                 United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 13-3421
                        ___________________________

                                     Karen Brake

                        lllllllllllllllllllll Plaintiff - Appellant

                                            v.

The Hutchinson Technology Incorporated Group Disability Income Insurance Plan

                       lllllllllllllllllllll Defendant - Appellee
                                      ____________

                     Appeal from United States District Court
                   for the District of South Dakota - Sioux Falls
                                    ____________

                            Submitted: October 7, 2014
                            Filed: December 29, 2014
                                  ____________

Before LOKEN, BEAM, and COLLOTON, Circuit Judges.
                           ____________

BEAM, Circuit Judge.

       Karen Brake appeals the district court's1 adverse grant of summary judgment
in favor of her employer's group disability plan in this Employee Retirement Income



      1
        The Honorable Lawrence L. Piersol, United States District Judge for the
District of South Dakota.
Security Act of 1974, 29 U.S.C. §§ 1001 et seq., (ERISA) denial-of-enhanced benefits
case. We affirm.

I.    BACKGROUND

       In 1988, Brake began working at Hutchinson Technology Incorporated
(Hutchinson) in Sioux Falls, South Dakota. She was diagnosed with multiple sclerosis
(MS) in 2000, but continued to work for Hutchinson until 2008. Hutchinson, which
was based out of Minnesota,2 provided a group disability insurance plan for its
employees and the plan provided long-term disability (LTD) insurance coverage and
benefits to eligible employees. Brake first purchased disability insurance in 1988, but
the current plan at issue became effective April 1, 2005, and was issued by CNA
Group Life Assurance Company, which later changed its name to Hartford Life Group
Insurance Company. In the group disability plan, Hutchinson, as the plan
administrator, ceded sole discretionary authority to Hartford to construe the terms of
the plan and make eligibility determinations. Brake was insured under the core plan
(which provided benefits of up to 50% of an employee's monthly earnings or $7000,
whichever was less), but on April 1, 2007, Brake purchased an option for "buy-up"
coverage (which provided benefits of up to 70% of monthly income or $10,000,
whichever was less). The buy-up provisions contained a pre-existing condition
limitation which excluded buy-up coverage for a particular disability if medical
treatment for that condition was rendered within twelve months prior to the effective
date of the buy-up coverage. The pre-existing limitation dropped off after the buy-up
coverage was in existence for a year without a disability claim. In Brake's case, this
meant that if Brake was treated for her MS condition between April 1, 2006, and April
1, 2007, and then became disabled as a result of her MS prior to April 1, 2008, the

      2
        In one place, the plan states that it is "governed by the laws of the governing
jurisdiction;" in another, it states that the plan is "effective in the State of Minnesota
and governed by the laws thereof." As discussed in our analysis, we agree with the
district court's assessment that Minnesota is the governing jurisdiction.

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pre-existing condition exclusion would limit her benefits to the core plan coverage.
Of course, this is exactly what happened.

       Brake began experiencing problems with her MS in April 2007, and started
working part-time on July 26, 2007. She received short-term disability benefits from
a separate short-term disability plan at that time. On March 25, 2008, she stopped
working at Hutchinson entirely. In May 2008, she applied for LTD benefits, stating
her onset of disability as July 27, 2007. In August 2008, Hartford informed her that
her LTD benefits were approved, but not payable at the buy-up plan rate, because her
July 2007 disability was due to a pre-existing medical condition (MS) that she
received treatment for within twelve months prior to purchasing buy-up coverage on
April 1, 2007. Brake contacted Hartford and explained that her two doctor visits
during the twelve-month time frame were for a yearly pap smear and a yearly routine
MRI which she had received every year since her 2000 MS diagnosis. Hartford, in
reply, pointed to these same medical records which indicated that Brake was
increasingly less able to manage her MS conditions during the 12-month time-frame
prior to the purchase of buy-up coverage. Brake exhausted her administrative
remedies with Hartford and brought this action pursuant to ERISA.

       The district court, noting the discretionary language that the plan gave Hartford
to construe the terms of the plan, applied an abuse-of-discretion standard of review to
the decision to deny benefits. The district court found that Hartford did not abuse its
discretion in allowing regular core-plan benefits but denying buy-up benefits due to
the pre-existing condition provision. The court further found that state statutes in
South Dakota or Minnesota did not alter this conclusion. Brake appeals.

II.   DISCUSSION

      We review the district court's summary judgment decision de novo, applying
the same standard of review to the plan administrator's decision that the district court

                                          -3-
did. Riddell v. UNUM Life Ins. Co. of Am., 457 F.3d 861, 864 (8th Cir. 2006).
Because there is language in the plan granting the plan administrator discretionary
authority to construe the terms of the plan, we apply an abuse-of-discretion standard
of review to the plan administrator's decision to deny benefits and must affirm the plan
administrator's decision if it is reasonable. Kutten v. Sun Life Assurance Co. of Can.,
759 F.3d 942, 944 (8th Cir. 2014). Also because Hartford is both the insurer and has
been given authority to administer the plan, we take this inherent financial conflict of
interest into account in deciding whether an abuse of discretion has occurred. Metro.
Life Ins. Co. v. Glenn, 554 U.S. 105, 116-17 (2008).

       Brake points us to a South Dakota Department of Insurance administrative
ruling which states in part that "[a] discretionary clause is not permitted in any
individual or group health policy." Brake argues that this state administrative ruling
negates the discretionary language in the plan and mandates a de novo standard of
review. See Standard Ins. Co. v. Morrison, 584 F.3d 837, 844-45 (9th Cir. 2009)
(holding that practice of disapproving discretionary clauses by state Commissioner of
Insurance was not preempted by ERISA's exclusive remedial scheme); Am. Council
of Life Insurers v. Ross, 558 F.3d 600, 608-09 (6th Cir. 2009) (upholding state rules
prohibiting insurers from marketing products containing discretionary clauses).
Although ERISA preemption is generally broad, state statutes or regulations that
regulate insurance are "saved" from preemption under 29 U.S.C. § 1144(b)(2)(A).3
Hutchinson does not argue that the South Dakota statute is preempted; instead it
argues that Minnesota, not South Dakota, law applies to the extent that federal law
does not. Hutchinson also argues that the regulation does not apply to Brake because


      3
        The Supreme Court has set forth a two-part test to determine whether state
laws regulating insurance are saved from preemption. A state insurance statute or
regulation is not preempted if it (1) is "specifically directed toward entities engaged
in insurance" and (2) "substantially affect[s] the risk pooling arrangement between the
insurer and the insured." Ky. Ass'n of Heath Plans, Inc. v. Miller, 538 U.S. 329, 342
(2003).

                                          -4-
the South Dakota administrative ruling expressly states that it applies only to policies
issued or renewed after June 30, 2008, well after Brake became disabled and made a
claim for benefits.

       As noted, the plan language states that it is governed by the laws of Minnesota,
when applicable and not otherwise governed by federal ERISA law. "Where a choice
of law is made by an ERISA contract, it should be followed, if not unreasonable or
fundamentally unfair." Buce v. Allianz Life Ins. Co., 247 F.3d 1133, 1149 (11th Cir.
2001) (quotation omitted). We find nothing unreasonable or fundamentally unfair
about enforcing the plan's Minnesota choice-of-law provision. The policy was written
for a Minnesota corporation and was issued to Hutchinson in Minnesota. See
Hamilton v. Standard Ins. Co., 516 F.3d 1069, 1073 (8th Cir. 2008) (holding that
when an ERISA benefit plan is a group employment plan as opposed to a single
policy, it is "issued" to the employer rather than each individual employee). Further,
any argument about the fairness of not applying South Dakota law is undermined by
the administrative ruling's limitation that it only applies to policies issued or renewed
after June 30, 2008, well after all of the relevant events that occurred in the instant
case. Accordingly, Brake's argument advocating a de novo standard of review based
upon a South Dakota Department of Insurance regulation is without merit, and we
apply the abuse-of-discretion standard of review.

       With regard to the merits of the dispute, Brake cites both South Dakota and
Minnesota laws that purportedly preclude health care plans from including pre-
existing condition limitations. As we have already determined that Minnesota, not
South Dakota, law applies, we briefly address Brake's argument based upon
Minnesota law, which she identifies, for the first time in her reply brief, as Minnesota
Statute § 60A.082. This statute provides that if a group disability insurer changes, the
new insurer shall credit the period of time the person was covered by the prior plan
for the purposes of satisfying a pre-existing condition, if the insured has maintained
continuous coverage. Minn. Stat. § 60A.082. Brake admits she did not make an

                                          -5-
argument to the district court based upon this statute, nor did she cite it in her opening
brief. Furthermore, we note that by its very terms, the Minnesota statute does not
apply here because the disability insurer has not changed. Instead, Brake purchased
enhanced, "buy-up" benefits from the same insurer.

       Thus, the state statutory scheme is irrelevant to the instant matter, and our only
task is to determine if the plan's interpretation of the policy was reasonable. Our
analysis of the reasonability of Hartford's plan interpretation is informed by the
following factors: whether the decision is consistent with plan goals; whether it
renders plan terms meaningless or is internally inconsistent; whether the decision
complies with ERISA; whether the plan has previously interpreted the terms at issue
consistently; and whether the interpretation was contrary to the clear language of the
plan. See Finley v. Special Agents Mut. Benefit Ass'n, Inc., 957 F.2d 617, 621 (8th
Cir. 1992) (listing a five-factor test for reviewing plan administrator's interpretation
of plan language).

       Brake contends that Hartford's decision was inconsistent with and contrary to
the clear language of the plan. In this regard, she argues that although her disability
arose out of a pre-existing condition, she is not excluded from buy-up plan coverage
because as a long-term employee of Hutchinson, she was vested in all her rights under
the regular long-term disability plan, and was effectively "grandfathered" in to
coverage for the buy-up plan. In support, Brake cites to the following language of the
Hartford policy: "You will receive credit toward satisfaction of the Pre-existing
Condition time periods under the Policy for the time You were covered under the
Prior Policy." This provision of the policy deals with providing plan participants
credit for time spent satisfying a similar pre-existing condition limitation under a
"prior policy." The buy-up plan, however, did not replace a prior policy for which
Brake was insured, and Hartford reasonably determined that this provision does not
apply to the facts of this case. Instead, Brake made a claim under a version of the plan
with enhanced pay-out options. The enhanced pay-out plan provisions also contained

                                           -6-
a window of pre-existing condition limitations. Brake unfortunately fell into that
window. The fact that the enhanced pay-out provisions did not completely replace an
existing policy is further demonstrated by the fact that Brake was not denied benefits
altogether; she still receives long-term disability payments under the original core
plan. Accordingly, we find that the decision, based upon the passage Brake cites, is
not inconsistent or contrary to the clear language of the plan, but is instead compelled
by the clear language of the plan.

       Brake also makes a tolling argument, which although not completely clear, we
gather is that as soon as one year had passed after she was last treated for MS during
the window, she could then receive enhanced benefits under the buy-up plan. The
district court held that while a "creative" reading of the policy language "could"
support tolling instead of a complete bar, it did not have to be interpreted that way,
and it was not unreasonable for the plan to interpret the provision the way it did. We
agree and find that the plan's interpretation was consistent with the plan goals and was
not contrary to the clear language of the plan.

III.   CONCLUSION

       We affirm the district court.
                       ______________________________




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