SSD/SSI: Medical opinions improperly discounted… Kelley reversed… Johnston.

Naomi Hale, 47, applied for SSD and SSI in 5/19 alleging that she became disabled in 3/15 due to DDD; back, neck, hand, wrist, arm, knee, and ankle problems; depression; migraines; and sleep apnea. ALJ Michele Kelley found following a hearing that Hale had severe impairments of cervical, thoracic, and lumbar DDD; CTS; knees osteoarthritis; status post bilateral knee total arthroplasty; trochanteric bursitis of the left hip; and obesity, but that she was not disabled because she had the RFC to perform her past work as an optician apprentice and other jobs existed in significant numbers. The Appeals Council denied her request for review. She seeks judicial review.

Substantial evidence supported Kelley’s conclusion that Hale’s migraines were not severe because they were controlled with medication and PT.

Substantial evidence supported Kelley’s conclusion that Hale’s depression was non-severe because it was rated as a mild impairment.

Substantial evidence supported Kelley’s conclusion that Hale’s urinary incontinence was not severe. She denied any urinary incontinence or bladder dysfunction at most of her medical appointments and while she did report some incontinence, the record contains no evidence that it caused work-related limitations that should have been included in the RFC assessment.

Hale argues that Kelley erred in discounting the opinions of NP Charlene Lewis, PT Sherri Gomes, and treating physician Jessica Bailey. The Revisions to Rules Regarding the Evaluation of Medical Evidence effective 1/18/17 require an ALJ to evaluate persuasiveness of all medical opinions based on:

1. supportability of the opinion;

2. consistence of the opinion;

3. the medical source’s relationship with the claimant;

4. the medical source’s specialization;

5. the medical source’s familiarity with other evidence in the record;

6. the medical source’s familiarity with SSD requirements.

Lewis stated that Hale would need to take unscheduled 15-minute breaks every 1-2 hours, avoid repetitive use of her hands, and be absent from work 3-4 times per month. Kelley found her opinions “not consistent with the many normal physical examination findings” or Hale’s “many activities of daily living.” However, she failed to properly apply the supportability factor to Lewis’s opinions. She failed to explain why they were inconsistent with her own treatment notes. She also failed to apply the consistency factor to Lewis’s opinions. She made no attempt to explain why her opinions were inconsistent with the other medical evidence and Hale’s daily activities. She rejected Lewis’s opinions without citing any inconsistent evidence. Her errors were not harmless. The vocational expert testified that Hale would not be able to sustain employment if she was “off task at least 20 percent of an 8-hour work day and a 40-hour work week.”

Gomes stated that Hale could only tolerate minimal work hours if the work involved repeated stresses and prolonged posturing. Kelley discounted her opinion because it was “vague and conclusory” and not supported by “specific function-by-function physical limitations in a work setting.” She failed to properly apply the supportability and consistency factors. She failed to explain why Gomes’s opinions were not supported by her own treatment notes or why they were inconsistent with the other medical and non-medical evidence. However, the error did not result in any prejudice to Hale because Kelley’s RFC assessment which allowed her to change positions every 30-60 minutes was consistent with Gomes’s opinions as to prolonged postures.

Bailey opined that “prolonged sitting in one position had been hard on [Hale] and [Hale] may need to limit her time at sitting” and she was “not able to work in any capacity at this time.” Kelley did not discuss either of these opinions. Bailey’s statement that Hale was unable to work in any capacity on 3/8/16 does not assess any specific work-related function and therefore does not qualify as a medical opinion under §404.1513(1)(2). Kelley was therefore not required to articulate how persuasive she considered the statement or otherwise address it. However, she erred by failing to address Bailey’s statement that “prolonged sitting in one position had been hard on [Hale] and [Hale] may need to limit her time at sitting.” This is a medical opinion. It addresses Hale’s ability to perform the physical demands of work activities. Kelley was therefore required to address the statement.

The error was not harmless. Kelley’s RFC assessment stated that Hale was capable of sitting “6 hours in an 8-hour workday, with normal breaks.” Had she addressed Bailey’s opinion regarding Hale’s inability to sit for prolonged periods it could have affected the RFC, the hypotheticals she posed to the vocational expert, and her ultimate disability determination.

It is not clear whether Hale is disabled. Remanded to properly apply the supportability and consistency factors to Lewis’s opinions and to address Bailey’s opinion regarding Hale’s inability to sit in one position for a prolonged period.

Hale v. SSA, 44 MFR 284, 10/25/22.

Eric Rasmusson (Rasmusson Law Offices), Missoula, for Hale; Special AUSA Mark Smith.

RACE/SEX/NATIONAL ORIGIN DISCRIMINATION claims by parents of bullied high school student dismissed for failure to exhaust administrative remedies… Christensen.

Owen Mercado’s parents sued Seeley Swan High School and Missoula Co. Public School District 1/21/21 alleging 15 incidents of racial, sexual, and national origin discrimination to which he was subjected by other students. (Owen’s paternal grandfather was from Puerto Rico but Owen was born in California). For example, they allege that other students called him the n-word, a border jumper, a faggot, and a “fuckboi.” The complaint also refers to incidents where he had items stolen and his vehicle was vandalized with drawings of penises and the word “faggot.” A Snapchat was taken of him with hand-drawn penises superimposed, he was attacked by an 8th grader, and he had a meme posted about him on Instagram. Plaintiffs allege that SSHS and Missoula Co. Public School District were made aware of these incidents and did nothing to investigate, stop, or prevent them and that some officials participated in or encouraged them. Plaintiffs advance 16 claims. Defendants request summary judgment. The allegations including whether the incidents occurred at all remain hotly contested. The Court need not wade into these disputed facts because Defendants’ summary judgment motion rests far more on the law and perhaps most importantly it is undisputed that Plaintiffs never exhausted administrative remedies.

Defendants raise a single over-arching argument in support of summary judgment on Plaintiffs’ state law claims — that claims brought under the Montana Human Rights Act fail because they never exhausted administrative remedies and the remaining state law claims are just legal recouchings of the same theories such they fall within its exclusivity and exhaustion requirements. Plaintiffs respond that the non-MHRA state law claims need not be administratively exhausted and in any event Defendants are equitably estopped from asserting an exhaustion defense. The Court disagrees.

The MHRA prohibits all sorts of discriminatory practices including denying anyone an education based on “race, creed, religion, sex, marital status, color, age, physical or mental disability, or national origin.” MCA 49-2-308(1)(a). It also prohibits Defendants from discriminating against an individual for opposing such discrimination or for aiding, abetting, inciting, compelling, or coercing such discrimination. §301. It also constitutes the exclusive remedy for those acts, §512(1), even if a litigant premises what is really an MHRA claim under other legal theories such as the Montana Constitution, Lay (Mont. 2015). To determine whether a claim that is not directly couched under the MHRA is governed by it the Court looks to the “gravamen” of the complaint. Id.

The gravamen of Plaintiffs’ complaint is that they were injured by Defendants’ failure to prevent sexual, racial, and national origin discrimination against Owen and that such discrimination essentially drove him out of SSHS and deprived him of educational opportunities. They argue that “a negligence claim” is not governed by the MHRA simply because “the negligence permitted the discriminatory conduct.” The Court disagrees and the Montana Supreme Court has held otherwise. Arthur (Mont. 2004) (rejecting “other tort claims” such as negligence-based claims or claims for negligent and intentional infliction of emotional distress “where those claims arose from” conduct prohibited by the MHRA). The Court recently expounded on this principle at length in a case in which Plaintiffs’ counsel is also counsel. Rhoten (D.Mont. 2021). All of Plaintiffs’ state law claims are bound by MHRA exclusivity procedures. This presents a significant impediment to their ability to prosecute those claims in this Court.

This is because the MHRA requires such claims to be brought “in conformance with the procedures set forth in the MHRA.” Id.; §49-2-512(1). And the MHRA only permits advancement of MHRA claims in a court after a complaint has timely been submitted to and rejected by the Human Rights Commission. §511(3)(a). Such complaints must be brought within 180 days following the actions complained of. §501(4)(a). Plaintiffs concede that that was never done and the time for doing so has passed. That means their state law claims are barred. (This exhaustion requirement does not generally extend to federal causes unless, as here, the court exercises supplemental jurisdiction over encompassed state law claims.)

Plaintiffs argue that Defendants should be equitably estopped from asserting the failure to exhaust defense because they “hoodwinked” parents into forfeiting their claims by not referring them to the Human Rights Bureau. They assert that Defendants “purposefully conceal” these exhaustion requirements from parents and capitalize on this “knowledge known only to them.” However, the Court cannot disregard the MHRA’s clear statutory directive prohibiting the judicial advancement of a discrimination claim “other than by the procedures specified in the Act.” Borges (Mont. 2018). North Star v. PSC (Mont. 2022) (equitable estoppel cannot be used to defeat argument that plaintiff failed to exhaust remedies specified by §2-4-702(1)(a)).

In any event, “equitable estoppel is not favored” and its application is “doomed” unless all 6 elements are established. Arthur. The Court need not discuss every element. The Court finds no evidence that Defendants engaged in conduct designed to conceal the MHRA’s exhaustion requirements to induce them to not properly advance their claims. They do not even argue that they failed to exhaust because Defendants somehow induced them into thinking exhaustion was unnecessary.

Plaintiffs also argue that exhaustion should be excused because filing an MHRA complaint would have been futile given Defendants’ repeated failure to act on previous complaints. However, a party’s belief that they might obtain an adverse disposition through the administrative process is insufficient to support a finding of futility. Mountain Water (Mont. 2005); Hathaway (Mont. 2021) (“The ‘mere possibility of an adverse outcome’ does not render the process futile.”). But this is all that Plaintiffs offer.

Based on the foregoing, the Court does not address Defendants’ argument that Plaintiffs cannot establish the injuries necessary to sustain their emotional distress claims.

Plaintiffs’ ADA claim argues that Defendants knew of Owen’s disabilities — depression and anxiety — but failed to afford reasonable accommodations. The focal point of this claim is Defendants’ failure to initiate procedures under IDEA. Plaintiffs’ failure to exhaust IDEA remedies forecloses their ADA claim. Courts should generally become involved in IDEA issues “only after a serious and thorough examination of the records of the proceedings undertaken by education professionals and the insights of those experts into the problems of the subject child.” Shields (Mont. 1997).

Plaintiffs’ §1983 claim is similar to all others and complains about Defendants’ alleged failure to respond to reports of discrimination against Owen. Defendants assert that Plaintiffs cannot demonstrate the policy, custom, or practice necessary to sustain the claim. Plaintiffs respond that they have alleged a sufficient number of discriminatory incidents, coupled with Defendants’ failure to investigate, such that a policy, custom, and practice has been established. However, there is no evidence that the actions were occasioned pursuant to an official policy. This is unsurprising because a public school district is obviously unlikely to officially adopt a policy of failing to respond to or prevent discrimination in its schools. Nor have Plaintiffs placed any evidence into the record establishing that the actions were the result of some longstanding practice or custom. That leaves the actions of a final policymaker — generally the superintendent or trustees. None of these officials are alleged to have been involved. The actions of certain principals are mentioned but there is no basis to conclude that they possessed any final policymaking authority.

Legal defects and shortcomings pervade Plaintiffs’ case. Thus summary judgment for Defendants is required. The Court does not mean to minimize the difficulties that Owen experienced at SSHS. Coming of age is a difficult experience only made more difficult by challenging interactions with one’s peers. However, the Court has no basis for affording legal relief.

(Plaintiffs demanded $2.4 million which the District rejected without counteroffer.)

Lechowski-Mercado v. Seeley Swan High School and Missoula Co. Public School Dist., 44 MFR 281, 8/15/22.

Lawrence Henke & David Vicevich (Vicevich Law), Butte, for Plaintiffs; Elizabeth Kaleva, Elizabeth O’Halloran, and Kevin Twidwell (Kaleva Law Office), Missoula, for Defendants.

INSURANCE: Damage from pipe leakage in basement of part-time home excluded under long-term leak exclusion… Molloy.

In 9/20 a pipe in the basement of Mary McKain’s part-time home in Polson released water for 1 month. According to McKain, a pressurized hot water pipe became separated from the hot water tank, sending an open flow of heated water into the basement, with power records indicating that it began on or about 9/19/20. (Although she refers to “an open flow” and a “leak,” she consistently refers to the event as a “leak.”) She reported the claim to Safeco under her Homeowners Policy. Safeco denied it on the basis that the policy excluded damage from such a long-term leak. McKain seeks a declaratory judgment that Safeco is obligated to pay for all losses incurred during the first 13 days of the leak.

The long-term leak exclusion removes from coverage damage that is the result of “continuous or repeated seepage or leakage of water or steam, or the presence or condensation of humidity, moisture, or vapor which occurs over a period of weeks, months, or years.” McKain asserts that “over” renders the exclusion ambiguous. Under her interpretation, the plain language excluding loss from a long-term leak over a period of weeks, months, or years means that loss from a long-term leak under a period of weeks, month, or years is covered. Under that reading the exclusion is ambiguous because there are 3 possible results:

1. When water causes loss during the first 13 days and continues to cause loss thereafter the entire loss is covered.

2. When water causes loss during the first 13 days and continues to cause loss then all losses which occurred during the first 13 days are covered and any loss the insurer can prove occurred after day 13 is excluded.

3. When water does not cause loss during the first 13 days but causes loss thereafter, that loss the insurer proves occurred after day 13 is excluded.

She argues that “no matter how the exclusion is interpreted, all losses caused by water exposure in less than 14 days (two weeks) are covered losses.”

Safeco asserts that the exclusion unambiguously “applies to all losses caused by water leakage or seepage occurring over a period of weeks or more, even where another cause or event contributed to the overall damage.” Under Safeco’s reading “the temporal aspect of the exclusion — over a period of weeks, months, or years — clearly refers to the leakage of water, not the resulting loss.” Safeco has the better position.

The plain language of the introduction to the building property loss exclusions precludes the first of McKain’s interpretations. In no event would the entire loss be covered if “water causes loss during the first 13 days and continues to cause loss thereafter.” The introductory language states that loss resulting from a long-term leak (which McKain implicitly concedes is a leak occurring for 14 days or more) “is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.” Thus even if the policy supported McKain’s reading that loss occurring within the first 13 days of a leak was covered, any loss occurring thereafter is unambiguously excluded.

McKain’s 2nd and 3rd readings are foreclosed when the introductory language is read in conjunction with the long-term leak exclusion. It states: “We do not cover loss caused directly or indirectly by any of the following excluded perils,” clarifying that each exclusion that follows identifies a “peril,” not a “loss.” Thus the long-term leak exclusion identifies a peril — the continuous or repeated seepage or leakage of water or steam which occurs over a period of weeks, months, or years — that excludes any resultant loss from coverage.

McKain’s position that the policy provides coverage for loss caused by water during the first 13 days of a leak even if that leak continues beyond 13 days ignores that the temporal limitation applies to the peril — the continuous or repeated seepage or leakage of water — and not the loss. McKain acknowledges that the event “began on or about September 19, 2020.” She agrees that the leak was discovered 10/19, so the leakage continued for 30 days or about 4 weeks. The duration meets the definition for the excluded peril identified in the exclusion. Thus it is irrelevant whether she sustained damages within any 13-day window because the exclusion excludes peril such as that which occurred here, and once that peril has occurred, the loss that flows from it “directly or indirectly” is excluded.

That conclusion is bolstered by Karon v. Safeco (D. Ariz. 2021) which concluded that the same exclusion was unambiguous and barred coverage for any losses that occurred in the first 13 days of a leak. The plaintiffs incurred losses after a refrigerator water line broke in their vacation home, leaking undetected for an extended time. The plaintiffs argued that the exclusion applied only to losses sustained “over a period of weeks,” meaning that any losses sustained within the first 13 days were covered. The court rejected that argument on the basis that “the operative term is ‘over,’ whereby Section 5 excludes claims for damage occurring ‘over a period of weeks,’ not damage occurring ‘after a period of weeks.’” The court distinguished its conclusion from 2 cases McKain relies on for her ambiguity argument.

The plaintiff in Wheeler v. Allstate (10th Cir. 2017) sustained significant damage to his vacation home as a result of a pipe leak in the basement and the district court granted summary judgment for Allstate. The 10th Circuit determined that a long-term leak exclusion that excluded damage “caused by seepage, meaning continuous or repeated seepage or leakage over a period of weeks, months, or years,” was unambiguous but that it was silent as to whether coverage existed for damage that was caused within a period of “weeks.” It concluded that the exclusion “does not clearly and unmistakably apply to damage caused by less than 14 days of leakage.” It remanded for the district court to determine the factual issue of whether the plaintiff could prove damages that occurred within the first 13 days of the leak.

The plaintiff in Hicks v. American Integrity (Fla. 2018) sustained damage to his home while he was away as a result of a leak in a refrigerator line. American Integrity denied the claim on the basis that the policy “does not insure for loss caused by constant or repeated seepage or leakage of water over a period of 14 or more days” and the district court agreed. The appellate court determined that “it is not unambiguously clear that a provision excluding losses caused by constant leakage of water over a period of fourteen or more days likewise excludes losses caused by constant leakage of water over a period of less than fourteen days.” It determined that the provision had to be read in favor of coverage and remanded on the issue of coverage within the first 13 days of the leak.

Distinguishing Wheeler and Hicks, Karon determined that the plaintiffs’ loss within 13 days was not covered because “the lead-in clause in the policy in Wheeler is meaningfully different than the lead-in clause here.” It emphasized that the lead-in clause in Wheeler excluded loss to property “consisting or caused by” while the lead-in clause to the Safeco policy in Karon excluded loss “caused directly or indirectly by any of the excluded perils. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.” The court ultimately concluded that “the clause here excludes otherwise covered risks, like water damage occurring within the first 13 days, that contribute to the overall loss.” Karon rejected the reasoning in Hicks as non-binding and unpersuasive, pointing to Brooke (WD Tex. 2001) that determined that the same language was unambiguous.

Karon is most persuasive and supports a determination that the policy is unambiguous. Read in its entirety, the building property exclusions exclude loss that results from a leak that occurs over a period of weeks, months, or years. The leak here occurred over a period of weeks so the loss resulting from it is excluded.

Because the long-term leak exclusion unambiguously excludes coverage, McKain’s claims alleging breach of the policy and implied covenant, violation of the UTPA, and punitives necessarily fail.

McKain v. Safeco Ins., 44 MFR 280, 8/25/22.

Ann Moderie (Moderie Law Firm), Polson, Matthew O’Neill (O’Neill Law Office), Polson, and Tyler Moss (Moss Law), Polson, for McKain; Carey Matovich & Katherine Huso (Matovich, Keller & Huso), Billings, for Safeco.

DISABILITY DISCRIMINATION: Request to be reassigned to a position with no contact with a co-worker who was causing anxiety & depression not reasonable on its face or in the run of cases, no need to resort to sham affidavit rule as to whether Plaintiff requested no contact or merely limited contact… DeSoto.

GSK, a subsidiary of GlaxoSmithKline, produces pharmaceuticals, vaccines, and healthcare products at 20 sites in the US. Fabiola Rough was hired by GSK in 2013 at the Hamilton vaccine plant as a Value Stream Manufacturing Technician. Over the years she had numerous conflicts with co-worker Audrey Needles to which 3 healthcare providers attributed her depression and anxiety for which she was granted several short-term disability leaves. In 8/19 Rough went to work for Juno Therapeutics in Washington and resigned from GSK. She filed a charge with EEOC which issued a dismissal and notice of rights in 2/21. She sued GSK in 5/21 asserting claims for failure to accommodate and discriminatory termination in violation of the ADA. Because she had resigned, her claim is based on a theory of constructive discharge. GSK requests summary judgment on all claims.

GSK argues that it is entitled to summary judgment on Rough’s failure to accommodate claim because she refused to participate in the interactive process and her requested accommodation — that she be placed in a position having no contact with Needles — was unreasonable. Because it is dispositive, the Court addresses its reasonable accommodation argument first.

Rough contends that she did not request a position with no contact with Needles, but one in a different department that would simply limit or minimize their contact, noting that “reassignment to a vacant position” may qualify as a reasonable accommodation under 42 USC 12111(9)(b).

To the extent that Rough argues that GSK has mischaracterized her requested accommodation, the Court is not persuaded. In opposition to GSK’s motion for summary judgment she submitted a declaration:

My request for an accommodation to GSK has never been to have no contact with Ms. Needles. Instead, I requested to be reassigned to a vacant position so that i would not be required to work, side-by-side, in the same department as Ms. Needles and so that I would not be required to constantly interact with Ms. Needles.

However, as GSK points out, at her deposition the following exchange occurred between her and GSK’s counsel:

Q: Would you agree that your request was to have no interaction — and I’m assuming the co-worker again is Ms. Needles. Is that a fair characterization of what your request was, Fabiola?

A: Yes.

GSK asks the Court to apply the sham affidavit rule, that “a party cannot create an issue of fact by an affidavit contradicting [her] prior testimony.” Yeager (9th Cir. 2012). However, “the sham affidavit rule should be applied with caution because it is in tension with the principle that the court is not to make credibility determinations when granting or denying summary judgment.” Id. “In order to trigger the sham affidavit rule, the district court must make a factual determination that the contradiction is a sham, and the inconsistency between a party’s deposition testimony and subsequent affidavit must be clear and unambiguous to justify striking the affidavit.” Id. Even without applying the sham affidavit rule, Rough’s declaration is not sufficient to raise a genuine material fact issue as to whether she requested an accommodation of no contact with Needles.

GSK provided uncontroverted documentary evidence demonstrating that the point of Rough’s accommodation requests was to have little to no contact with Needles, and that LCSW Melissa Zeilinski expressly requested a “no contact” accommodation in 8/19. Rough went on short-term disability leave in 5/18 and in 6/18 GSK received the first of several certifications from her healthcare providers. Kevin Brown advised that “Rough has feared for her safety related to [Needles’s] actions and expressed hostility” and that the situation would “need to be remedied” before she could return to work. In 8/18 Amanda Springer requested accommodation for Rough in the form of “very little to no contact/interaction” with Needles. In 10/18 Springer advised that she would need to “avoid contact” with Needles upon return to work. In 11/18 Springer stated that she should “work away from” Needles. When Rough returned in 11/18 GSK assigned non-production tasks and moved her workstation away from Needles. She went on short-term disability leave again in 5/19, and on 6/6/19 Zeilinski advised that she would be able to return only if she did not have to work in the same department as Needles. In 7/19 Zeilinski stated that she should remain on leave “until given a position in another area away from” Needles. On 8/22/19 Zeilinski stated that she would not be able to return until she was “able to work without contact” with Needles.

The Court agrees with GSK that the many certifications by Rough’s healthcare providers can fairly & accurately be characterized as evidencing ever-increasing restrictive accommodation requests, culminating in 8/19 with an express recommended accommodation of no contact or interaction with Needles. These certifications are further supported by Rough’s deposition testimony that her accommodation request was to have no interaction with Needles.

The next question is whether no contact or interaction with Needles is “reasonable on its face, i.e., ordinarily or in the run of cases.” Barnett (US 2002). Drawing from analogous caselaw, the Court finds that she has not met this initial burden. Id. (looking to analogous caselaw to support its conclusion that a proposed accommodation will not be reasonable in the run of cases).

Gaul (3rd Cir. 1998) held that the employee’s “request to be transferred away from individuals causing him prolonged and inordinate stress was unreasonable as a matter of law under the ADA.” It reasoned that the plaintiff “is essentially asking this court to establish the conditions of his employment, most notably, with whom he will work. However, nothing in the ADA allows this shift in responsibility.” Several other courts have similarly held that a request for reassignment away from or for no contact with a co-worker or supervisor is unreasonable as a matter of law.

The case that Rough relies on to support her argument that it was reasonable to request no contact with Needles is materially distinguishable. The plaintiff in Vitchayanonda (CD Cal. 2019) requested a reduced schedule or transfer to a different unit because her workload was exacerbating her stress and causing physical deterioration. Although the defendant argued that she wanted to get away from her supervisor, the Court found that that was only because the supervisor refused to honor the accommodation for a reduced schedule that she was initially provided. It concluded that transfer to a different unit was reasonable for her disability. Unlike here, she had requested a transfer because of her heavy workload, not to avoid contact with a co-worker.

While this Court does not go so far as to adopt a per se rule that a request for no contact or interaction with a co-worker is necessarily unreasonable as a matter of law, it does find that Rough has not shown that her request is “reasonable on its face, i.e., ordinarily or in the run of cases.”

In addition, Rough has not shown that special circumstances render her request reasonable. A plaintiff may make such a showing by demonstrating that her requested accommodation “will not likely make a difference” to the defendant’s operations.” Hamilton (D.Mont. 2019); Barnett. Rough provides no reason why her request that GSK ensure no contact with Needles “will likely not make a difference” to its operations, while GSK provided uncontroverted evidence that reassigning her to such a position would have resulted in significant disruption to its operations. Hamilton Site Manager Stephen Brandt explained in his declaration that interaction among Site employees is possible regardless of what department they work in, and the ability to work and communicate with other departments is an essential function of every position at the Site. According to Brandt, the only way to ensure that employees have no contact would be for the Site to return to running separate shifts like it did at the old facility or for GSK to “build an entirely separate facility with no shared spaces or overlap in production.” Perhaps obviously, both of these options would “carry significant expense and disruption.”

Rough points to evidence that she maintains shows that she was qualified for several vacant positions at the Site and other GSK locations. But even assuming that she has raised a factual dispute as to whether she met the qualifications for other positions, because her request was not reasonable either on its face or under the circumstances GSK was not required to transfer her to those positions.

Rough has not presented any evidence of special circumstances showing why her request for no contact with a particular co-worker “can constitute a ‘reasonable accommodation’ even though in the ordinary case it cannot.” Barnett. GSK is entitled to summary judgment on her failure to accommodate claim. Because there was no failure to accommodate, “there was no discriminatory termination.” Hamilton. Thus GSK is entitled to summary judgment on her discriminatory termination claim.

The Court need not address GSK’s alternative argument that Rough’s claims fail because she refused to participate in the interactive process required by the ADA.

Rough v. GlaxoSmithKline, 44 MFR 279, 7/27/22.

Torrance Coburn (Tipp, Coburn & Associates), Missoula, for Rough; Jenny Jourdonnais & Charles Hansberry (Hansberry & Jourdonnais), Missoula, for GSK.

LONG-TERM CARE INSURANCE: Lifetime home care and numerous other claims under Long Term Care Policy and HomeCare Recovery Policy rejected on summary judgment… Christensen.

James & Dorothy Carroll applied for a Long Term Care Policy with Equitable Life & Casualty in 3/90 which was issued with an effective date of 3/27/90. They later applied for a HomeCare Recovery Policy which Equitable issued with an effective date of 1/13/95.

Dorothy was admitted to St. Patrick’s Hospital 7/26/18. She was discharged to The Village Health & Rehab 8/8/18. She began privately paying for her stay at The Village 10/5/18. She was discharged to her home after 79 total days on 10/26/18. In 1/19 she submitted a claim under the LTC Policy for the part of her stay at The Village that was not covered by Medicare Advantage and for the Home Again Benefit. Equitable paid $3,150 under the LTC Benefit ($150/day for the 21 days that she privately paid for her stay) and $6,330 under the Home Again Benefit ($2,250 for the first 15 days and $4,080 for the following 34 days). She also submitted a claim under the HCR Policy and Equitable determined that she was eligible for a maximum $19,200 in Level I benefits based on her Diagnostic Related Group number and $15,000 in Level III benefits. It paid her $19,200 in Level I benefits and $15,000 in Level III benefits.

James was admitted to St. Patrick’s 10/19/18 and discharged 10/24/18. Equitable determined that he was eligible for a maximum $7,600 under the HCR policy based on his DRG and paid $7,600 Level I benefits. He was admitted to St. Patrick’s again 4/10/19 and discharged 4/11. Equitable determined that no benefits were owed because he was in the same Period of Care that began after his first stay 10/19/18 and his DRG for his April hospitalization was lower than for his October hospitalization. He was admitted to St. Patrick’s again 5/24/21 and discharged 5/28/21. Equitable’s successor SILAC Ins. (the name changed 5/7/20) determined that he was eligible for a maximum Level I benefit of $11,600 under the HRC policy based on his DRG for that hospitalization.

Carrolls’ guardians David & Della Clark sued SILAC in State Court 5/21/20. SILAC removed to this Court and Plaintiffs filed an amended complaint alleging that the LTC Policy “provides unlimited benefits for stays in long-term care facilities” like The Village and SILAC breached that contract by claiming it was not responsible for paying any benefits paid by Medicare and it owes additional Home Again benefits after Dorothy’s hospital stay. They allege that the LTC Policy violates Montana’s Long Term Care Insurance Act by conditioning home health care benefits on a prior institutionalization and as a result of the policy’s provision invalidating any provision that conflicts with the law of the beneficiary’s state on the policy’s effective date it cannot enforce the prior institutionalization requirement.

Plaintiffs allege that the HCR policy provides “unlimited” Level I and II HomeCare benefits for their lifetime and that it is a limited benefit policy which Montana no longer authorizes.

Count I requests declaratory judgment; Count II alleges that SILAC breached its contractual obligations; Count III alleges that it violated MCA 33-18-201; Count IV alleges that it violated the LTCIA and the implied covenant; Count V alleges that it breached its fiduciary duty; Count VI alleges constructive fraud. Count VII alleges fraud. The parties request summary judgment. Hearing was held 4/22/22. Defendant’s motion will be granted.

Plaintiffs’ claims concerning the LTC Policy.

Plaintiffs first allege that SILAC’s refusal to pay benefits under the LTC Policy for the part of Dorothy’s stay at The Village that was covered by Medicare is inconsistent with the policy representation that “THIS IS NOT MEDICARE SUPPLEMENT COVERAGE.” Second, they allege that SILAC owes additional Home Again Benefits including home care by a home health agency for “any need” they may have.

The LTC Policy obligates SILAC to pay “the Eligible Charges for Your stay in a Long Term Care Facility or Nursing Home at the Percentage You selected” when certain criteria apply. It defines “Eligible Charges” as “expenses You are obligated to pay as a resident inpatient which are charged directly by the Long Term Care Facility or Nursing Home for services provided.” Under the heading “EXCEPTIONS” it states: “This section tells You when We will not pay benefits under Your Policy. This policy does not cover any loss: 1. For benefits paid under Medicare and any Federal or State law or regulation (except Medicaid) unless an Eligible Charge is made which You must pay.” These provisions make clear that SILAC will pay charges that the insured must pay. Because Dorothy’s Medicare Advantage covered part of her stay at The Village with no copay required, SILAC did not breach its contract by refusing to pay LTC Benefits for those days.

Plaintiffs assert that the disclaimer in SILAC’s “Outline of Coverage” that “THIS IS NOT MEDICARE SUPPLEMENT COVERAGE” is inconsistent with the LTC Policy’s exclusion for benefits paid under Medicare, which renders the policy ambiguous as to whether it provides “unlimited benefits for stays in long-term care facilities like Village.” This is meritless for several reasons. First, in addition to the provisions which make clear that SILAC will pay only for charges that the insured must pay, the Policy Schedule clearly states that the “MAXIMUM DAILY AMOUNT OF ELIGIBLE CHARGES” is $150. The maximum lifetime benefit is unlimited. No consumer could reasonably expect the LTC Policy to provide “unlimited” benefits in light of the exclusions and daily maximum. Second, the LTC Policy contains an “Entire Contract” clause which provides that “this Policy, with its endorsements and any attached papers is the entire contract between You and Us. No agent may change this Policy or waive any of its provisions.” The “NOT MEDICARE SUPPLEMENT COVERAGE” disclaimer is extrinsic to the contract and cannot alter its unambiguous terms; even if admissible, this evidence does not render the contractual language susceptible to the meaning offered by Plaintiffs. Richards (Mont. 2009). Third, a Medicare supplement policy has a specific definition under Montana law; it is a policy “that is advertised, marketed, or designed primarily as a supplement to reimbursements under medicare for the hospital, medical, or surgical expenses of persons eligible for medicare.” MCA 33-22-903(8). There is no dispute that the LTC Policy fits within the definition of “Long-term care insurance” under Montana law, which excludes “any insurance policy that is offered primarily to provide basic medicare supplement coverage.” MCA 33-22-1107(6)(b)(i). SILAC’s legally accurate statement that the LTC Policy is not Medicare supplement coverage does not render the policy ambiguous.

Under the LTC Policy’s unambiguous terms SILAC was obligated to cover up to $150/day in Eligible Charges during Dorothy’s stay at The Village. She incurred Eligible Charges only 10/5-10/26 when she began paying privately. SILAC paid the daily maximum of $150 for those 21 days. It fulfilled its obligations under LTC Policy terms as to her stay at The Village.

Although Plaintiffs’ arguments as to the Home Again Benefit primarily focus on legality of the prior institutionalization requirement, their complaint asserts that SILAC breached the LTC Policy by contending that it paid the maximum allowable Home Again Benefit following Dorothy’s stay at The Village because the “LTC Policy states the maximum benefit is 1825 days.” However, the plain terms of the policy make clear that SILAC will pay Home Again Benefits for the number of days your Long Term Care stay exceeds 30 days, but for no longer than the Home Again Lifetime Maximum.” No reasonable consumer could understand the LTC Policy to obligate SILAC to pay the Home Again Benefit for as long as the insured utilizes home care, subject only to the Lifetime Maximum.

Plaintiffs allege that the LTC Policy violates the LTCIA by failing to contain a paragraph describing “limitations or conditions on eligibility for benefits,” conditioning receipt of home health care benefits on a prior hospitalization or institutionalization, and conditioning eligibility for home care on prior institutionalization in long-term care for more than 30 days. SILAC contends that §1115 of the LTCIA does not apply to the LTC Policy because the effective date of this provision was 1 day after the effective date of the LTC Policy. Plaintiffs argue that the statute applies to policies delivered or issued for delivery in Montana on or after 10/1/89, and their LTC Policy was issued on or after 5/24/90. While they are correct that the statute generally “applies to policies delivered or issued for delivery in [Montana] on or after October 1, 1989,” the section prohibiting prior hospitalization or institutionalization requirements, now codified as §33-22-115, was expressly carved out from that effective date and was “effective one year after passage and approval,” and approval occurred 3/28/89. 1989 Mont. Laws 810. In short, §33-22-1115 did not go into effect until the day after the Effective Date of Carrolls’ LTC Policy.

The parties dispute whether the LTC Policy was “delivered or issued for delivery” 3/27/90 — the policy’s Effective Date — or 5/24/90 — the date it was “checked” by the “Policy Issue Department.” Resolving the precise delivery or issue date is unnecessary because the contractual terms provide that “any provision of this Policy which, on its Effective Date, is in conflict with the laws of the state in which you reside on that date is amended to conform to the minimum requirements of those laws.” §33-22-1115 did not go into effect until the day after Carrolls’ LTC Policy’s Effective Date and thus the policy was not automatically amended to conform with §33-22-1115.

Plaintiffs contend that SILAC “continued transacting insurance with Carrolls by renewing” the LTC Policy and thus it violated §33-22-1115 upon each renewal. The policy provides: “You may renew this Policy as long as You live. To renew, just pay a renewal premium. After this Policy is in force We cannot refuse to renew it or place any restriction on it if the premium is paid on time.” Montana law distinguishes between a renewal — “the right to require the execution of a new lease or contract” — and an extension, “which operates to extend the term of the original agreement, which then becomes a contract for both the original and the extended term.” Helena Light & Ry. (Mont. 1920). The Court must “look to the reading of the entire contract, and to the practical construction given to it by the parties themselves, rather than to the phraseology used.” Id. Although the LTC Policy refers to “renewal,” its terms make clear that SILAC intended to bind itself to the original terms for Carrolls’ lifetimes without execution of a new contract, and payments of renewal premiums thus operated as extensions of the original contract rather than renewals. Id.; Smith (6th Cir. 2021) (“in the long-term care context, courts have consistently recognized whether the insurer can cancel coverage as a dividing line between extended contracts and renewed contracts.”); Bushnell (Wash. 2011) (statute that prohibited prior institutionalization requirements in policies “delivered or issued for delivery” after the effective date did not apply to renewals). Accordingly, Carrolls’ continued payments of premiums did not “renew” the LTC Policy such that it was automatically amended by passage of the LTCIA.

Assuming without deciding that the LTCIA applies to the LTC Policy, the policy’s conditions do not violate the statute. It does not condition eligibility for a benefit provided in an institutional care setting on receipt of a higher level of institutional care. The parties dispute whether it conditions eligibility for a benefit “other than waiver of premium, postconfinement benefits, postacute care benefits, or recuperative benefits, on a prior institutionalization requirement,” §33-22-1115(1)(c), and whether it “contains a benefit advertised, marketed, or offered as a home health care benefit” that is impermissibly conditioned on a prior institutionalization requirement, §1115(3).

The LTC Policy provides the Home Again Benefit “when You come home again following a Long Term Care stay of more than 30 days.” Plaintiffs contend that this is a home healthcare benefit within the meaning of §1115(3) and thus its receipt cannot be conditioned on a prior institutionalization requirement. SILAC argues that it is a recuperative benefit within the meaning of §1115(1)(c) which permits SILAC to condition its receipt on a prior institutional stay of not more than 30 days. §1115(4). SILAC is correct as a matter of statutory and contractual interpretation.

The LTC Policy described the Home Again Benefit:

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.

Plaintiffs focus on “home health agencies” in the list of providers to support their argument that the Home Again Benefit is a home health care benefit, but §33-22-1001 defines “home health care” narrowly as “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.” The LTC Policy’s contractual language is much broader, obligating SILAC to pay benefits “regardless of who provides for Your care” and allowing the insured to use the benefits “for any need You may have.” Additionally, the Home Again Benefit expressly is intended “to help in Your recovery following a Long Term Care stay”; it is expressly recuperative and thus falls within the §1115(1)(c) exception. Contrary to Plaintiffs’ argument, this plain-text reading does not render (3) superfluous; the general prohibition on prior institutionalization requirements is subject to broad exceptions for postconfinement, postacute care, or recuperative benefits, §1115(1)(c), and (3) specifies that home health care benefits are not within those exceptions even if, for example, they are provided postconfinement. Accordingly, the LTC Policy’s institutionalization requirement for the Home Again Benefit does not violate the LTCIA.

Assuming in Plaintiffs’ favor that the LTC Policy was issued after the effective date of §33-22-1115 and the statute therefore does apply to the LTC Policy, the policy does not comply with §1115(2), which requires a “long-term care insurance policy containing a limitation or conditions for eligibility other than those prohibited in subsection (1)” to “clearly label, in a separate paragraph of the policy or certificate entitled ‘Limitations or Conditions on Eligibility for Benefits’, the limitations or conditions, including any required number of days of confinement.” §1115(2). Plaintiffs argue that this non-compliance renders the prior institutionalization requirement void as contrary to public policy.

Plaintiffs’ cases do not support voiding the prior institutionalization requirement as the remedy for the LTC Policy’s noncompliance with §111(2)’s disclosure requirement. The Montana Supreme Court has voided coverage exclusions that result in failure to provide minimum coverage required by statutes, subrogation clauses that undermine the made-whole doctrine, and “provisions that render coverage ‘illusory’ by ‘defeating coverage for which the insurer has received valuable consideration,’” particularly when an anti-stacking provision means that an insurer received consideration for coverage not provided. Fisher (Mont. 2013); Bennett (Mont. 1993). The violation alleged here concerns the method of disclosing a limitation or condition to the insured. Instead of disclosing the 30-day institutionalization requirement for the Home Again Benefit in a separate “Limitations” or “Conditions” paragraph, the LTC Policy disclosed it on the 2nd page of the policy — its “BENEFITS” page — and as part of the benefit itself: “We will pay the Home Again Benefit when: 1) You come home again following a Long Term Care stay of more than 30 days. We will pay Home Again Benefits for the number of days your Long Term Care stay exceeds 30 days, but for no longer than the Home Again Lifetime Maximum.” Plaintiffs have produced no evidence that they were unaware of the 30-day institutionalization requirement for the Home Again Benefit or otherwise suffered any injury as a result of the LTC Policy’s method of disclosing that requirement; rather, they contend that they were injured by SILAC’s refusal to pay additional Home Again Benefits. Nor could they produce any evidence that the LTC Policy’s method of disclosure rendered their coverage illusory because they received thousands of dollars in Home Again Benefits following Dorothy’s hospitalization and stay at The Village in accordance with the policy. Accordingly, SILAC’s method of disclosing the prior institutionalization requirement does not limit coverage in a manner that “contravenes an express statute, undermines the made-whole doctrine, constitutes illusory coverage, or violates public policy in any other way” such that the prior institutionalization requirement itself must be voided. Fisher.

The Court further observes parallels with High Country Paving (Mont. 2022) which held that an insurer’s technical violation of Montana’s Property & Casualty Insurance Policy Language Simplification Act could not be used to invalidate an unambiguous policy exclusion, relying on the PSA’s purpose — “to establish minimum language and format standards to make property and casualty policies easier to read” — as well as stating that the minimum policy simplification standards “are not intended to increase the risk assumed under policies.” Unlike the PSA, the LTCIA plainly intends to increase the insurer’s risk to the extent it establishes minimum standards for long-term care insurance. However, the separate paragraph requirement in §1115(2) does not place substantive limitations on the kinds of conditions insurers may impose, but regulates the method of disclosing those conditions or limitations. Because the prior institutionalization condition was unambiguously and prominently disclosed in the LTC Policy, the reasoning of High Country Paving further counsels against invalidating the prior institutionalization requirement as a remedy for SILAC’s non-compliance with §1115(2).

In sum, SILAC has paid all benefits owed to Plaintiffs under the LTC Policy.

Claims concerning the HCR Policy.

Plaintiffs allege that the HCR Policy’s Level I & II HomeCare Benefits “are unlimited for Carrolls’ lifetime.” While it is true that the Lifetime Maximum Eligible Charges for Levels I & II are “UNLIMITED,” this lifetime maximum follows the HCR Policy’s description of benefits which expressly limits the Eligible Charges for Level I & II HomeCare Recovery Benefits “to the dollar amount for Your DRG as shown on the HomeCare Recovery Schedule,” a subsection of the policy labeled “OTHER IMPORTANT PROVISIONS” that explains the use of DRGs and how Periods of Care are determined, and 7 pages of “HomeCare Recovery Schedule Levels I & II” DRG maximums. No reasonable consumer would understand the unlimited Lifetime Maximum Eligible Charges to render all of these provisions & limitations superfluous.

Plaintiffs rely heavily on statements by SILAC’s representatives in arguing that the HCR Policy is ambiguous as to whether it provides unlimited home healthcare benefits. First they emphasize a statement that if they received home healthcare services within 30 days following discharge from a hospital or nursing home SILAC would “pay 100% of the eligible charges that they incur during the first week, following the first week, we will pay 100% if those services are prior authorized and if they are not prior authorized, we’ll just pay 75% at that point going forward. That’s an unlimited time frame for them.” They interpret this to mean that SILAC’s representatives understood that the benefit was unlimited under the HCR Policy. However, this statement does not create ambiguity as to the HCR Policy’s limits for 2 reasons.

First, the statement concerning the time frame for home care recovery benefits being unlimited is consistent with express terms of the HCR Policy; Level I & II benefits are limited by maximum eligible charges for each DRG code, not by a specific time frame in which those maximum eligible charges must be incurred. Second, even if Plaintiffs reasonably could have interpreted the statement to mean that the HCR Policy provided unlimited Level I or II home healthcare benefits, the express terms of the policy describe limited benefits, and the Entire Contract clause states that “no agent may change this Policy or waive any of its provisions.” The statement that there is “an unlimited time frame for Level I & II HCR Benefits does not support Plaintiffs’ reading of the HCR Policy as providing unlimited Level I & II home healthcare benefits.

Plaintiffs further rely on a statement by a SILAC employee in an internal email that “the Service Center Rep quoted to the HC Agency that the [Level I & II] benefit was unlimited” and noting that “we are setting up training with the Service Center reps on some of our lesser-known and harder-to-understand policies.” Even viewing this in the light most favorable to Plaintiffs, this characterization of the representative’s description of the benefit as “unlimited” and acknowledgment that the HCR Policy may be “harder to understand” than SILAC’s other policies does not render the HCR Policy susceptible to Plaintiffs’ interpretation that it offered unlimited coverage for home healthcare services. The HCR Policy unambiguously limits Eligible Charges to the DRG code assigned for the insured’s institutionalization or procedure for each Period of Care. With this in mind, the Court will analyze each of Plaintiffs’ claims under the HCR Policy.

SILAC paid $19,200 in Level I benefits and $15,000 in Level III benefits after Dorothy’s 7-8/18 hospitalization. Plaintiffs do not dispute the DRG code assigned to this hospitalization, which determined the maximum Eligible Charges for this Period of Care. Nor do they argue that the Level III benefits were incorrectly limited to $15,000 (75% of Eligible Charges incurred during the first week and 75% of Prior Authorized Eligible Charges incurred in following weeks — $20,000 lifetime maximum Level III Eligible Charges). Rather, they assert that the HCR Policy promised that “HomeCare benefits for Level I and II are unlimited for Carrolls’ lifetime.” As discussed above, this interpretation of the HCR Policy is objectively unreasonable. SILAC fulfilled its obligations under terms of the HCR Policy and does not owe additional Level I or III HCR benefits concerning this hospitalization.

SILAC paid $7,600 in Level I HomeCare Recovery Benefits after James’s 10/18 hospitalization. As with Dorothy’s 7-8/18 hospitalization they argue that the HCR Policy promises unlimited Level I benefits. For the reasons discussed above, no reasonable consumer could interpret the HCR Policy to promise unlimited home healthcare benefits. SILAC does not owe additional level I HCR benefits concerning this hospitalization.

SILAC did not pay any benefits under the HCR Policy for James’s 4/19 hospitalization because it determined that he was in the same Period of Care that began upon his 10/18 hospital stay, and his DRG for his April hospitalization was lower than that for his October hospitalization. In addition to their argument that the Level I & II benefits are unlimited, Plaintiffs claim that the HCR Policy’s definition of “Period of Care” is “indecipherable” and must be interpreted in favor of coverage.

The HCR Policy defines a Period of Care as

a period of time beginning with the first day You receive HomeCare Recovery Services for which HomeCare Recovery Benefits-Level I or II are payable. A Period of Care ends on the last day You receive HomeCare Recovery Services prior to 30 consecutive days during which You did not receive HomeCare Recovery Services and were not confined to a Hospital or Nursing Home.

Under the heading “OTHER IMPORTANT PROVISIONS” and next to a sub-heading of “Successive Periods of Care,” the HCR Policy states that “each Period of Care for HomeCare Recovery Benefits-Level I or II not separated by at least 6 consecutive months during which You do not receive HomeCare Recovery Services will be deemed one Period of Care.” The HCR Policy also states that “if two or more DRGs apply, HomeCare Recovery Benefits will be based upon the largest DRG Maximum. HomeCare Recovery Benefits will be paid under only one DRG Maximum during any one Period of Care.”

Although these provisions are not especially simple, they are not ambiguous. A Period of Care begins upon the insured’s use of HomeCare Recovery Services for which benefits are payable and ends when the insured stops receiving those services unless the insured resumes the services within 30 days of that end date. Following the end date there must be 6 consecutive months in which the insured does not receive HomeCare Recovery Services before a new Period of Care can begin. If the insured resumes HomeCare Recovery Services within those 6 months SILAC is obligated to pay only the maximum Eligible Charges for the largest DRG Maximum within that Period of Care. By including these terms the parties bargained to allocate the risk of incurring home healthcare costs following successive institutionalizations or outpatient procedures; SILAC agreed to pay up to the highest DRG maximum, accepting the risk of having to pay for additional home care services following a major procedure shortly after paying for services following a minor hospitalization, while Carrolls agreed to accept only the highest DRG maximum for each Period of Care, accepting the risk that SILAC may not pay for all the expenses they incurred especially if multiple institutionalizations or procedures occurred in quick succession. Plaintiffs have not set forth any facts showing that SILAC incorrectly determined that James’ 4/19 hospitalization and claim under the HCR Policy fell within the 6-month limitation on successive Periods of Care, nor have they asserted that SILAC incorrectly determined that the 4/19 hospitalization’s DRG Maximum was less than that for his 10/18 hospitalization; instead, they dispute that James was in the same Period of Care “because the HomeCare Policy’s definition of ‘period of care’ does not make sense.” As explained above, the Court disagrees. There is no dispute of material fact that SILAC fulfilled its obligations under terms of the HCR Policy and does not owe additional Level I HCR benefits concerning the 4/19 hospitalization.

SILAC paid $11,600 in Level I HomeCare Recovery Benefits after James’s 5/21 hospitalization. As with Dorothy’s 7-8/18 hospitalization and James’s 10/18 hospitalization, Plaintiffs argue that the HCR Policy promises unlimited Level I benefits. For the reasons discussed above, no reasonable consumer could interpret the HCR Policy to promise unlimited lifetime home healthcare benefits. SILAC does not owe additional Level I HCR benefits concerning this hospitalization.

Plaintiffs allege that the HCR Policy violates Montana law because Montana repealed its statutory scheme “authorizing” limited benefit disability policies in 1997. SILAC responds that the repeal has no effect on legality of the HCR Policy because it was never regulated under that statute. SILAC is correct. Since 1981 Montana has regulated home healthcare coverage under the Disability Insurance chapter of Title 33, but unlike the LTCIA, the statute governing home healthcare coverage does not set any minimum standards, but merely provides that insurers and health service corporations transacting health insurance business in Montana “shall make available benefits for home health care.” MCA 33-22-1002. The repealed statute authorized “limited benefit” disability policies that were defined by reference to the statute, which limited its applicability to policies that were permitted not to comply with certain mandated healthcare coverage requirements because they were issued to small employers, disabled workers, and select others. MCA 33-22-1201-1204 (1995). The HCR Policy plainly does not fall within the repealed statute’s definition of a limited benefit disability policy.

SILAC argues that Plaintiffs’ claim that it violated the LTCIA and breached the implied covenant is barred by UTPA §33-18-242(3) (“An insured who has suffered damages as a result of the handling of an insurance claim may bring an action against the insurer for breach of the insurance contract, for fraud, or pursuant to this section, but not under any other theory or cause of action. An insured may not bring an action for bad faith in connection with the handling of an insurance claim.” The UTPA plainly bars Plaintiffs’ claim to the extent that it attempts to assert a standalone violation of the LTCIA, and summary judgment for SILAC is warranted on that claim. But courts appear to be divided as to whether the UTPA prohibits a claim for contract damages based on an alleged breach of the implied covenant of good faith & fair dealing. The Court need not resolve this because Plaintiffs’ claim that SILAC breached the implied covenant rests on their allegations that the LTC Policy and HCR Policy violate Montana law and that SILAC failed to disclose that violation. Because the policies do not violate Montana law except insofar as the LTC Policy does not comply with disclosure formatting requirements of the LTCIA and Plaintiffs have not submitted any evidence that they were unaware of the prior institutionalization requirement or that this noncompliance caused them any damages, summary judgment for SILAC on breach of the implied covenant is warranted.

The UTPA clearly preempts Plaintiffs’ tort claim for breach of fiduciary duty. Even if not preempted, their claim that SILAC breached its fiduciary duty is based on their allegations that the LTC Policy and HCR Policy violate Montana law and that SILAC “misrepresented the legalities of these policies in order to continue collecting premiums from Carrolls.” Because the policies do not violate Montana law except insofar as the LTC Policy does not comply with disclosure formatting requirements of the LTCIA and Plaintiffs have not submitted any evidence that they were unaware of the prior institutionalization requirement or that this noncompliance caused them any damages, summary judgment for SILAC on breach of fiduciary duty is warranted.

To the extent that Plaintiffs’ UTPA, fraud, and constructive fraud claims are based on their allegations that the LTC Policy and HCR Policy violate Montana law and/or that SILAC misrepresented that they complied with Montana law, SILAC is entitled to summary judgment because the policies do not violate Montana law except insofar as the LTC Policy does not comply with disclosure formatting requirements of the LTCIA and Plaintiffs have not submitted any evidence that they were unaware of the prior institutionalization requirement or that this noncompliance caused them any damages.

Plaintiffs also advance a claim under the UTPA and their fraud and constructive fraud claims based on alleged misrepresentations of pertinent facts or policy provisions relating to coverages. The Court has concluded that SILAC fulfilled all of its obligations under the express terms of the policies as to Carrolls’ claims, and Plaintiffs do not dispute the factual bases on which SILAC relied to contest their claims for unlimited benefits for home healthcare services. Accordingly, SILAC “had a reasonable basis, factually and legally, to contest [their] claim,” and summary judgment for SILAC on their UTPA claim is warranted.

The misrepresentations they identify as key to their fraud and constructive fraud claims require more precise parsing:

“Equitable purposefully backdated the LTC Policy to avoid compliance with the LTC Act.” The Court has concluded that the LTC Policy does not violate the LTCIA except to the extent that it does not comply with the disclosure formatting requirements of §1115(2) and that Plaintiffs did not submit any evidence that they were unaware of the prior institutionalization requirement or that this noncompliance caused them damages. They have failed to establish any consequent and proximate injuries or damages caused by any reliance on the effective date of the LTC Policy.

“The LTC Policy is ambiguous because it purports not to be a supplement but then only provides coverage supplemental to Medicare.” The Court has concluded that SILAC’s statement that the LTC Policy is not Medicare supplement coverage does not render the policy ambiguous and that the statement is not false under Montana’s definitions of long-term care insurance and Medicare supplement insurance.

“Equitable represented that the LTC Policy conforms to Montana law, even though it violates the LTC Act because it conditions coverage on a prior-institutional stay.” The Court has already concluded that the prior institutionalization requirement for the Home Again Benefit complies with the LTCIA.

“Equitable never took any steps to comply with Montana law even when issuing endorsements and despite its representation that the policy would conform to the law.” The Court has concluded that the LTC Policy does not violate the LTCIA except to the extent that it does not comply with the disclosure formatting requirements of §1115(2) and that Plaintiffs did not submit any evidence that they were unaware of the prior institutionalization requirement or that this noncompliance caused any damages. Additionally, the Court has concluded that the LTC Policy’s self-amendment provision did not apply to §1115 because that section was not effective until the day after the effective date of the policy and the policy was not automatically amended upon its renewal (or issuance of endorsements) because its terms make clear that the parties intended to bind themselves to the original terms for Carrolls’ lifetimes.

“Equitable’s Outline of Coverage contradicts the LTC Policy Schedule.” Plaintiffs cite pgf. 49 of the Amended Complaint which states that the Outline of Coverage states that the maximum Home Again Benefit is 1460 days (4 years) while the LTC Policy states that the maximum benefit is 1825 days (5 years). There is no evidence that they have relied on this inconsistency or that such reliance caused any injuries; rather, the evidence shows that the Home Again Benefits paid were not limited by the lifetime maximum, but by terms of the benefit itself.

“Equitable admits the HCR Policy is ‘a limited benefit policy’ but ‘did not issue any endorsements or amendments’ to comply with Montana law after §33-22-1201, et seq, was repealed.” The Court has already concluded that the HCR Policy did not fall within the repealed statute’s definition of a limited benefit disability policy and the repeal thus did not render the policy unlawful.

“Equitable told Carrolls they reached their ‘lifetime maximum’ benefit under the HCR Policy even though the policy purports to offer unlimited benefits.” The Court has already concluded that the unambiguous terms of the HCR Policy provided unlimited Lifetime Maximum Eligible Charges for Level I & II benefits and a $20,000 lifetime maximum for Level III Eligible Charges, and SILAC’s statement that they had reached their lifetime maximum for Level III benefits based on their claim following Dorothy’s July to August 2018 hospitalization was not false.

“Equitable’s policies materially represented to Carrolls that Equitable will provide coverage for long-term and home care.” Plaintiffs cannot establish that these representations were false; SILAC in fact provided coverage and paid benefits for Dorothy’s long-term care and for her and James’s home healthcare and the policies did not represent that they would provide complete coverage for all home healthcare costs they incurred.

“Equitable misrepresented that the policies provide ‘lifetime benefits.’” The Court has already determined that no reasonable consumer would interpret the unambiguous terms of the policies, each of which clearly sets forth conditions & limitations on benefits, to provide unlimited benefits for long-term care or home healthcare.

“Equitable continues to renew its policies it knows violate Montana law and while continuing to collect premiums.” The Court has concluded that the LTC Policy does not violate the LTCIA except to the extent that it does not comply with the disclosure formatting requirements of §1115(2) and that Plaintiffs did not submit any evidence that they were unaware of the prior institutionalization requirement or that this noncompliance caused any damages and that the HCR Policy does not violate Montana law.

Plaintiffs purport to identify “numerous additional facts” in support of their fraud claims relating to the arguments that the policies did not comply with Montana law, but these facts do not identify any misrepresentations. They quote extensively from Della Clark’s deposition in which she testified about “phone conversations between two people talking about how the claim will be denied,” “copies of the brochures that were out and adverse conflict with what we are being told now,” and “the runaround” of requests for information concerning their claims, e.g., “‘We have Dorothy’s stuff but we don’t have Jim’s stuff,’ and then two days later, ‘We have Jim’s stuff but we never got Dorothy’s stuff.’” Plaintiffs do not identify how SILAC’s internal phone calls concerning denying claims constitute misrepresentations, they do not identify specific “conflicts” between SILAC’s advertising and the policies in addition to those addressed by the Court, and they have not produced any facts showing injury attributable to the process of submitting documentation in support of their insurance claims. Thus they have failed to establish a prima facie claim of fraud or constructive fraud.

SILAC is entitled to summary judgment on all of Plaintiffs’ claims.

(Plaintiffs sought $572,970 for past benefits and compensatory damages through the time of the motions hearing, interest, unlimited future home healthcare benefits, special damages, and punitives.)

David & Della Clark as guardians/conservators for James & Dorothy Carroll v. SILAC Life Ins. fka Equitable Life & Casualty, 44 MFR 278, 8/3/22.

Dana Henkel & Robert Terrazas (Terrazas Henkel), Missoula, for Plaintiffs; Jill Gerdrum (Hall & Evans), Missoula, and Susan Egeland (Faegre Drinker), Dallas, for SILAC.