David Clark v. Silac Insurance Company

• Court: Court of Appeals for the Ninth Circuit
• Decided: September 15, 2023
• Docket: 22-35685
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS SEP 15 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

DAVID CLARK, as guardian and No. 22-35685 conservator for James W. Carroll and personal representative of the estate of D.C. No. 9:20-cv-00155-DLC Dorothy M. Carroll; DELLA CLARK, as guardian and conservator for James W. Carroll, MEMORANDUM*

Plaintiffs-Appellants,

v.

SILAC INSURANCE COMPANY, FDBA Equitable Life & Casualty Insurance Company; JOHN DOES, 1-20,

Defendants-Appellees.

Appeal from the United States District Court for the District of Montana Dana L. Christensen, District Judge, Presiding

Submitted August 25, 2023** Portland, Oregon

Before: BENNETT, VANDYKE, and H.A. THOMAS, Circuit Judges. Partial Dissent by Judge BENNETT.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). James and Dorothy Carroll (together, the Carrolls) took out a long-term care

insurance policy and a home-care recovery policy issued by SILAC Insurance

Company (SILAC).1 Following several hospital stays between 2018 and 2021, the

Carrolls sought coverage for a variety of services under the two policies. After

SILAC provided coverage for only some of the services, the Carrolls filed a

complaint in state court alleging that SILAC denied them additional benefits that

were due under the policies. SILAC removed the case to federal court. The parties

cross-filed motions for summary judgment, and the district court granted SILAC’s

motion for summary judgment and denied the Carrolls’ motion as moot.

We review a district court’s grant of summary judgment de novo. Stephens

v. Union Pac. R.R. Co., 935 F.3d 852, 854 (9th Cir. 2019). “In cases where state

law applies, federal courts must ‘ascertain from all the available data what the state

law is and apply it.’” Lawson v. Grubhub, Inc., 13 F.4th 908, 913 (9th Cir. 2021)

(quoting West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237 (1940)). We have

jurisdiction under 28 U.S.C. § 1291. We affirm.

Although the parties dispute whether Section 33-22-1115 of the Montana

Code Annotated applies to the Carrolls’ long-term care insurance policy, we need

not resolve that dispute. As relevant here, the Carrolls’ long-term care insurance

1 The Carrolls’ court-appointed guardians and conservators, David and Della Clark, were substituted as plaintiffs upon a showing that the Carrolls lacked mental capacity.

2 policy describes a benefit—the Home Again Benefit—that contains a prior-

institutionalization requirement. The Carrolls contend that the prior-

institutionalization requirement is void under both Section 33-22-1115(3) and

Section 33-22-1115(2) of the Montana Code. Even assuming Section 33-22-1115

applies, the Carrolls’ argument does not succeed.

Section 33-22-1115(3) prohibits an insurance company from including a

prior-institutionalization requirement in a long-term care insurance policy only

when the “policy . . . contains a benefit advertised, marketed, or offered as a home

health care benefit.” Mont. Code. Ann. § 33-22-1115(3) (1989).2 The policy here

contains no such benefit. Under Montana law, the definition of “home health care”

is limited to “services provided by a licensed home health agency to an insured in

the insured’s place of residence that is prescribed by the insured’s attending

physician as part of a written plan of care.” Id. § 33-22-1001. By contrast, the

Home Again Benefit “will be paid regardless of who provides for [the insured’s]

care, including family members, friends, and home health agencies.”3

While an insured may thus elect to receive the care they need from a home

health agency, the policy is—by its plain terms—not limited to the types of care

2 While the 1989 version of the statute applies to the Carrolls’ claims, the current version of the statute still includes this prohibition. Mont. Code. Ann. § 33-22- 1115(3) (2021). 3 A similar description is included in the marketing material for the long-term care insurance policy.

3 that such an agency can provide. And in addition to permitting any person to

provide the insured’s care, the policy provides coverage for “any need” the insured

may have, including “adult day care.” Cf. id. (limiting “home health care” to

services provided “in the insured’s place of residence”). The distinction between a

home health care benefit and the Home Again Benefit is further highlighted by the

marketing material, which states that “[a]fter a long term care stay you may need

assistance in your home to help in your recovery. Your Home Again [B]enefit is

designed to do just that.” Thus, the benefit offers a broader array of services in a

narrower set of circumstances: when coming home again after a long-term care

stay.

Section 33-22-1115(2) requires that a long-term care insurance policy label

any limitations or conditions on eligibility in a separate paragraph entitled

“Limitations or Conditions on Eligibility for Benefits.” Id. § 33-22-1115(2)

(1989).4 Although the Carrolls’ policy does not disclose the institutionalization

requirement in such a paragraph, SILAC nevertheless unambiguously and

prominently disclosed that requirement on the second page of the policy. As such,

the error is only a “technical violation” and does not invalidate the “unambiguous

policy exclusion[]” here. See High Country Paving, Inc. v. United Fire & Cas. Co.,

4 The current version of the statute still includes this requirement. Mont. Code. Ann. § 33-22-1115(2) (2021).

4 507 P.3d 1165, 1168 (Mont. 2022).

The Carrolls also contend that they were entitled to unlimited home-care

benefits under their home-care recovery policy. But the first page of the policy

states that it is a “LIMITED BENEFIT POLICY,” and the second page of the

policy explains that a beneficiary will receive benefits only under limited

circumstances. Although the Carrolls argue that the description of the home-care

benefits is ambiguous, the policy is not ambiguous or incomprehensible to an

ordinary consumer. Nor could the fact that SILAC’s call center representatives

stated that the policy had an “unlimited timeframe for benefits” and characterized

the policy as being “harder-to-understand” transform the policy into one with

unlimited benefits. The policy itself states that “[n]o agent may change this Policy

or waive any of its provisions.”

Because the Carrolls’ long-term care insurance policy and home-care

recovery policy do not violate Montana law, the district court correctly dismissed

the Carrolls’ remaining claims for bad faith, breach of fiduciary duty, and fraud.5

AFFIRMED.

5 The Carrolls do not argue that the long-term care insurance policy’s technical violation of Section 33-22-1115(2) serves as a basis for these claims.

5 FILED Clark v. SILAC Insurance Company, No. 22-35685 SEP 15 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS BENNETT, Circuit Judge, dissenting in part:

I respectfully dissent, in part. I believe the Home Again Benefit violates the

Montana Long-Term Care Act (“LTCA” or “Act”), see Mont. Code Ann. § 33-22-

1103, et seq., and therefore would reverse summary judgment on this basis and

remand to the district court. I would affirm the district court as to Plaintiffs’ other

claims.

First, the LTCA applies. Although most provisions of the Act became

effective on March 28, 1989, the Montana legislature delayed the effective date of

the section relevant here—§ 33-22-1115—until March 28, 1990. 1989 Mont. Laws

810. On March 27, 1990, James and Dorothy Carroll applied for a long-term care

insurance policy offered by SILAC. As part of their application, the Carrolls

signed a Medical Authorization that stated: “I understand and agree that the Policy

applied for will not take effect until issued by the Company.” On May 18, 1990,

SILAC decided to underwrite the Carrolls’ policy, and on or around May 24, 1990,

SILAC’s Policy Issue Department completed the last step in the policy issuing

process. But upon issuing the policy to the Carrolls, SILAC backdated it, stating

that the policy’s effective date was March 27, 1990.

1 SILAC now claims that because the policy’s effective date occurred one day

before § 33-22-1115 became effective, that provision cannot apply.1 But the

language of § 33-22-1115 states that it applies to policies “delivered or issued for

delivery” on or after March 28, 1990. See Mont. Code Ann. § 33-22-1115(1)

(1989); 1989 Mont. Laws 810. Although the Carrolls’ policy was backdated, it

cannot have been “delivered or issued for delivery” before SILAC decided to

underwrite it. In other words, though the Carrolls applied for the policy on March

27, 1990, the policy was not actually issued for delivery until after May 24, 1990—

regardless of its “effective date.” Thus, § 33-22-1115 applies.

Second, both the marketing materials associated with the Home Again

Benefit and the language of the policy show that the policy “contains a benefit

advertised, marketed, or offered as a home health care benefit.” Mont. Code. Ann.

§ 33-22-1115(3) (1989) (emphasis added). Accordingly, it was unlawful for the

policy to “condition receipt of a benefit on a prior institutionalization

requirement.” Id.

According to the Act, “home health care” is a defined term with five

requirements. That term covers: (1) services (2) provided by a licensed home

health agency (3) to an insured (4) in the insured’s place of residence (5) as

1 The panel majority assumes without deciding that the provision does apply. Maj. at 3. 2 prescribed by a physician as part of a written plan of care. Mont. Code. Ann. § 33-

22-1001. Examples of services provided by home health care are listed in the

statute.2 Id.

The policy issued to the Carrolls states, in part:

To help in Your recovery following a Long Term Care stay, We will pay a benefit when You come home again. Home Again Benefits will be paid regardless of who provides for Your care, including family members, friends, and home health agencies. Benefits may be used for any need You may have, including adult day care or respite care. We will pay the Home Again Benefit when: 1) You come home again following a Long Term Care stay of more than 30 days;[3] and

2 Section 33-22-1001 reads in its entirety:

“Home health care” means services provided by a licensed home health agency to an insured [in the insured’s] place of residence that is prescribed by the insured’s attending physician as part of a written plan of care. Services provided by home health care include:

(1) nursing; (2) home health aide services; (3) physical therapy; (4) occupational therapy; (5) speech therapy; (6) hospice service; (7) medical supplies and equipment suitable for use in the home; and (8) medically necessary personal hygiene, grooming, and dietary assistance.

Mont. Code Ann. § 33-22-1001. 3 SILAC does not dispute that this is a prior institutionalization condition.

3 2) Your Doctor certifies Home Again Care is reasonable and necessary to provide for Your health and safety.[4]

SILAC advertised this benefit by promising consumers: “We will pay for

care received from family, friends, home health agencies or anyone you choose—

even respite care and adult day care are covered.” This marketing aligned with the

policy, which states that the Home Again Benefit “will be paid regardless of who

provides for Your care, including family members, friends, and home health

agencies.”

Both the marketing and the policy give rise to violations under Section 33-

22-1115(3), which states: “A long-term care insurance policy that contains a

benefit advertised, marketed, or offered as a home health care benefit may not

condition receipt of a benefit on a prior institutionalization requirement.” There

can be no dispute that the Home Again Benefit covers (and was marketed as

covering) services provided to an insured in the insured’s place of residence by a

licensed home health agency, as certified/ordered by a physician. However, the

4 The policy also provided: “‘HOME AGAIN CARE’ means a program of care ordered by a Doctor for a person unable to engage in the normal activities of persons of the same age and sex”; and “For Us to provide Prior Authorization for HomeCare Recovery Services, We must have a written plan of treatment from Your Doctor. The plan of treatment must contain a specific diagnosis of Your medical and physical condition, describe any functional limitations and include a plan of care.”

4 majority holds that because the Home Again Benefit is “not limited to the types of

care” a home health agency might provide, Maj. at 3–4, it is not subject to the

LTCA. This conclusion is puzzling. Why would the statute be inapplicable when

the policy provides statutorily defined “home health care,” simply because the

policy also provides other benefits? While the statute could have excluded (albeit

illogically) home health care+ policies from the institutionalization condition

prohibition, it did not do so. And, to repeat, the statute specifically says: “A long-

term care insurance policy that contains a benefit advertised, marketed, or offered

as a home health care benefit may not condition receipt of a benefit on a prior

institutionalization requirement.” Mont. Code Ann. § 33-22-1115(3) (emphases

added). The policy contains a relevant benefit and it conditions receipt of a benefit

on a prior institutionalization. The plain language of the policy shows a clear

violation.

There is no dispute that care provided by family or friends pursuant to the

Home Again Benefit falls outside the reach of § 33-22-1115(3). But, again, the

question posed by the text of the statute is not whether the policy covers only home

health care benefits, the question is whether the policy “contains a benefit

advertised, marketed, or offered as a home health care benefit.” Id. § 33-22-

1115(3) (emphasis added). Even though the Home Again Benefit provision

contains other benefits that are not home health care benefits, it undoubtedly

5 contains home health care benefits. See FDIC v. Meyer, 510 U.S. 471, 476 (1994)

(noting that when the text of a statute contains undefined terms, we construe those

terms to have their ordinary meanings); see also Park Place Apartments, L.L.C. v.

Farmers Union Mut. Ins. Co., 247 P.3d 236, 239 (Mont. 2010) (“When a court

reviews an insurance policy, it is bound to interpret its terms according to their

usual, common sense meaning as viewed from the perspective of a reasonable

consumer of insurance products.”).

The insurance provided to the Carrolls by their policy covered care provided

in their home and certified by their doctors as reasonable and necessary. This care

could be provided by family members, or, as the policy and advertisements for the

policy made clear, by licensed home health agencies. Because I believe this is a

home health care benefit under Montana law, I would reverse on this ground and

remand for further appropriate proceedings.