4 N.Y.3d 664 (2005)
New York Insurance Law § 3234(a)(2) allows insurers to defer disability benefit payments for pre-existing conditions for up to 12 months but prohibits a permanent exclusion of coverage for disabilities stemming from such conditions.
Summary
Benesowitz began a new job with Honeywell and was covered by their disability insurance plan administered by MetLife. He had pre-existing kidney disease. MetLife denied his claim for long-term disability benefits, citing a plan exclusion for pre-existing conditions that trigger disability within the first 12 months of coverage. Benesowitz argued this exclusion violated Insurance Law § 3234(a)(2). The Second Circuit certified the question to the New York Court of Appeals, which held that the statute allows a 12-month waiting period but not a permanent bar to coverage.
Facts
Mitchell Benesowitz began working for Honeywell on April 1, 2002, and was immediately covered by their group disability insurance plans, administered by MetLife.
In the three months before starting at Honeywell, he received treatment for kidney disease.
By October 2002, his kidney disease prevented him from working, and he applied for long-term disability benefits.
MetLife denied his application based on a plan exclusion for pre-existing conditions, defined as any illness for which the employee received treatment within three months before coverage began, where disability began within 12 months of coverage.
Procedural History
Benesowitz filed an administrative appeal with MetLife, arguing the pre-existing condition exclusion violated Insurance Law § 3234(a)(2).
MetLife denied the appeal.
Benesowitz sued MetLife in federal court.
The District Court granted summary judgment to MetLife, relying on a Second Circuit case that Benesowitz argued was not applicable.
The Second Circuit certified the question of the correct interpretation of Insurance Law § 3234(a)(2) to the New York Court of Appeals.
Issue(s)
Whether New York Insurance Law § 3234(a)(2) allows: (1) a 12-month waiting period during which benefits are not paid for disabilities stemming from pre-existing conditions arising within the first 12 months of coverage, or (2) a permanent exclusion of coverage for disabilities resulting from pre-existing conditions that trigger disability within the first 12 months of coverage.
Holding
The Court answered that New York Insurance Law § 3234(a)(2) means that a policy may impose a 12-month waiting period during which no benefits will be paid for a disability stemming from a pre-existing condition and arising in the first 12 months of coverage, because the statute is a tolling provision and does not allow for a permanent exclusion.
Court’s Reasoning
The Court emphasized that statutory interpretation aims to ascertain the legislature’s intent.
It noted that Insurance Law § 3234 mirrors the language of Insurance Law § 3232, a health insurance statute, which also contains a 12-month maximum time frame for pre-existing condition provisions.
Since § 3232(b) is understood as a tolling provision (allowing insurers to limit coverage for 12 months but requiring coverage thereafter), the similar language in § 3234(a)(2) should be interpreted the same way.
The legislative history supported this interpretation, with the Senate memorandum stating that the bill adds a new section 3234 to the Insurance Law to establish similar standards for pre-existing conditions for disability insurance policies to those in health insurance policies.
The Court contrasted the language in Insurance Law § 3216(d)(1)(B)(ii), applicable to individual disability policies, which uses the phrase “commencing after” to allow a complete bar to coverage for claims arising during a specific period. Section 3234 (a)(2) does not contain similar language.
The Court also noted that individual underwriting is still permissible. Quoting the Superintendent,