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March 24, 2004.

JOHN M. SHUTTS, Plaintiff,

The opinion of the court was delivered by: FREDERICK SCULLIN, Chief Judge, District



  Plaintiff John M. Shutts commenced this declaratory judgment action on October 30, 2001, seeking a declaration from this Court, pursuant to 28 U.S.C. § 2201-2202, that he is entitled to long-term disability benefits pursuant to the provisions of the policy that Defendants Page 2 First UNUM Life Insurance Company of America and Unumprovident Corporation (hereinafter collectively referred to as "Defendant" or "First UNUM") issued to him. Presently before the Court are Defendant's motion for judgment on the administrative record and Plaintiff's cross-motion for judgment on the administrative record.*fn1


  During 1999, Plaintiff was employed as President of the John I. Shutts Agency, Inc. Defendant issued long-term disability and group health insurance policies to Plaintiff's employer, the John I. Shutts Agency, Inc. The policies are governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA").*fn2 The policy's effective date was October 1, 1998.

  Plaintiff suffers from organic brain syndrome.*fn3 On July 19, 2000, he applied for long-term Page 3 disability benefits, listing April 1, 1999, as his date of disability.

  Defendant, relying upon several pieces of written correspondence and telephone interviews, denied Plaintiff's claim for long-term disability benefits on the ground that Plaintiff was not in active employment prior to the effective date of his policy and, as a result, Plaintiff's waiting period was never satisfied.*fn4

  Plaintiff then appealed Defendant's decision on December 5, 2000. Defendant affirmed its prior determination and upheld its denial. At that time, Defendant also alleged that Plaintiff failed to provide timely notice of his alleged disability as the policy required.*fn5

  After exhausting his administrative remedies, Plaintiff commenced the instant action, seeking a declaration from this Court that he is entitled to long-term disability coverage. Plaintiff bases his claim on various grounds which the Court will address seriatim. Page 4


 A. Initial Matters

  As a preliminary matter, Plaintiff asserts that Defendant waived any right it may have to dispute the timeliness of Plaintiff's notice of claim by failing to assert late notice as a ground for denying coverage. Plaintiff cites Lauder v. First Unum Life Ins. Co., 284 F.3d 375, 381 (2d Cir. 2002), to support his argument and specifically asserts that the policy does not require notice within a thirty- or ninety-day notice period, but, to the contrary, merely encourages the insured to notify the insurer of a claim within those time periods.

  Defendant, on the other hand, argues that Plaintiffs failure to file proof of loss in a timely manner precludes his claim for benefits under ERISA. Defendant asserts that under the policy, if Plaintiff was disabled as of April 1, 1999, he was required to give notice within thirty days of that date, i.e., May 1, 1999, or, at the latest, December 1999. Plaintiff did not give notice, however, until July 19, 2000 — approximately seven months later.

  The Second Circuit has held that the doctrine of waiver applies to an ERISA claim. See Lauder, 284 F.3d at 381 (citations omitted). However, there is no bright-line rule for determining whether waiver applies in a particular case and a case-specific analysis is required. See id. First, it is necessary to determine whether timely notice is a required element of the policy under which the plaintiff seeks reimbursement, since such an element cannot be waived, and seemingly, with respect to the first consideration, "a claim of waiver [can]not be used to expand the policy so that the insured `extend[s] its coverage to more than it originally bargained.'" Id. (quotation omitted). However, if waiver would not expand the coverage Page 5 bargained for, then the court must analyze the particular case under a different waiver principle, which is as follows: "[A]n insurer is deemed, as a matter of law, to have intended to waive a defense to coverage where other defenses are asserted, and where the insurer possesses sufficient knowledge (actual or constructive) of the circumstances regarding the unasserted defense.'" Id. at 382 (quotation omitted).

  The policy reads:
We encourage you to notify us of your claim as soon as possible, so that a claim decision can be made in a timely manner. Written notice of a claim should be sent within 30 days after the date your disability begins. However, you must send UNUM written proof of your claim no later than 90 days after your eliminations period. If it is not possible to give proof within 90 days, it must be given as soon as is reasonably possible.
See Hall Aff. at Exh. "B" at LTD-CLM-1 (emphasis added).

  The policy does not, contrary to Defendant's assertions, require that notice be given within thirty days but states that it should be given within that time period. Additionally, although the policy states that notice must be given within ninety days after the insured's elimination period, it leaves an exception open to those who cannot do so. Moreover, failure to timely file proof of loss does not expand the policy so as to extend its coverage to more than originally planned.

  With respect to the second consideration, the Court must look to see if the record supports Defendant's contention. The administrative record contains a comment from a UNUM representative, dated March 9, 2001, stating: "[n]ext steps — Uphold denial on reappeal as not actively employed. (Note — N.Y. not a strict time limit state; consequently will not put in late Page 6 notice as uphold reason)." See Hall Aff. at Exhibit "B." Not only did First Unum intend to uphold its denial of benefits on other grounds and deliberately avoid using failure to timely file as a defense, but its reason for doing so was based upon its opinion that New York was not a "strict time limit state." Defendant's statement appears to show that it ...

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