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Hodge v. Unum Group

March 30, 2010

KARYN HODGE, PLAINTIFF,
v.
UNUM GROUP, THE PAUL REVERE LIFE INSURANCE COMPANY AND THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, DEFENDANTS.



The opinion of the court was delivered by: Matsumoto, District Judge

MEMORANDUM DECISION & ORDER

Plaintiff Karyn Hodge commenced this action against Unum Group ("Unum"), The Paul Revere Life Insurance Company ("Paul Revere") and The Prudential Insurance Company of America (collectively, "Defendants"), asserting a claim for breach of contract based on Defendants' rescission of her disability insurance policy, and seeking a declaratory judgment requiring Defendants to perform their obligations under the policy. Presently before the Court is Defendants' motion for summary judgment, pursuant to Fed. R. Civ. P. 56, based on the statute of limitations. For the reasons set forth below, Defendants' motion is granted and Plaintiff is given twenty days to file a motion for leave to amend the complaint.

BACKGROUND

Upon review of the record, the Court finds that the relevant undisputed facts are as follows:

Paul Revere issued Plaintiff a disability insurance policy on April 10, 1996. (Defendants' Rule 56.1 Statement ("Def. 56.1") ¶ 4). After the policy lapsed, Plaintiff applied for reinstatement on January 20, 1998, and, as part of that application, answered "NO" to the following questions:

13. Since the date of application for the policy(s) to be reinstated but within 5 years, has any person:

(c) Been treated by a physician or practitioner; been hospitalized or institutionalized; or been ill or injured?

15. Does any person have any physical or mental impairment? Plaintiff then signed the Reinstatement Application after acknowledging:

(1) I have read the statements and answers made above. They are, to the best of my knowledge and belief, true and complete and correctly recorded. The Company will rely on them in reinstating or placing in force any policy(s). The Company may contest any such policy(s) as to these statements and answers for a period of two years from the effective date of reinstatement. (Def. 56.1 ¶¶ 14-15, Ex. 4)

The policy was reinstated on January 20, 1998. (Def. 56.1 ¶¶ 12-13)

On June 30, 1998, Plaintiff underwent surgery on her right rotator cuff and, in August 1998, submitted a claim for disability income benefits as a result of her "torn rotator cuff tendons [and] bone spurs in her right shoulder." (Def. 56.1 ¶¶ 17-18) Through its investigation of Plaintiff's claim for benefits, Paul Revere discovered that Plaintiff had failed to disclose certain medical information in her application for reinstatement of the policy. As a result of this discovery, in a letter dated October 27, 1998, Paul Revere advised Plaintiff of the status of her claim and notified her that the reinstatement of her policy was rescinded. Specifically, Paul Revere informed Plaintiff that the policy was voided because of her failure to disclose treatment for a rotator cuff problem prior to the reinstatement. (Def. 56.1 ¶¶ 20-25, Ex. 11) The October 27, 1998 letter stated that Paul Revere's Underwriting Department had reviewed Plaintiff's medical records and determined: "Had we been aware of the insured's medical history, . . . we would not have reinstated this policy -- especially given the probability of surgery as noted at that time." The October 27 letter further stated: "Enclosed you will find a check in the amount of $1,676.83. This check provides you with a complete refund of all the premiums you have paid for your policy since it was reinstated on January 20, 1998. Your policy is not in force. . . . As your policy is not in force, we are unable to consider a claim for disability benefits arising from your recent surgery." (Def. 56.1, Ex. 11) Plaintiff negotiated the refund check on or about November 16, 1998. (Def. 56.1 ¶ 28, Ex. 12)

By letter dated January 14, 1999, Paul Revere again informed Plaintiff that her policy had been rescinded, explained its reasons and advised, "Enclosed with our letter of October 27, 1998 was a check in the amount of $1,676.83 which represented a refund of all premiums paid for your policy since it was reinstated on January 20, 1998. By cashing of this refund check is acknowledgment that the reinstatement policy is null and void and no longer in force." (Def. 56.1 ¶ 29, Ex. 13)

Approximately seven years later, on March 21, 2006, Defendants informed Plaintiff that her claim was eligible for reassessment as part of a Regulatory Settlement Agreement (the "RSA") entered into by Defendants, the United States Department of Labor and insurance regulators. (Glen Decl. in Opp. Mot. for Summ. Judg. ("Glen Decl."), Ex L) On May 23, 2007, in order to receive the reassessment, Plaintiff signed a Reassessment Information Form. The "Conditional Waiver and Release" included with the form provided, in pertinent part: "[A]ny applicable statute of limitations is tolled during the pendency of the reassessment of my claim; however, I understand that my participation in the Claim Reassessment Process will not revive or reinitiate the statute of limitations with respect to the previous claim decision." (Glen Decl., Ex. M) After completing the reassessment, in a letter dated June 21, 2007, Unum informed Plaintiff that "the original decision to rescind [her] policy was appropriate." (Def. 56.1, Ex. 15)

Plaintiff filed the instant complaint in New York Supreme Court, Queens County on May 7, 2008. Defendants removed the action to this court on June 6, 2008 based on diversity ...


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