It denied her claim, citing Ms. Bradshaw's pregnancy at the time she purchased her policy and asserting that it qualified as a pre-existing condition that had “contributed to” Ms. Bradshaw's stroke.

Ms. Bradshaw sued Reliance, alleging violations of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

Reliance moved for summary judgment, and the district court granted its motion, concluding that Reliance's decision denying benefits was reasonable.

Ms. Bradshaw appealed to the Eleventh Circuit, arguing that Reliance had incorrectly and unreasonably interpreted the policy by applying the pre-existing-condition exception to deny her long-term disability benefits. In Ms. Bradshaw's view, the exception did not apply because she had not received treatment for a stroke during the “look-back period.”

For its part, Reliance claimed that it had reasonably applied the policy's exclusion for a pre-existing condition because Ms. Bradshaw had not been employed for a full year, was pregnant during the “look-back period,” and her pregnancy “played a part in producing” the stroke. More specifically, Reliance justified its denial of Ms. Bradshaw's claim because it viewed her pregnancy as having “contributed to” her stroke.

The Reliance Policy

The Reliance policy provided:

PRE-EXISTING CONDITIONS: Benefits will not be paid for a Total Disability:

(1) caused by;

(2) contributed to by; or

(3) resulting from

a Pre-existing Condition unless the Insured has been Actively at Work for one (1) full day following the end of twelve (12) consecutive months from the date he/she became an Insured. 

According to the policy:

“Pre-Existing Condition” means any Sickness or Injury for which the Insured received medical Treatment, consultation, care or services, including diagnostic procedures, or took prescribed drugs or medicines, during the three (3) months immediately prior to the Insured's effective date of insurance. 

The policy noted that the term:

Sickness 

includes pregnancy 

The circuit court reversed and remanded the case to the district court for it to award ERISA benefits to Ms. Bradshaw.

In its decision, the circuit court explained that the policy permitted Reliance to deny long-term disability benefits for a total disability that was “caused by,” “contributed to by,” or “resulting from” – terms not defined in the policy – a pre-existing condition unless the insured had been actively at work for a full year. It then ruled that Reliance's interpretation of the pre-existing-condition clause and, in particular, the phrase “contributed to,” was “unreasonable as a matter of law and at odds with the goals of ERISA.”

The circuit court explained that the exclusion of coverage for a loss “(1) caused by; (2) contributed to by; or (3) resulting from a Pre-existing Condition,” strictly construed, “purport[ed] to preclude coverage if any pre-existing health conditions in some way – no matter how remote – might have contributed to the loss.”

In other words, the circuit court continued, the Reliance policy would essentially require a claimant “to be in perfect health” at the time of obtaining the policy before the policy would benefit the claimant during the succeeding 12 months, “and that, of course, [was] a condition hardly obtained, however devoutly to be wished.”

The Eleventh Circuit then ruled that the language “caused by; contributed to by; or resulting from a Pre-existing Condition” excluded coverage for only those losses “substantially caused by, substantially contributed to by, or substantially resulting from a pre-existing condition.” In the circuit court's view, this interpretation of the policy language advanced ERISA's “clear purpose to provide greater coverage to beneficiaries.”

The circuit court rejected Reliance's argument that but for Ms. Bradshaw's pregnancy, she would not have developed high blood pressure; but for her high blood pressure, she would not have developed preeclampsia; but for her preeclampsia, she would not have suffered a stroke; and, finally, but for her stroke, she would not have become totally disabled. Connecting Ms. Bradshaw's healthy pregnancy during the look-back period to her ultimate disabling condition required four links, the Eleventh Circuit said, which were “too many.”

The circuit court concluded that the “only condition” that Ms. Bradshaw had during the “look-back period” was a healthy pregnancy, and her pregnancy could “not be said to have substantially contributed to her total disability.”

The case is Bradshaw v. Reliance Standard Life Ins. Co., No. 16-11125 (11th Cir. Aug. 31, 2017).