, M.D., Plaintiff,



         This matter comes before the Court on Defendant Principal Life Insurance Company's Motion to Dismiss Plaintiff's Complaint in Its Entirety with Prejudice Pursuant to Rule 12(B)(6) [Docket No. 10] and Defendant Principal Life Insurance Company's Amended Memorandum of Law in Support of Its Motion to Dismiss [Docket No. 15]. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332.

         I. BACKGROUND[1]

         This case arises out of a dispute over long term disability benefits. Plaintiff is a neurosurgeon employed by the Denver Health and Hospital Authority. Docket No. 4 at 4-5, ¶ 2. On November 21, 2016, plaintiff became disabled when he was no longer able to perform the duties of his job. Id. at 5, ¶ 3. At the time plaintiff became disabled, the Denver Health and Hospital Authority had an insurance policy with Principal Life Insurance Company that provided plaintiff with short term and long term disability benefits. Id., ¶ 4. Plaintiff was approved for short term disability benefits through May 20, 2017. Id.[2]

         On March 24, 2017, plaintiff received a letter from defendant approving his application for long term disability benefits. Id., ¶ 5; see also Id. at 9 (Exhibit A). The letter stated that “[s]ince [plaintiff was] over the age of 72 when [he] ceased work the Long Term Disability policy limit[ed] the maximum duration of benefits to 12 months.” Id. at 9-10. In an email to the adjuster, plaintiff challenged the one-year limitation on the ground that the “own occupation” provisions of the insurance policy entitled plaintiff to long term disability benefits for two years. Id. at 5, ¶ 6. The policy defines “own occupation” as “[t]he occupation you are routinely performing when Disability begins” and “Own Occupation Period” as “[t]he first two year(s) of the Benefit Payment Period.” Id. at 6, ¶¶ 8, 10. “Own Occupation Period” is further listed in the “Long Term Disability Insurance Summary” next to the phrase “two year(s).” Id. at 5-6, ¶ 7; see also Id. at 18.[3]

         On April 3, 2017, the adjuster sent plaintiff a letter rejecting his appeal. Id. at 5, ¶ 6; see also Id. at 22. The letter did not address the “own occupation” language of the policy. Id. at 5, ¶ 6; see also Id. at 22.

         Plaintiff filed this lawsuit in the District Court for the City and County of Denver, Colorado on or about April 24, 2017. Docket No. 1 at 1; see also Docket No. 1-1 at 2-3. On May 17, 2017, defendant removed the case to this Court on the basis of diversity jurisdiction. Docket No. 1 at 2-3. In his complaint, plaintiff seeks a declaratory judgment that he is entitled to long term disability benefits for a period of two years under the terms of defendant's insurance policy. Docket No. 4 at 4.[4] On May 24, 2017, defendant filed a motion to dismiss the complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6). Docket No. 10. Defendant filed an amended memorandum of law in support of that motion on June 7, 2017. Docket No. 15. Plaintiff filed a response on June 13, 2017, Docket No. 18, to which defendant replied on June 27, 2017. Docket No. 22.


         To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege enough factual matter that, taken as true, makes the plaintiffs' “claim to relief . . . plausible on its face.” Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not shown - that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal quotation marks and alteration marks omitted). Thus, even though modern rules of pleading are somewhat forgiving, “a complaint still must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory.” Bryson, 534 F.3d at 1286 (alteration marks omitted).

         III. ANALYSIS

         Defendant argues that plaintiff has failed to state a claim for which relief can be granted under Rule 12(b)(6) because the insurance policy unambiguously limits the duration of long term disability benefit payments to 12 months for a person of plaintiff's age. Docket No. 15 at 1. In response, plaintiff contends that his long term disability benefits were governed by the “own occupation” provisions of the insurance policy, which provide for a benefits period of two years. Docket No. 18 at 5-8.

         In Colorado, “[t]he interpretation of an insurance contract is a question of law” to which traditional principles of contract interpretation apply. USAA Cas. Ins. Co. v. Anglum, 119 P.3d 1058, 1059 (Colo. 2005); Chacon v. Am. Family Mut. Ins. Co., 788 P.2d 748, 750 (Colo. 1990).[5] Thus, courts construing the terms of an insurance policy must “give effect to the intent and reasonable expectations of the parties.” Hoang v. Assurance Co. of Am., 149 P.3d 798, 801 (Colo. 2007). This means affording words in the policy “their plain meaning according to common usage” and avoiding “strained constructions.” Allstate Ins. Co. v. Starke, 797 P.2d 14, 18 (Colo. 1990). When policy language is ambiguous - i.e., when it is “reasonably susceptible on its face to more than one interpretation” upon evaluation of the policy as a whole, State Farm Mut. Auto Ins. Co. v. Stein, 940 P.2d 384, 387 (Colo. 1997) - it must be “construed against the insurer . . . and in favor of the insured.” Id. at 390.

         The parties' dispute centers on the relationship between two sets of provisions in the insurance policy - the “Benefit Payment Period” provisions and the “Own Occupation” provisions.[6] The policy defines “Benefit Payment Period” as “[t]he period of time during which benefits are payable.” Docket No. 18-1 at 8. Section M, Article 1 of the policy, which is entitled “Benefit Payment Period, ” further provides that, “if Disability begins at or after age 65, ” benefits are payable “until the later of the date of Social ...

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