Richard M. SANCHEZ, Plaintiff-Appellant, v. MONUMENTAL LIFE INSURANCE COMPANY, Defendant-Appellee

We must decide the proper test to apply to establish subject matter jurisdiction over a removed diversity case in which the plaintiffs state court complaint fails to specify whether the amount in controversy exceeds $50,000.

I

In March 1989, appellant Richard Sanchez, a welder, filed a claim for “permanent total disability” benefits from Monumental General Insurance Co., the insurance carrier for Sanchez’s group policy. The claim was based on an injury which Sanchez allegedly suffered in January 1988. With his claim Sanchez submitted a physician’s statement which indicated that any total disability which Sanchez may have suffered as a result of his injury had ended by October 1988. Under the terms of Sanchez’s insurance policy, Sanchez was not entitled to benefits for “permanent total disability” unless he was (1) prevented from working in any or all occupations (2) for a continuous period of at least twelve months. Because Sanchez’s claim failed to satisfy this standard, Monumental sent him a letter on March 31, 1989, informing him that “no benefits would be payable.”

In early August 1989, Sanchez submitted a second claim for benefits to Monumental. In this second claim, he…