UNUM Life Ins. Co. of America v. Ward, 526 U.S. 358 (1999)

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358

OCTOBER TERM, 1998

Syllabus

UNUM LIFE INSURANCE CO. OF AMERICA v. WARD

certiorari to the united states court of appeals for the ninth circuit

No. 97-1868. Argued February 24, 1999—Decided April 20, 1999

Defendant-petitioner UNUM Life Insurance Company of America

(UNUM) issued a long-term group disability policy to Management Analysis Company (MAC) as an insured welfare benefit plan governed by the Employee Retirement Income Security Act of 1974 (ERISA). The policy provides that proofs of claim must be furnished to UNUM, at the latest, one year and 180 days after the onset of disability. Under the admitted facts of this case, plaintiff-respondent Ward, a MAC employee, became permanently disabled on May 5, 1992. In late February or early March 1993, he qualified for state disability benefits in California, where he worked, and thereupon informed MAC of his disability. In April 1994, Ward asked MAC whether its long-term disability plan covered his condition. When MAC told him it did, Ward completed a benefits application and sent it to MAC, which processed the application and forwarded it to UNUM. UNUM received proof of Ward's claim on April 11, 1994. Because this notice was late under the policy terms, UNUM advised Ward that his claim was denied as untimely. Ward filed this suit under ERISA's civil enforcement provision, 29 U. S. C. 1132(a), to recover the disability benefits provided by the plan. He argued that, because a California employer administering an insured group health plan should be deemed to act as the insurance company's agent under Elfstrom v. New York Life Ins. Co., 67 Cal. 2d 503, 512, 432 P. 2d 731, 737, his notice of permanent disability to MAC, in February or March 1993, sufficed to supply timely notice to UNUM. The District Court rejected this argument, concluding that California's Elfstrom rule is subject to ERISA's preemption clause, 1144(a), which states that ERISA provisions "shall supersede . . . State laws" to the extent that those laws "relate to any employee benefit plan." In rendering summary judgment for UNUM, the District Court further held that the Elfstrom rule is not preserved under ERISA's saving clause, 1144(b)(2)(A), which exempts from preemption "any law of any State which regulates insurance." The Ninth Circuit reversed, identifying two grounds on which Ward might prevail. First, that court relied on California's "notice-prejudice" rule, under which an insurer cannot avoid liability although the proof of claim is untimely, unless the insurer shows it suffered actual prejudice from the delay. Following its precedent,

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