Hudson v. Principal Life Insurance Company
- John Tunheim
- 0:24-cv-01308
- U.S. District Court · District of Minnesota
- 21
In Kim Hudson v. Principal Life Insurance Company, Judge Tunheim ruled that Kim Hudson is not entitled to long-term disability benefits because she was treated for low back pain during the three-month lookback period before her coverage took effect, triggering the policy's pre-existing condition exclusion, and also ruled she is ineligible for life coverage during disability because she was already 60 years old when she became disabled.
Employees covered by employer-sponsored long-term disability insurance plans governed by ERISA, particularly those who were treated for health conditions before their coverage took effect and later claim disability benefits related to those conditions. Also relevant to insurers and plan participants in states (like Oregon) that prohibit discretionary clauses in insurance contracts, which affects how courts review benefit denials.
What happened
In Kim Hudson v. Principal Life Insurance Company, Kim Hudson sued her employer's disability insurance carrier, Principal Life Insurance Company, after it denied her claim for long-term disability (LTD) benefits and life coverage during disability under a plan governed by the Employee Retirement Income Security Act of 1974 (ERISA), the federal law that regulates most employer-sponsored benefit plans. Hudson argued she became disabled due to coccydynia — pain in the tailbone — after stopping work in October 2022. Principal Life denied her claim on two grounds: (1) she was not disabled under the policy's definition, and (2) even if she were disabled, a pre-existing condition exclusion blocked coverage because she had been treated for a related condition in the three months before her coverage began.
The court first had to decide how to review Principal Life's denial. The policy contained a 'discretionary clause' that would normally require courts to defer to the insurer's interpretation, but the policy was governed by Oregon law, and Oregon prohibits such clauses in insurance contracts. The court found the Oregon rule is not overridden by ERISA, so it reviewed the denial independently — without deference to Principal Life — applying what is called 'de novo' review. The court then determined that Hudson's LTD coverage did not take effect until August 9, 2022, because she had unplanned absences from work around August 1, 2022, the date coverage would otherwise have started, and the policy required her to be actively working on the effective date. That pushed the three-month lookback period to May 9 through August 8, 2022.
Applying de novo review, Judge Tunheim concluded that the pre-existing condition exclusion barred Hudson's LTD claim. The medical records showed that on May 18, 2022, a doctor treated Hudson for 'chronic right-sided low back pain with right-sided sciatica' and prescribed oxycodone, and on July 11, 2022, she received an MRI for low back pain — both within the lookback period. Hudson's own attending physician later stated she was unable to work due to 'low back pain,' and Hudson herself confirmed in a phone call with Principal Life that she stopped working because of low back pain. The court rejected Hudson's argument that coccydynia (tailbone pain) was a distinct condition not covered by the exclusion, finding that low back pain was the disabling condition and it was treated during the lookback period. The court also granted summary judgment to Principal Life on the life coverage during disability claim because Hudson turned 60 in September 2022, before she was deemed disabled in January 2023, and the policy requires disability to occur before age 60. Hudson's motion for summary judgment was denied, and Principal Life's motion for summary judgment was granted in full.
The detailed version
- Kim Hudson v. Principal Life Insurance Company, Civil No. 24-1308 (JRT/ECW)
- John R. Tunheim, United States District Judge
- February 23, 2026
Overview
This case arises under the Employee Retirement Income Security Act of 1974 (ERISA), the federal statute governing most employer-sponsored benefit plans. Kim Hudson, a former customer service representative at Consumer Cellular, Inc., sued Principal Life Insurance Company after it denied her claims for long-term disability (LTD) benefits and life coverage during disability (LCDD) under an employer-sponsored welfare benefit plan. The parties filed cross-motions for summary judgment. The court granted Principal Life's motion and denied Hudson's motion.
The Policies
- LTD Policy: Provided long-term disability benefits to eligible Consumer Cellular employees. Coverage took effect on the first of the calendar month after completing 30 consecutive days of employment, but only if the employee was 'Actively at Work' on that date. If not actively at work, coverage was delayed until the employee returned to active work. The policy contained a pre-existing condition exclusion, which barred benefits for any disability resulting from a condition for which the employee received treatment, consultation, care, services, or prescription medication in the three months before coverage became effective (the 'lookback period'). The exclusion could be overcome only if the employee had been actively at work for one full day after 12 consecutive months of insured status before becoming disabled. - LCDD Policy: Allowed an insured to retain life insurance without paying premiums while totally disabled, but only if the employee became totally disabled before retirement or before reaching age 60. - The LTD policy included an Oregon choice-of-law provision and a discretionary clause granting Principal Life authority to interpret the policy and determine eligibility.
Facts
Hudson was hired on June 6, 2022, and stopped working on October 14, 2022, citing disability. She applied for LTD benefits in February 2023, describing her disability as herniated discs, an inflamed tailbone, and sciatica arising from a May 2021 motor vehicle accident. Her attending physician, Dr. Jonathan Landsman, stated she was unable to work due to 'low back pain,' and also noted coccydynia (tailbone pain), lumbar radiculopathy, and lumbar spinal stenosis.
Principal Life conducted a pre-existing condition review. Key records from the lookback period included: (1) a May 18, 2022 telehealth visit with Dr. Aarohi Munshi, who diagnosed Hudson with 'chronic right-sided low back pain with right-sided sciatica,' referred her to acupuncture and physical therapy, and prescribed oxycodone; and (2) a July 11, 2022 MRI indicating lumbar radiculopathy and low back pain, showing multilevel degenerative changes. Principal Life also noted that during a May 30, 2023 phone call, Hudson confirmed she stopped working 'due to low back pain.'
Principal Life denied Hudson's LTD claim on June 7, 2023, citing the pre-existing condition exclusion. On appeal, it also concluded Hudson was not disabled under the policy. Principal Life separately denied the LCDD claim because Hudson was born in September 1962 and turned 60 before she was deemed disabled in January 2023. Hudson did not appeal the LCDD denial administratively.
Standard of Review — ERISA and Oregon Law
The court first resolved the applicable standard of review. Normally, when an ERISA plan grants the administrator discretionary authority, courts apply an 'abuse of discretion' standard, deferring to the administrator's reasonable interpretations. However, the court found that Oregon Administrative Rule 836-010-0026 prohibits discretionary clauses in insurance contracts issued in Oregon. The court determined the Oregon regulation is not preempted by ERISA because it qualifies under ERISA's 'savings clause,' which preserves state laws that regulate insurance (citing Kentucky Ass'n of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003)): (1) the regulation is specifically directed at the insurance industry, and (2) it substantially affects the risk pooling arrangement between insurers and insureds. The court noted that the Sixth, Seventh, and Ninth Circuits have reached similar conclusions regarding comparable state anti-discretionary-clause rules. Accordingly, the court applied de novo review — meaning it examined the evidence independently without deference to Principal Life.
Effective Date and Lookback Period
The court determined that Hudson's LTD coverage took effect on August 9, 2022, not August 1, 2022. Although August 1 would have been the first calendar month after Hudson completed 30 days of employment, Hudson was absent from work from July 23 through August 6, 2022, with absences classified as 'suspended/unplanned,' 'no call/no show unplanned,' or 'called out unplanned.' These do not fall within the policy's enumerated short-term absence exceptions (scheduled days off, holidays, vacations, jury duty, funeral leave, personal time, or approved FMLA leave). Because Hudson was not actively at work on August 1, coverage was delayed until she returned to active work on August 9, 2022. August 7 and 8 appeared to be scheduled days off. The three-month lookback period therefore ran from May 9, 2022, through August 8, 2022.
Pre-Existing Condition Exclusion
The court held that the pre-existing condition exclusion bars Hudson's LTD claim. Within the lookback period, Hudson was treated for 'chronic right-sided low back pain with right-sided sciatica' on May 18, 2022, and received an MRI for low back pain on July 11, 2022. Dr. Landsman's Attending Physician Statement identified 'low back pain' as the reason Hudson could not work. Hudson also confirmed on the phone that she stopped working due to low back pain. The court rejected Hudson's argument that coccydynia is a distinct condition unrelated to the low back pain treated during the lookback period. The court found that low back pain was the disabling condition and that Hudson was treated for it during the lookback period, satisfying the exclusion's requirements. The court noted that even though there is a medical distinction between the coccyx/sacral region and the lumbar spine, Hudson's attending physician based the disability finding at least in part on 'low back pain,' making the distinction immaterial to the outcome.
LCDD Claim
The court granted summary judgment to Principal Life on the LCDD claim. Hudson was born in September 1962 and turned 60 before Dr. Landsman deemed her disabled in January 2023. The policy requires disability to occur before age 60. Hudson did not oppose Principal Life's summary judgment motion on this claim.
Outcome
- Hudson's Motion for Summary Judgment (Docket No. 60): DENIED. - Principal Life's Motion for Summary Judgment (Docket No. 65): GRANTED. - Judgment to be entered for Principal Life on all claims.
Reviewer note from the AI+
Read the full 21-page opinion on CourtListener, the free public archive maintained by the Free Law Project.