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Eleventh Circuit Court of Appeals Finds that Reliance Standard Life Insurance Company Acted Unreasonably When it Denied Disability Insurance Benefits Under the Pre-Existing Condition Exclusion to a Woman Who Suffered a Stroke Nine Days After Giving Birth

Julissa Bradshaw had a healthy pregnancy and no other pre-existing medical conditions when she became insured under her ERISA governed disability insurance policy with Reliance Standard Life Insurance Company ("RSL"). Approximately six months after obtaining the policy, Julissa gave birth to her daughter. Tragically, nine days later, Julissa suffered a debilitating stroke and was unable to return to work. Accordingly, Julissa filed a claim for long-term disability benefits with RSL. RSL denied Julissa's claim, alleging that her healthy pregnancy qualified as a pre-existing condition that "contributed to" her stroke. RSL argued that the Policy permits RSL to deny long-term disability benefits for a total disability that was "caused by," "contributed to by," or "resulting from" a pre-existing condition unless the insured has been actively at work for a full year. RSL claimed that because Julissa had not been employed for a full year, was pregnant during the "look-back period," and her pregnancy "played a part in producing" the stroke, her pregnancy "contributed to" her stroke and was therefore excluded from coverage.

Julissa filed an administrative appeal with RSL, as required under her Policy and the ERISA regulations. However, RSL upheld the denial. Accordingly, Julissa filed suit in the Middle District of Florida Federal Court. The Middle District Court ruled in favor of RSL and Julissa appealed to the Eleventh Circuit Court of Appeals.

The Eleventh Circuit overturned RSL's decision and found that RSL's interpretation of the pre-existing condition clause, and in particular, the phrase "contributed to," to be both unreasonable as a matter of law and at odds with the goals of ERISA. The Eleventh Circuit rejected RSL's "but for" argument (but for Julissa's pregnancy, she would not have developed high blood pressure; and but for her high blood pressure, she would not have developed preeclampsia; and but for her preeclampsia, she would not have suffered a stroke; and finally, but for her stroke, Julissa would not have become totally disabled.). The Eleventh Circuit explained that multiple stages intervened between Julissa's healthy pregnancy and her total disability, rendering RSL's position untenable. The Appeals Court went on to explain that such a broad construction of the exclusion runs directly counter to ERISA's central goal of protecting the interests of employees and their beneficiaries in employee benefit plans. The Appeals Court therefore concluded that the district court erred when it granted summary judgment in favor of RSL and further held that RSL's decision to deny Julissa's claim was unreasonable based on a correct construction of the Policy's pre-existing condition exclusion.

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