Hudson v. Principal Life Insurance Company
- John Tunheim
- 0:24-cv-01308
- U.S. District Court · District of Minnesota
- 21
In Hudson v. Principal Life Insurance Company, Judge Tunheim ruled that a pre-existing condition exclusion bars Kim Hudson's long-term disability and life insurance benefits claims.
Employees covered by employer-sponsored long-term disability insurance plans governed by ERISA, particularly those whose plans are subject to Oregon choice-of-law provisions and who seek disability benefits after a short employment period. Also relevant to insurers and plan administrators operating under state anti-discretionary-clause regulations, and to claimants whose pre-coverage medical history may be characterized as a pre-existing condition.
What happened
In Kim Hudson v. Principal Life Insurance Company (Civil No. 24-1308), Kim Hudson sued her employer's insurer, Principal Life Insurance Company, after it denied her claims for long-term disability (LTD) benefits and life insurance coverage during disability under an employer-sponsored plan governed by the Employee Retirement Income Security Act of 1974 (ERISA). Hudson argued she became disabled due to coccydynia (tailbone pain), while Principal Life contended she was not disabled and, even if she were, a pre-existing conditions exclusion blocked her coverage because she received treatment for low back pain in the three months before her coverage took effect.
The court first determined the correct standard for reviewing Principal Life's benefit denial. Although the insurance policy contained a clause giving Principal Life discretion to interpret the plan — which would normally lead courts to defer to the insurer's decisions — Oregon law (which governed the policy) bans such discretionary clauses. The court found that Oregon's prohibition is not overridden by federal ERISA law, so it reviewed Principal Life's denial from scratch (called "de novo" review) rather than giving deference to the insurer. The court also found that Hudson's life insurance during disability claim failed because she was already 60 years old when she became disabled, and the policy required total disability to occur before age 60.
On the main LTD claim, Judge Tunheim concluded that the pre-existing condition exclusion applied and barred Hudson's benefits. The policy excluded coverage for any disability resulting from a condition for which the employee received treatment in the three months before coverage began. The court determined that Hudson's LTD coverage became effective on August 9, 2022 — not August 1, 2022 — because she was absent from work without an approved reason during late July and early August 2022, pushing back the effective date. That made the lookback period May 9 through August 8, 2022. During that window, Hudson had a telehealth visit on May 18, 2022, during which she was treated for chronic low back pain with sciatica and prescribed oxycodone, and she underwent an MRI on July 11, 2022, also for low back pain. Because Hudson's own doctor listed "low back pain" as the reason she could not work, and she was treated for low back pain during the lookback period, the exclusion applied. Hudson's motion for summary judgment was denied and Principal Life's motion for summary judgment was granted.
The detailed version
- Hudson v. Principal Life Insurance Company · No. 0:24-cv-01308
- John Tunheim
- Feb. 23, 2026
Background
Kim Hudson was hired by Consumer Cellular, Inc. as a customer service representative on June 6, 2022. She stopped working on October 14, 2022, claiming disability. She applied for long-term disability (LTD) benefits under an employer-sponsored welfare benefit plan insured by Principal Life Insurance Company and governed by the Employee Retirement Income Security Act of 1974 (ERISA). Her application described her disability as three herniated discs and an inflamed tailbone (coccydynia) arising from a May 2021 motor vehicle accident. She also sought life coverage during disability (LCDD), which allows retention of life insurance without premium payments when an insured becomes totally disabled before age 60.
The Policies
The LTD policy included a pre-existing condition exclusion barring benefits for any disability resulting from a condition for which the member received treatment, consultation, care, services, or prescription medication during the three-month period before the coverage effective date (called the "lookback period"). The exclusion covered not only the primary condition but also "all related conditions and complications." The LCDD provision required that total disability occur before the earlier of retirement or attainment of age 60. The policy also contained a discretionary clause reserving to Principal Life the authority to interpret policy terms and determine benefit eligibility, and it was subject to an Oregon choice-of-law provision.
Principal Life's Denial and Appeal
Principal Life initially set the LTD effective date as August 1, 2022, and denied Hudson's LTD claim on June 7, 2023, finding that a May 18, 2022 telehealth visit — during which Dr. Aarohi Munshi treated Hudson for "chronic right-sided low back pain with right-sided sciatica," referred her to acupuncture and physical therapy, and prescribed oxycodone — fell within the lookback period. Hudson appealed, and during its review Principal Life reconsidered the effective date. Based on Hudson's time and payroll records, it found she had unplanned, unapproved absences from July 23 through August 6, 2022, meaning she was not "Actively at Work" on August 1, 2022 (the date coverage would otherwise have begun). The policy required active work on the effective date; otherwise, coverage did not begin until the employee returned to active work. Principal Life determined Hudson returned to active work on August 9, 2022, making that the LTD coverage effective date and setting the lookback period as May 9 through August 8, 2022. On February 9, 2024, Principal Life denied Hudson's appeal, reaffirming the pre-existing condition exclusion and also finding she was not disabled. A July 11, 2022 MRI — showing multilevel degenerative changes and spinal canal narrowing, ordered for "lumbar radiculopathy, low back pain" — also fell within the revised lookback period. Expert Dr. Gary Pushkin confirmed that Hudson was treated for chronic low back pain with spinal stenosis during the lookback period. The LCDD claim was denied because Hudson was born in September 1962 and therefore turned 60 in September 2022, before Dr. Landsman deemed her totally disabled in January 2023. Hudson did not administratively appeal the LCDD denial.
Standard of Review
The parties disputed whether the court should review Principal Life's denial under the deferential "abuse of discretion" standard (which applies when the plan grants the insurer interpretive discretion) or the more searching "de novo" standard (reviewing the decision without deference). The LTD policy contained a discretionary clause, which would ordinarily trigger abuse of discretion review. However, Oregon Administrative Rule 836-010-0026 prohibits discretionary clauses in insurance contracts issued in Oregon. The court addressed, on its own initiative, whether ERISA preempts this Oregon regulation. ERISA broadly preempts state laws relating to covered employee benefit plans, but the savings clause exempts state laws that regulate insurance. Applying the Supreme Court's two-part test from Kentucky Ass'n of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003), the court found the Oregon regulation (1) is specifically directed at entities engaged in insurance and (2) substantially affects the risk-pooling arrangement between insurers and insureds by limiting permissible contract terms. The court found the savings clause applies and the Oregon regulation is not preempted by ERISA. Consistent with decisions from the Sixth, Seventh, and Ninth Circuits addressing comparable state regulations, the court applied de novo review.
Effective Date and Lookback Period
The court determined as a matter of law that the LTD coverage effective date was August 9, 2022. Under the policy, coverage ordinarily begins on the first calendar day of the insurance month after 30 consecutive days of employment — here, August 1, 2022. But the policy also specifies that if an employee is not Actively at Work on that date, coverage does not begin until the employee returns to active work. Hudson's absences from July 23 through August 6, 2022, were classified as "suspended/unplanned," "no call/no show unplanned," or "called out unplanned" — none of the enumerated permissible short-term absences (scheduled days off, holidays, vacation, jury duty, funeral leave, personal time, or approved FMLA leave). August 7 and 8 appeared to be scheduled days off. Hudson resumed active work on August 9, 2022, making that the effective date. The three-month lookback period therefore ran from May 9 through August 8, 2022.
Pre-Existing Condition Exclusion
The court found no genuine dispute of material fact that Hudson was treated for her disabling condition during the lookback period. Two key events occurred within the lookback window: (1) the May 18, 2022 telehealth visit with Dr. Munshi, at which Hudson was treated for "chronic right-sided low back pain with right-sided sciatica," was prescribed oxycodone, and received referrals to physical therapy and acupuncture (records show Hudson attended at least three physical therapy sessions before being discharged for non-compliance); and (2) the July 11, 2022 MRI, ordered for "lumbar radiculopathy, low back pain," showing significant degenerative spinal changes.
Hudson argued that neither the May 18 visit nor the July 11 MRI referenced her coccyx or sacral region — the area she identified as the source of her disability. The court rejected this argument. Dr. Landsman's own Attending Physician Statement listed "low back pain" as the reason Hudson was unable to work (alongside coccydynia and other conditions), and Hudson herself confirmed in a May 30, 2023 phone call with Principal Life that she stopped working due to low back pain. The court held that what mattered was not whether specific anatomical references matched, but whether Hudson was treated for the same condition that her physician found disabling. Because both her treating physician and her own statements identified low back pain as her disabling condition, and because she received treatment for low back pain during the lookback period, the pre-existing condition exclusion applied. The court also noted that while there is an anatomical distinction between the lumbar spine and the coccyx/sacral region, coccydynia alone cannot be said to have caused Hudson's disability given that her physician's disability determination was based at least in part on low back pain. That distinction was therefore immaterial.
LCDD Claim
Hudson did not respond to or oppose Principal Life's summary judgment motion on the LCDD claim. The court granted summary judgment to Principal Life on this claim both because of Hudson's failure to respond and on the merits: the policy requires total disability to occur before the employee reaches age 60, Hudson was born in September 1962 and thus turned 60 in September 2022, and she was not deemed totally disabled until January 2023 — after she turned 60.
Disposition
The court denied Hudson's motion for summary judgment and granted Principal Life's motion for summary judgment on both the LTD and LCDD claims. Judgment was ordered entered accordingly.
Read the full 21-page opinion on CourtListener, the free public archive maintained by the Free Law Project.