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November 25, 1997


The opinion of the court was delivered by: CALDWELL

 I. Introduction.

 The plaintiff, Karen McWilliams, received treatment for thyroid cancer and sued her employer, Capital Telecommunications Inc. (CTI), in state court to recover benefits allegedly owed her under its medical and short-term disability plan, governed by the Employee Retirement Income Security Act (ERISA). See 29 U.S.C. § 1001-1461.

 The other defendant, CoreSource, Inc., the plan administrator, removed the case here on the basis of our federal question jurisdiction. (The case is governed by ERISA section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B)).

 This case requires us to analyze a typical pre-existing-conditions exclusion, common in health insurance policies and their ERISA counterparts. The subject has generated some sharp conflict in the courts that have considered the issue because the result of enforcing the exclusion is to leave an often unwary ERISA-plan participant or insured with substantial medical bills.

 As intimated, CTI has refused to pay benefits because it believes Ms. McWilliams is seeking coverage for a pre-existing condition that is excluded under the terms of the plan. Plaintiff counters that the exclusion does not preclude coverage and that, in any event, it is invalid because it is not conspicuous, plain and clear, thus defeating her reasonable expectations of coverage.

 We are considering cross-motions for summary judgment, which we will evaluate under the well established standard. See Davis v. Portline Transportes Maritime Internacional, 16 F.3d 532, 536 n.3 (3d Cir. 1994).

 II. Background.

 Based on the pleadings and evidentiary submissions of the parties, the following is the undisputed background to this litigation.

 The plaintiff used to work for Phillips Office Products. She became employed by CTI in October 1995 but did not become eligible for medical and short-term disability coverage under its employee benefit plan until January 1, 1996. Accordingly, under the amendments to ERISA made by the Comprehensive Omnibus Budget Reconciliation Act of 1986 (COBRA), 29 U.S.C. §§ 1161-68, she continued the insurance she had with her former employer from October through December 1995, thinking that this provided her with a seamless transition to her new employer's coverage.

 However, the plaintiff had overlooked exclusions for pre-existing conditions in CTI's plan. Paragraph 5.01 in subparagraph "ah," one of 40 subparagraphs excluding coverage under certain circumstances, provides, in pertinent part, that no payment would be made under the plan:

for Pre-Existing Conditions that were being treated within 90 days prior to the date of coverage . . . .

 Article I of the plan set forth plan definitions. In pertinent part, paragraph 1.44 defines a "Pre-Existing Condition" as:

any Injury or Sickness for which an Employee either received medical treatment, services, or advice or took prescribed drugs or medicine during the 90 day period prior to the date of coverage . . . .

 Paragraph 1.50 defines "Sickness" in a basically circular fashion:

Any pregnancy or illness, other than an Injury not covered by Worker's Compensation or any occupational disease act.

 Although not necessary to resolve this case, paragraph 1.23 defines "Injury" as:

 Article VI deals with short-term disability benefits. Paragraph 6.01 establishes the conditions for receiving those benefits and paragraph 6.02, captioned "Limitations and Exclusions," prohibits short-term disability benefits for, among other things, "pre-Existing conditions that were treated within 90 days prior to the date of coverage."

 The plan has a table of contents listing the "Articles" and the "Title" of each article. Article I is identified as the "Definitions" article, Article V as the "Exclusions" article, and Article VI as the "Short-Term Disability Benefits" article. The table of contents does not indicate that the latter article contains an exclusion provision.

 The effect of these provisions was to leave plaintiff without coverage under CTI's plan for pre-existing conditions as defined in the plan for a period from October 1, 1995, through December 31, 1995.

 Since 1988, plaintiff has had a history of lumps and growths. The plaintiff avers that these growths or cysts have appeared from time to time in her breasts and one time in her thyroid. She has also had uterine fibroids. These growths, including the one in her thyroid, have either disappeared on their own or have been benign.

 All of this changed on December 11, 1995, when during the course of a routine exam, the plaintiff's registered-nurse practitioner discovered a second growth on the thyroid, a one-centimeter soft mass which ultimately was diagnosed as cancerous. However, the nurse practitioner avers that such a mass would ordinarily represent a thyroid cyst or a goiter and only rarely would be carcinoma of the thyroid. Diagnosing the mass as probably a thyroid cyst, she immediately ordered an ultrasound.

 On December 21, 1995, the ultrasound was conducted. It revealed that the left lobe of the thyroid was enlarged and contained a large lobulated mass. On January 16, 1996, the plaintiff discussed the ultrasound results with the nurse-practitioner for the first time. The latter recommended a biopsy. The plaintiff was not concerned about the biopsy because she thought the lump in her thyroid was just another mass that was either benign or would go away on its own. On January 30, 1996, the biopsy was performed and it revealed atypical glandular cells. On February 16, 1996, a total thyroidectomy was performed which revealed papillary thyroid carcinoma of the left lobe. Apparently, a diagnosis of cancer was made at this time.

 The plaintiff sought coverage under the CTI plan for $ 8,955.85 in medical bills and $ 2,035.80 in short-term disability benefits. The claim was rejected both initially and on ...

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