A Minnesota appellate court has affirmed a trial court’s summary dismissal of a plaintiff’s lawsuit seeking death benefits under a life insurance policy issued to his spouse, finding that the suit was untimely under the terms of the policy.
Jane Butler worked as a teacher for a Minnesota school district until June 4, 2004, when she ceased active employment due to the effects of a brain tumor. Under the school district’s life insurance policy, premiums were waived for employees who were “totally disabled.” On Aug. 23, 2004, Butler filed a premium-waiver claim with Sun Life Assurance Company of Canada asserting that she was totally disabled. On Dec. 17 of that year, Sun Life denied her claim because she failed to timely submit evidence supporting her premium-waiver request.
Butler appealed, and Sun Life upheld the denial based on its determination that the evidence did not support a finding that she was “totally disabled.” Sun Life informed Butler that she had the right to file a lawsuit, but she did not pursue legal action against Sun Life.
After Butler’s death on July 28, 2010, her husband, Malcolm Butler, filed a claim for death benefits with Sun Life. The school district informed Sun Life that Butler was retired at the time of her death, and Sun Life therefore paid Mr. Butler the retiree life insurance benefit of $25,000 instead of the $50,000 life insurance benefit for active employees.
Butler then sued Sun Life for the additional $25,000 under a breach of contract theory, alleging that Sun Life had breached the policy by denying Ms. Butler’s premium-waiver claim and alleging that had Sun Life not improperly denied her claim, he would be entitled to the higher life insurance benefit of $50,000.
Sun Life moved for summary judgment. The trial court granted Sun Life’s motion. Butler appealed.
The policy provided that:
[n]o legal action may start … until 60 days after Proof of Claim has been given; nor … more than 3 years after the time Proof of Claim is required.
It further stated that:
proof of claim must be given to Sun Life no later than 15 months after the Employee ceases to be Actively at Work.
If it is not possible to give proof within these time limits, it must be given as soon as reasonably possible. Proof of claim may not be given later than one year after the time proof is otherwise required unless the individual is legally incompetent.
Proof of claim must consist of … a description of the loss or disability; the date the loss or disability occurred; and the cause of the loss or disability.
The appellate court’s decision
The appellate court affirmed, rejecting Butler’s argument that the three-year policy limit on legal actions was unreasonable because it did not allow enough time to prove the existence of a disability as defined under the policy.