From Casetext: Smarter Legal Research

Delk v. Durham Life Insurance

United States Court of Appeals, Eighth Circuit
Mar 19, 1992
959 F.2d 104 (8th Cir. 1992)

Summary

adopting the contra insurer rule when the language remains ambiguous even when accorded its ordinary meaning

Summary of this case from Ramsey v. Colonial Life Ins. Co. of America

Opinion

No. 91-2992.

Submitted March 9, 1992.

Decided March 19, 1992.

David H. Pennington, Little Rock, Ark., argued (Ben F. Arnold, appeared on the brief), for appellant.

Martin W. Bowen, West Memphis, Ark., argued, for appellee.

Appeal from the United States District Court for the Eastern District of Arkansas.

Before FAGG and BEAM, Circuit Judges, and GAITAN, District Judge.

The HONORABLE FERNANDO J. GAITAN, JR., United States District Judge for the Western District of Missouri, sitting by designation.


Jack Delk (Delk) suffered an eye injury on September 22, 1990, while employed by Spurlock, Inc. (Spurlock). Under an employee benefit plan governed by the Employee Retirement Income Act of 1974, 29 U.S.C. § 1001-1461 (1988) (ERISA), Delk was insured through a group health insurance plan issued and underwritten by Durham Life Insurance Company (Durham). The injury occurred during the term of the Durham policy. Spurlock, on December 1, 1990, changed its group health insurance carrier. Delk was still under treatment for the eye injury and continued to submit medical charges to Durham, contending that he was due benefits under the policy because the injury occurred while the policy was in force. Durham, on the other hand, contended that benefits ceased upon the cancellation of the policy by Spurlock.

A denial of benefits is to be reviewed under a de novo standard "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989). The district court found that the plan does not give its administrators the authority to exercise discretion in determining eligibility or construing the terms of the plan. This factual finding by the district court is not clearly erroneous so de novo review is appropriate.

After applying ordinary principles of interpretation to the plan at issue, see DeGeare v. Alpha Portland Indus., 837 F.2d 812, 816 (8th Cir. 1988), the district court found the language of the plan ambiguous. When extrinsic evidence failed to resolve the ambiguities in the language, the court construed the language of the plan against Durham. In Brewer v. Lincoln Nat'l Life Ins. Co., 921 F.2d 150, 153 (8th Cir. 1990), we held that the Missouri rule of construction that requires ambiguities to be construed in favor of the insured could not be used in interpreting the terms of a plan governed by ERISA. There, we were able to resolve the ambiguity in the language by interpreting the language as would "an average plan participant." See id. at 154 (quoting 29 U.S.C. § 1022(a)(1) (1988)). The language at issue in Brewer ceased to be ambiguous when it was accorded its ordinary, and not specialized, meaning. Brewer, 921 F.2d at 154.

Here, however, as the district court aptly demonstrated, the language remains ambiguous even after applying the approach in Brewer. Therefore, the district court correctly used the principle of contra proferentem and construed the ambiguous language against Durham. As a matter of federal common law, a court construing plans governed by ERISA should construe ambiguities against the drafter only if, after applying ordinary principles of construction, giving language its ordinary meaning and admitting extrinsic evidence, ambiguities remain. See DeGeare, 837 F.2d at 816 (stating that "[c]onstruing ambiguities against the drafter should be the last step of interpretation, not the first step"); see also Taylor v. Continental Group Change In Control Severance Pay Plan, 933 F.2d 1227, 1233 (3rd Cir. 1991).

Accordingly, we affirm the judgment of the district court.


Summaries of

Delk v. Durham Life Insurance

United States Court of Appeals, Eighth Circuit
Mar 19, 1992
959 F.2d 104 (8th Cir. 1992)

adopting the contra insurer rule when the language remains ambiguous even when accorded its ordinary meaning

Summary of this case from Ramsey v. Colonial Life Ins. Co. of America

affirming district court's decision to construe ambiguous ERISA plan against the drafter

Summary of this case from Hursh v. DST Sys.

acknowledging that the court in Brewer resolved the ambiguity by applying the plain meaning

Summary of this case from Billings v. Unum Life Ins. Co. of America

clarifying that the court in Brewer held that the limitation "ceased to be ambiguous when it was accorded its ordinary, and not specialized, meaning"

Summary of this case from Billings v. Unum Life Ins. Co. of America

explaining that in Brewer it was able to "resolve the ambiguity in the language by interpreting the language as would `an average plan participant'" and holding that the policy "ceased to be ambiguous when it was accorded its ordinary, and not specialized meaning"

Summary of this case from Billings v. Unum Life Ins. Co. of America

applying contra proferentem to ERISA plan reviewed de novo

Summary of this case from Kimber v. Thiokol Corp.

distinguishing previous 8th Circuit case which held that ERISA preempts application of state-law doctrines of insurance contract interpretation and then applying contra insurer rule in an ERISA case

Summary of this case from Saltarelli v. Bob Baker Group Medical Trust

stating an ERISA plan must be interpreted from the perspective of an average plan participant, and its terms should be accorded their ordinary, not specialized, meaning

Summary of this case from Northrup v. Penford Products Company

referencing 29 U.S.C. § 1022

Summary of this case from Smith v. United Healthcare Services, Inc.

considering the applicability of the contra proferentem rule to hinge on whether the term remains ambiguous after application of rules of interpretation

Summary of this case from West v. Aetna Life Ins. Co.

In Delk, the Eighth Circuit Court of Appeals upheld use of the contra insurer rule only after other means to resolve the ambiguity had been exhausted.

Summary of this case from Coonley v. Fortis Benefit Ins. Co.

construing ERISA plan's ambiguities against the drafter as a last resort

Summary of this case from Sanders v. Gravel Products, Inc.
Case details for

Delk v. Durham Life Insurance

Case Details

Full title:JACK DELK, APPELLEE, v. DURHAM LIFE INSURANCE COMPANY, APPELLANT

Court:United States Court of Appeals, Eighth Circuit

Date published: Mar 19, 1992

Citations

959 F.2d 104 (8th Cir. 1992)

Citing Cases

Coonley v. Fortis Benefit Ins. Co.

This principle is applicable even to contracts governed by ERISA. . . ."); Delk v. Durham Life Ins. Co., 959…

Billings v. Unum Life Ins. Co. of America

UNUM's argument is based on the opinions of the Eighth and Fifth Circuits, which hold that applying the plain…