
USCA1 Opinion

	




                            United States Court of Appeals                            United States Court of Appeals                                For the First Circuit                                For the First Circuit                                 ____________________        No. 93-2077                                  GEORGE A. HUGHES,                                Plaintiff, Appellant,                                          v.                        BOSTON MUTUAL LIFE INSURANCE COMPANY,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Douglas P. Woodlock, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                         Torruella and Stahl, Circuit Judges,                                              ______________                             and Carter,* District Judge.                                          _______________                                 ____________________            John  Silvia,  Jr. with  whom  Long  & Silvia  was  on  brief  for            __________________             ______________        appellant.            Ralph C. Copeland, with  whom Copeland & Hession  was on brief for            _________________             __________________        appellee.                                 ____________________                                    July 18, 1994                                 ____________________        ____________________        *Of the District of Maine, sitting by designation.                      STAHL, Circuit Judge.   In this appeal,  plaintiff-                             _____________            appellant George Hughes ("Hughes") contends that the district            court  erred  in  granting  summary  judgment  for defendant-            appellee   Boston  Mutual  Life  Insurance  Company  ("Boston            Mutual")  on  Hughes'  claim  of  entitlement  to  disability            benefits  under a  group  insurance plan.    The lower  court            allowed  the  motion on  the  basis that  Hughes'  receipt of            medical   treatment  for   symptoms  of   multiple  sclerosis            triggered  the  "pre-existing  condition"  exclusion  in  the            insurance  policy  issued to  Hughes  by Boston  Mutual.   We            vacate and remand for further proceedings.                                          I.                                          I.                                          __                                      BACKGROUND                                      BACKGROUND                                      __________                      Multiple sclerosis  ("MS") is  a grave  disorder of            the nervous system.  See generally Cury v. Colonial Life Ins.                                 ___ _________ ____    __________________            Co.  of America, 737 F. Supp. 847,  850 (E.D. Pa. 1990).  The            _______________            cause of MS remains shrouded in mystery and a cure still lies            beyond the grasp of medical science.  Symptoms of MS include                      weakness,  fatigue,  incoordination,  and                      difficulty   walking.     Another  common                      symptom of multiple sclerosis  is spastic                      paraparesis   which   is   a   stiffness,                      weakness,  or  spasticity  in  the  lower                      extremities.  Finally, depression is very                      common in multiple sclerosis patients.            Id.              ___                      MS "follows a slow,  progressive course marked by a            history  of exacerbations and remissions."   Id.  The disease                                                         ___                                         -2-                                          2            cannot be diagnosed  with certainty  during the  life of  the            patient.  Thus,  depending on the results of  observation and            sophisticated testing,  a physician  may make a  diagnosis of            "most likely," "likely [or probable]," or "possible" MS.  See                                                                      ___            id.            ___                      The  circumstances  leading  to Hughes'  claim  for            disability  caused  by  MS  are  relatively  straightforward.            Hughes  became  a permanent  employee  of  the University  of            Massachusetts in  November 1987, and later  applied to enroll            in a group disability  insurance plan available to University            of Massachusetts  employees through  Boston  Mutual.   Boston            Mutual approved the application, designating February 1, 1988            as the effective date of coverage.                      The  disability  insurance  policy  ("the  Policy")            contains the following language setting forth an exclusion of            coverage   for   disability  arising   from   a  pre-existing            condition:                      This  policy  will  not cover  any  total                      disability:                      1.  which is caused or contributed to by,                      or results from a pre-existing condition;                      and                      2.   which begins in the  first 12 months                      after the insured's effective  date ["the                      probationary period"], unless he received                      no  treatment  of  the  condition  for  6                      consecutive  months  after his  effective                      date.                      "Treatment"  means consultation,  care or                      services   provided    by   a   physician                                         -3-                                          3                      including diagnostic  measures and taking                      prescribed drugs and medicines.                      "Pre-existing Condition" means a sickness                      or injury for  which the insured received                      treatment  within 6  months prior  to the                      insured's   effective  date   ["the  pre-                      probationary period"].                      The  events  that  occurred  within  each   of  the            relevant periods are essentially undisputed.  During the pre-            probationary  period (August  1, 1987  to February  1, 1988),            Hughes experienced  a number of symptoms  consistent with MS.            In  August   1987,  Hughes   visited  Dr.   Daniel  Sullivan,            complaining of  numbness in  both lower extremities,  loss of            balance,  and  gastrointestinal   problems.    Dr.   Sullivan            prescribed medication for the gastrointestinal  symptoms, but            made no diagnosis of MS.                      Although the record  contains an unrebutted  after-            the-fact  diagnosis from  Dr.  David Dawson  that Hughes  was            "suffering   from  multiple   sclerosis"   in  August   1987,            deposition  testimony from  Dr. Dawson  and other  physicians            suggests that Hughes' condition was  not amenable to any type            of  clinical diagnosis  during  the pre-probationary  period.            Dr.  Sullivan testified that the  symptoms he observed in the            summer of 1987 "would not  create the impression of  multiple            sclerosis."   Dr.  Jeremy  Worthington (who,  in March  1988,            diagnosed Hughes as  having MS)  confirmed that  the loss  of            balance  reported to Dr. Sullivan  in August 1987  is "a very            non-specific complaint," which is  "not enough to establish .                                         -4-                                          4            .  . [a]nything."  Dr. Dawson initially testified that he had            "no opinion about the diagnosability of multiple sclerosis in            1987."  Dr.  Dawson did testify that  Hughes' condition could            have   been  diagnosed   as  "clinically   probable  multiple            sclerosis"  in February  19881 (after  the expiration  of the                                            _____            pre-probationary period),  but did not advance  an opinion as            to  the  diagnosability  of MS  during  the  pre-probationary            period.   Finally, Dr.  Dunn, an ophthalmologist  who treated            Hughes in  June  1987 (before  the  pre-probationary  period)                                   ______            wrote  "possible MS" in his  notes, but there  is no evidence            that Dr. Dunn communicated his hypothesis either to Hughes or            to any treating physician during the pre-probationary period.                      During  the first  six months  of the  probationary            period (February  1, 1988 to  July 1, 1988),  Hughes received                                            ____________________            1.  Although Dr. Dawson actually testified  that Hughes could            have  been  diagnosed  as  suffering from  "probable  MS"  in            February  1987   (before   the  commencement   of  the   pre-                      ____    ______            probationary period), the record suggests that Dr. Dawson may            have  intended to refer to  February 1988.   The reference to            1987  seems to  spring from  Dr. Dawson's understanding  of a            letter  he  wrote   to  Dr.  Worthington  on   May  31,  1988            summarizing Hughes' medical history.  The typewritten text of            that letter (attached as part of Exhibit 5 to Boston Mutual's            motion for summary judgment) contains a  paragraph describing            an outbreak of suspicious symptoms to February 1988, although            it appears that either the author or the recipient used a pen            or pencil  to change "1987" to "1988" as well as to cross out            the  paragraph  recounting a  second issue.    To add  to the            confusion,  the briefs  of  both parties  adopt the  district            court's findings, which do not mention an episode in February            1987.   In light  of this contrary  evidence and  our duty to            view the evidence in  the light most favorable to  Hughes, we            infer that February 1988  should be the date of  Dr. Dawson's            retrospective diagnosis.                                         -5-                                          5            additional medical attention.  On March 1, Hughes experienced            various  symptoms, including  "extreme fatigue,  inability to            maintain balance,  double vision, lack  of coordination  with            walking,  and slurring of speech."   On March  10, Dr. Jeremy            Worthington diagnosed Hughes as suffering  from MS.  On April            5,  Hughes  underwent   Magnetic  Resonance  Imagery  ("MRI")            testing, which confirmed the Worthington diagnosis.                      Later in the probationary period, Hughes' worsening            condition made it increasingly difficult for him to work.  At            the  suggestion  of  Dr.  Sullivan,  Hughes  terminated   his            employment with  the University  of Massachusetts on  July 6,            1988, and filed a disability claim with Boston Mutual.                      Boston Mutual  denied the  claim in  November 1988,            prompting  Hughes  to  file   this  action  in  Massachusetts            Superior Court.2   Because the  Policy is  a group  insurance            plan regulated by the Employee Retirement Income Security Act            of 1974, as amended, 29  U.S.C.   1001 et seq. (1988  & Supp.                                                   __ ____            1992)  ("ERISA"), Boston  Mutual  removed the  action to  the            United   States  District   Court   for   the   District   of            Massachusetts  pursuant to  28 U.S.C.     1441 (1988  & Supp.            1992).  The district court granted Boston Mutual's motion for                                            ____________________            2.  Although Count  I refers simply  to a breach  of contract            claim, the complaint plainly  seeks to recover benefits under            an ERISA-regulated plan pursuant to 29 U.S.C.   1132(a)(1)(B)            (1988).     Federal   and   state   courts  have   concurrent            jurisdiction  over  such  claims.   29  U.S.C.     1132(e)(1)            (1988).                                         -6-                                          6            summary judgment, Hughes  v. Boston Mut.  Life Ins. Co.,  No.                              ______     __________________________            91-10179-WD  (D.  Mass.  Aug.  27,  1993),  and  this  appeal            followed.                                         -7-                                          7                                         II.                                         II.                                         ___                                PROCEDURAL PRINCIPLES                                PROCEDURAL PRINCIPLES                                _____________________                      Where,  as here,  the  administrator of  an  ERISA-            regulated plan  does not allege that it  has discretion under            the  plan to  interpret the  terms of  the insurance  policy,            judicial review of a denial of benefits entails  no deference            to the  administrator's explanation  of the plan  and follows            the familiar course of  an action for breach of  an insurance            contract.  See Firestone Tire & Rubber Co. v. Bruch, 489 U.S.                       ___ ___________________________    _____            101, 115 (1989); Allen  v. Adage, Inc., 967 F.2d  695, 697-98                             _____     ___________            (1st Cir. 1992).                      Similarly, an appellate court  independently weighs            the  merits  of  a   motion  for  summary  judgment,  without            deference to the reasoning  of the district court.   See Bird                                                                 ___ ____            v. Centennial Ins.  Co., 11  F.3d 228, 231  (1st Cir.  1993).               ____________________            Summary judgment is appropriate if "there is no genuine issue            as to  any  material fact  and  . .  .  the moving  party  is            entitled to a judgment as a matter of law."  Fed.  R. Civ. P.            56(c).  The  party opposing  summary judgment  "may not  rest            upon the  mere allegations  or denials of  [its] pleading[s],            but . . . must set forth specific facts showing that there is            a genuine issue for trial."  Fed. R. Civ. P. 56(e).  See also                                                                 ___ ____            Anderson v.  Liberty Lobby, Inc.,  477 U.S. 242,  256 (1986);            ________     ___________________            LeBlanc v. Great Am. Ins.  Co., 6 F.3d 836, 841-42  (1st Cir.            _______    ___________________            1993), cert. denied, 114 S. Ct. 1398 (1994).  Moreover, where                   _____ ______                                         -8-                                          8            the non-moving party bears the burden of persuasion at trial,            it can only avert summary judgment with a display of evidence            "sufficient to  establish the existence  of [the]  element[s]            essential to [its] case."  Celotex Corp. v. Catrett, 477 U.S.                                       _____________    _______            317, 322-23 (1986).   Finally, a court deciding a  motion for            summary judgment  cannot assume  the skepticism of  the fact-            finder,  but must draw all  reasonable inferences in favor of            the non-moving party.   See Levy v. FDIC,  7 F.3d 1054,  1056                                    ___ ____    ____            (1st Cir. 1993).                                         III.                                         III.                                         ____                                      DISCUSSION                                      DISCUSSION                                      __________                      While we normally  look to the law  of a particular            state  to guide  our construction of  a contract,  "a federal            common   law  of   rights   and   obligations"  governs   the            interpretation  of an  ERISA-regulated group  insurance plan.            Pilot  Life  Ins. Co.  v. Dedeaux,  481  U.S. 41,  56 (1987);            _____________________     _______            Burnham v. Guardian Life  Ins. Co. of America, 873  F.2d 486,            _______    __________________________________            489 (1st Cir. 1989).  The need for federal uniformity in this            area  does not,  however, require  federal rules  at variance            with  the general law  of the states.   Indeed, we have noted            that  the emerging  federal common  law "must  embody common-            sense canons of contract interpretation," id., of which state                                                      ___            law  is  the  "richest  source,"  Rodriguez-Abreu   v.  Chase                                              _______________       _____            Manhattan  Bank, N.A.,  986  F.2d 580,  585 (1st  Cir. 1993).            _____________________            Thus,   "straightforward   language  in   an  ERISA-regulated                                         -9-                                          9            insurance  policy  should  be  given  its  natural  meaning."            Burnham, 873 F.2d  at 489.   Similarly, in  keeping with  the            _______            rule  of  contra  proferentem,  ambiguous  terms  should   be                      ______  ___________            strictly construed against the insurer.  Rodriguez-Abreu, 986                                                     _______________            F.2d at 586;  see also Lee v. Blue Cross/Blue Shield, 10 F.3d                          ___ ____ ___    ______________________            1547, 1551 (11th Cir.  1994) (collecting cases to demonstrate            that contra proferentem rule  "has been widely adopted" among                 ______ ___________            circuit  courts  for  resolution  of  ambiguities  in  ERISA-            regulated insurance  contracts); cf.  Allen, 967 F.2d  at 701                                             ___  _____            n.6 (holding that contra proferentem principle does not apply                              ______ ___________            to  ERISA contracts beyond  the insurance context).   But cf.                                                                  ___ ___            Brewer v. Lincoln Nat'l  Life Ins. Co., 921 F.2d  150, 153-54            ______    ____________________________            (8th Cir. 1990) (holding that state law policy of  construing            ambiguities  in  favor  of   the  insured  could  not  govern            interpretation  of ERISA  policy), cert.  denied, 111  S. Ct.                                               _____  ______            2872 (1991); McMahan v.  New England Mut. Life Ins.  Co., 888                         _______     _______________________________            F.2d  426, 429-30  (6th  Cir. 1989)  (same).3   Nevertheless,                                            ____________________            3.  Brewer  and McMahan  primarily  involve  the question  of                ______      _______            whether a  state law  rule of contract  construction controls            the  interpretation  of an  ERISA  contract.   It  is unclear            whether either  court actually rejects the contra proferentem                                                       ______ ___________            principle as  a rule  of federal  common law.   The  court in            Brewer  comes  closest to  doing  so, citing  as  support the            ______            Supreme  Court's   statement  that  courts   should  construe            provisions  in  ERISA  plans "`without  deferring  to  either                                                                   ______            party's  interpretation.'"   921  F.2d  at  154 (emphasis  in            original) (quoting  Bruch, 489 U.S.  at 112).   The quotation                                _____            from Bruch  is accurate,  but cannot  support the  holding in                 _____            Brewer.  Bruch concerns  the standard for judicial  review of            ______   _____            benefit determinations by  fiduciaries or plan administrators            under ERISA.  489 U.S. at 105.  The Court's preference for de                                                                       __            novo review of  nondiscretionary decisions, id. at 115, in no            ____                                        ___                                         -10-                                          10            sympathy   for   either  party   cannot   justify  sophistry.            "[C]ourts  have no right to torture language in an attempt to            force particular results or to convey delitescent nuances the            contracting parties neither intended nor imagined."  Burnham,                                                                 _______            873 F.2d at 489.                       The exclusion  clause at issue here  does not apply            to pre-existing conditions  in the ordinary sense.  A routine            pre-existing condition clause aims to bar coverage for claims            arising from conditions existing before the effective date of                                    ________            an  insurance  policy;  such  policies  focus  on  the  prior            origination  or prior  manifestation of  the condition.   See                                                                      ___            generally 1B  John Alan  Appleman & Jean  Appleman, Insurance            _________                                           _________            Law  and Practice,   396 (1981 &  Supp. 1993).  The clause in            _________________            Hughes'  policy  might  be  described more  accurately  as  a            "recent  treatment" exclusion  because it  prohibits coverage            for any  total disability which occurs  during a probationary            period and  is  attributable to  a  condition for  which  the            insured  received  medical   treatment  just  prior   to  the            probationary period.                                            ____________________            way limits a  court's ability to select  appropriate rules of            contract   interpretation   in   aid   of   its   independent                                                              ___________            construction  of disputed  terms.  In  any event,  the Eighth            Circuit   has   since  construed   Brewer  as   allowing  the                                               ______            application  of  contra  proferentem  to  an  ERISA-regulated                             ______  ___________            insurance plan, but only after the  court attempts to resolve            an apparent ambiguity by favoring the "ordinary" meaning of a            disputed  term.  See Delk  v. Durham Life  Ins. Co., 959 F.2d                             ___ ____     _____________________            104, 105-06 (8th Cir. 1992) (per curiam).                                           -11-                                          11                      Unlike the standard pre-existing  condition clause,            the recent  treatment exclusion  is not strictly  designed to            weed out known insurance risks; it would even permit activity            which, if not reported on an application for a policy  with a            standard pre-existing condition clause, might  suggest fraud.            For  example, as counsel for Boston  Mutual suggested at oral            argument, an insured who was disabled within the probationary            period and did not receive medical treatment  for a condition            contributing  to the  disability during  the pre-probationary            period would be entitled to coverage even if she (1) received            treatment  for such a  condition before (but  not during) the                                             ______            pre-probationary period, (2) knowingly suffered from symptoms            of the  condition during the pre-probationary  period without            seeking medical  attention, or (3) received  treatment during            the  pre-probationary period for a broken  arm (not a symptom            of  MS)  caused by  a fall  attributable  to loss  of balance            resulting from undiagnosed MS.                      We also note that the exclusion is not triggered by            any medical treatment, only by treatment "for" a "sickness or            injury" (the "[c]ondition") which "caused or contributed to .            .  . or results" in  a "total disability."   As several other            courts  interpreting  similar  language  have  observed,  the            exclusion does not explicitly require diagnosis.  Marshall v.                                                              ________            UNUM  Life Ins.  Co., No.  A3-91-201, 1992  WL 554314,  at *2            ____________________            (D.N.D.  Nov. 6, 1992), aff'd,  13 F.3d 282  (8th Cir. 1994);                                    _____                                         -12-                                          12            Cury, 737  F. Supp. at  854.  But neither  does the exclusion            ____            explain   what  constitutes  treatment   "for"  a  particular            condition.   Boston  Mutual suggests  that treatment  "for" a            condition  refers  to  treatment  of  any  symptom  which  in            hindsight appears to be a manifestation of the condition.  We            acknowledge that this would  be one reasonable interpretation            of  the exclusion.  See  Bullwinkel v. New  England Mut. Life                                ___  __________    ______________________            Ins. Co., 18 F.3d  429, 432-33 (7th Cir. 1994)  (holding that            ________            treatment of malignant breast lump in pre-probationary period            triggered recent  treatment exclusion although  lump was  not            definitively diagnosed as cancer until later time); Cury, 737                                                                ____            F. Supp.  at 854-55 (holding  that treatment for  symptoms of            undiagnosed multiple sclerosis  in critical period  activated            recent   treatment   exclusion).      But   Boston   Mutual's            interpretation  is  not  the  only  plausible  one.    Hughes            reasonably   suggests  that   the  exclusion   requires  some            awareness  on the part of  the physician or  the insured that            the insured is receiving  treatment for the condition itself.            See Ross v. Western Fidelity Ins. Co., 881 F.2d 142, 144 (5th            ___ ____    _________________________            Cir.  1989) ("[T]here is at least a reasonable argument that,            under  [a  recent  treatment   exclusion],  treatment  for  a                                                                   ______            specific  condition  cannot be  received unless  the specific            ___________________            condition is  known.")  (emphasis in  original);  Karagon  v.                                                              _______            Aetna  Life Ins.  Co., 228  N.W.2d 515,  516 (Mich.  Ct. App.            _____________________            1975)  (holding  that treatment  of  symptoms of  undiagnosed                                         -13-                                          13            multiple sclerosis did not trigger recent treatment exclusion            where disease did not manifest itself with sufficient clarity            to allow reasonably accurate  diagnosis and treatment).4  Nor            is there extrinsic  evidence which would  allow us to  choose            one plausible  interpretation over the  other as a  matter of            law.  Because the exclusion is susceptible to "reasonable but            differing  interpretations,"  we  find it  to  be  ambiguous.            Rodriguez-Abreu,  986   F.2d  at  586.5     And,  because  we            _______________            interpret ambiguities against the  insurer, id.; Lee, 10 F.3d                                                        ___  ___                                            ____________________            4.  We note that Ross  is not irreconcilable with Bullwinkel,                             ____                             __________            in  which the court may not have  had the occasion to address            the  ambiguity alleged here and in Ross.  Indeed, the Seventh                                               ____            Circuit specifically stated that "this case is unique because            the Bullwinkels' attorney really  rested his entire appeal on            the  argument  that  a  court  may  not  infer  that  a  lump            discovered to  be cancerous in  one month was  also cancerous            two months  before. .  . .  We make  no statement  about what            might  happen  if  an  attorney  in  a  future case  presents            different  arguments and authority to the court."  18 F.3d at            433.               5.  In so stating, we obviously reject the  reasoning of some            other courts that have construed similar language by focusing            exclusively  on the  absence of  a requirement  for diagnosis            without seriously considering whether the language concerning            treatment  "for" a  particular condition  is ambiguous.   See                                                                      ___            Marshall,  1992 WL  554314,  at *2  ("[T]he  language of  the            ________            policy  in  the  instant   case  is  clear  and  unambiguous;            diagnosis  is not required by  the policy for  a finding that            there is a  pre-existing condition."); Cury, 737  F. Supp. at                                                   ____            854 ("There is no requirement  that a diagnosis, definite  or            otherwise, of the pre-existing  condition must be made during            the   pre-existing   condition    period.").      Under   the            interpretation  suggested by Hughes,  a physician's awareness            of the sickness would  probably require at least  a tentative            diagnosis;  however, it  may  be that  no diagnosis  would be            necessary if the insured was already aware of the condition.                                          -14-                                          14            at  1551,  we  adopt for  purposes  of  summary judgment  the            construction offered by Hughes.6                      The sole  remaining task is to  apply the exclusion            to the facts at hand.  The parties have identified  MS as the            "[c]ondition"  which  "caused or  contributed  to  . .  .  or            result[ed]" in Hughes' "total  disability."  E.g., Appellee's                                                         ____            Br. at  14.   At this stage,  it is  undisputed that  neither            Hughes nor the physicians who treated his symptoms during the            pre-probationary period were aware  that he was being treated            for "most likely MS,"  "probable MS," or even  "possible MS."            Therefore,  we  cannot say  as a  matter  of law  that Hughes            received treatment  "for" MS  during the critical  six months            before the effective date of the Policy.                                         IV.                                         IV.                                         ___                                            ____________________            6.  The  trier of  fact  must resolve  any ambiguities  in an            ERISA  contract  identified by  the  court  and incapable  of            definitive resolution on the existing record.  See Allen, 967                                                           ___ _____            F.2d at 698; see  also Jos. Schlitz Brewing Co.  v. Milwaukee                         ___  ____ ________________________     _________            Brewery Workers'  Pension  Plan, 3  F.3d 994,  999 (7th  Cir.            _______________________________            1993); Teamsters Indus. Employees Welfare Fund v. Rolls-Royce                   _______________________________________    ___________            Motor  Cars, Inc.,  989 F.2d  132, 135  n.2 (3rd  Cir. 1993);            _________________            D.E.W., Inc.  v. Local  93, Laborers'  Int'l Union,  957 F.2d            ____________     _________________________________            196, 199 (5th Cir. 1992).  Moreover, despite any interpretive            presumption  favoring the  insured,  an insurer  may seek  to            overcome  that  presumption  with  probative  evidence.   See                                                                      ___            Stephen L. Liebo,  13 Appleman's Insurance Law and Practice                                    _____________________________________            7403,  at 75  (Supp.  1993) ("Where  a  policy is  ambiguous,            grounds, including  appropriate  extrinsic evidence,  may  be            found  to  show that  the  interpretation  unfavorable to  an            insured was the one reasonably understood by both parties; it            is  only when the ambiguity still remains after the resort to            such extrinsic evidence that an ambiguous  provision is to be            construed against  the insurer.").  Therefore,  Boston Mutual            would remain  free to  introduce evidence at  trial that  its            interpretation is the more reasonable one.                                           -15-                                          15                                      CONCLUSION                                      CONCLUSION                                      __________                      For  the foregoing reasons,  we vacate the judgment            below and remand for further proceedings consistent with this            opinion.                      So ordered.                      ___________                                         -16-                                          16
