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April 25, 1997


The opinion of the court was delivered by: CALDWELL

 I. Introduction.

 In this diversity action controlled by Pennsylvania law, the defendant, UNUM Life Insurance Company of America, has filed a motion under Fed. R. Civ. P. 12(b)(6) to dismiss the plaintiff's amended complaint. The plaintiff, Ronald E. Yingling, seeks to recover disability benefits under the policy UNUM issued to his employer.

 The motion argues that the action is barred by the insurance policy's contractual period of limitations. The plaintiff's opposition to the motion requires us to decide, among other things, whether the defendant waived the limitations period by leading the plaintiff on and whether a purported ambiguity in the policy language dealing with the submission of claims renders the plaintiff's lawsuit timely.

 Because the motion relied on matters outside the amended complaint, by order, dated April 2, 1997, we converted it to one for summary judgment. We therefore apply the well established standard for deciding motions under Fed. R. Civ. P. 56 to the motion, see Davis v. Portline Transportes Maritime Internacional, 16 F.3d 532, 536 n.3 (3d Cir. 1994), and present the following undisputed facts in the light most favorable to the plaintiff.

 II. Background.

 According to the amended complaint, the plaintiff worked as a business manager and board secretary with the Spring Grove Area School District in Spring Grove, Pennsylvania. The School District had a group long-term disability policy with UNUM. The policy contained the following three-year limitation on when suit could be brought to enforce rights under it:


A claimant or the claimant's authorized representative cannot start any legal action:
1. . .
2. more than 3 years after the time proof of claim is required.

 (UNUM policy, Section VI, captioned "General Policy Provisions" at pages L-GPP-2 and 3, attached as exhibit A to the amended complaint). In turn, the policy had the following provision on submission of a proof of claim:


1. Notice
a. Written notice of claim must be given to the Company within 30 days of the date disability starts, if that is possible. If that is not possible, the Company must be notified as soon as its is reasonably possible to do so.
2. Proof
a. Proof of claim must be given to the Company. This must be done no later than 90 days after the end of the elimination period.
b. If it is not possible to give proof within these time limits, it must be given as soon as reasonably possible. But proof of claim may not be given later than one year after the time proof is otherwise required.
c. Proof of continued disability and regular attendance of a physician must be given to the Company within 30 days of the request for the proof.
d. The proof must cover:
i. the date disability started;
ii. the cause of disability;
iii. how serious the disability is.

 (UNUM policy, Section VI, captioned "General Policy Provisions" at page L-GPP-2). The elimination period is defined as "a period of consecutive days of disability for which no benefit is payable" as shown in the policy specifications. (UNUM policy at page L-DEF-1). The policy specifications set a period of 90 days for the elimination period. (UNUM policy at page L-PS-1).

 The plaintiff avers that he was exposed to various chemicals in October 1989 during a School District renovation project. (Amended complaint, PP 9 and 11). As a result, he alleges he became "hypersensitized to common chemicals, foods, and environmental allergens" which have caused him "to experience severe bodily symptoms and reactions to minimal chemical exposures." (Id. at P 10). The plaintiff became disabled on December 5, 1990, and was forced to stop working on that date, (id. at P. 13), although he unsuccessfully attempted to return to work part-time for a two-week period beginning April 16, 1991. (Id. at P 14).

 Thereafter, the parties exchanged numerous letters about coverage for the plaintiff. We provide the following chronology but, aside from July 19, 1991, the date of the plaintiff's application for benefits, several dates are important to the resolution of the defendant's motion: October 20, 1993, the date of an UNUM letter finally denying coverage and advising the plaintiff he had 60 days to appeal; February 17, 1994, the date the appeal was denied; June 17, 1994, the date the plaintiff inquired about further administrative rights and the deadline for filing a lawsuit; and August 2, 1994, the date the defendant responded that all administrative rights had been "technically" exhausted and informed the plaintiff that suit could be brought within three years after a proof of claim was required.

 As noted, on or about July 19, 1991, plaintiff submitted an application for benefits on standard UNUM forms, claiming total disability arising from his work-related exposure to chemicals. (Amended complaint, P 37; plaintiff's original complaint, exhibit B; defendant's exhibit B). The application listed December 5, 1990, as the starting date of disability and that the plaintiff had unsuccessfully attempted to return to work part-time from April 16, 1991, to May 10, 1991.

 On or about February 18, 1992, UNUM notified plaintiff that there was no evidence of a physical disability but that he was being approved for disability based on psychological grounds. UNUM also informed him that, in accord with policy language limiting coverage for mental illness, he would be receiving only 24 months of disability coverage ending on October 21, 1993, and that he would have to submit periodic reports on his condition. The letter additionally stated: "If you disagree with this determination, please submit further evidence that would support your physical condition and we will evaluate it." (Plaintiff's original complaint, exhibit C; defendant's exhibit C).

 On or about February 27, 1992, the plaintiff wrote the defendant informing the company that he was accepting the benefits under protest and that he would submit the appropriate "medical updates through [his] period of convalescence." (Amended complaint, P 41; plaintiff's original complaint, exhibit D)(brackets added). The plaintiff later provided additional medical evidence. (Amended complaint, P 42).

 On August 26, 1992, the defendant wrote the plaintiff about an administrative appeal of the company's decision that the plaintiff had taken in March 1992. UNUM stated that after a complete review of the file and an independent medical examination by a specialist in occupational medicine, it was standing by its original decision that his disability was "primarily of psychiatric origin" and that benefits would end on October 21, 1993. (Amended complaint, P 43; plaintiff's original complaint, exhibit E; defendant's exhibit D).

 On September 4, 1992, the plaintiff wrote to defendant expressing his dissatisfaction with the decision in his case and hinting that UNUM was more concerned about limiting its exposure than compensating him for his real disability. He also supplied some medical literature about multiple chemical sensitivities. (Amended complaint, P 44; plaintiff's original complaint, exhibit F). The defendant did not respond to this letter.

 Almost a year later, on July 27, 1993, apparently as part of the company's review of the plaintiff's coverage, the defendant wrote the plaintiff requesting updated information on his condition. It also took this opportunity to acknowledge the plaintiff's dissatisfaction with the benefits being provided, and stated that it would "be happy to review any additional medical information" that the plaintiff might send, but that benefits were scheduled to end ...

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