Harris-Frye v. United of Omaha Life Insurance Company et al, No. 1:2014cv00072 - Document 59 (E.D. Tenn. 2015)
Court Description: ORDER granting in part and denying in part 37 Motion for Summary Judgment; granting in part and denying in part 40 Motion for Summary Judgment; accepting and adopting in part and rejecting in part 52 Report and Recommendations ; denying 21 Motion for Judgment on the Pleadings. Signed by District Judge Harry S Mattice, Jr on 9/21/2015. (AML, )
Download PDF
<![CDATA[
Harris-Frye v. United of Omaha Life Insurance Company et al Doc. 59 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TENNESSEE at CHATTANOOGA MEAGAN HARRIS-FRYE, Plaintiff, v. UNITED OF OMAHA LIFE INSURANCE COMPANY; and BOARD OF TRUSTEES, MID-SOUTH CARPENTERS REGIONAL COUNCIL HEALTH AND WELFARE FUND, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 1:14-cv-72 J udge Mattice Magistrate J udge Lee ORD ER On J une 1, 20 15, United States Magistrate J udge Susan K. Lee filed her Report and Recomm endation (“R & R”) pursuant to 28 U.S.C. § 636(b)(1) and Fed. R. Civ. P. 72(b). (Doc. 52). Magistrate J udge Lee recom m ended that: (1) Plaintiff’s m otion for sum m ary judgm ent (Doc. 40 ) be granted in part to the extent that it seeks $ 12,760 .0 0 in statutory penalties under 29 U.S.C. § 1132(c)(3) and denied in part to the extent that it seeks additional penalties under 29 U.S.C. § 1132(c)(3) and relief under 29 U.S.C. § 1132(a)(3); (2) Defendant Board of Trustees, Mid-South Carpenters Regional Council Health and Welfare Fund’s (“Defendant Board of Trustees”) m otion for sum m ary judgm ent (Doc. 37) be granted in part to the extent it seeks judgm ent on Plaintiff’s claim for relief under 29 U.S.C. § 1132(a)(3) and denied in part to the extent it seeks judgm ent on Plaintiff’s claim for statutory penalties under 29 U.S.C. § 1132(c)(3); (3) Defendant United of Om aha Life Insurance Com pany’s (“Defendant United”) m otion for judgm ent on the adm inistrative record (Doc. 21) be denied; and (4) Plaintiff’s claim for benefits Dockets.Justia.com under 29 U.S.C. § 1132(a)(1)(B) be rem anded for a determ ination of whether the insured was totally disabled as defined by the relevant policy on J anuary 31, 20 12. (Doc. 52 at 34). Plaintiff and Defendant Board of Trustees filed timely objections (Docs. 54 and 55), and tim ely responses to each other’s objections (Docs. 57 and 58).1 Specifically, Defendant Board of Trustees objects to Magistrate J udge Lee’s recom m endation that: (1) Plaintiff exhausted her adm inistrative rem edies; (2) Defendant Board of Trustees has been shown to control adm inistration of the plan such that it is a proper defendant; and (3) Plaintiff is entitled to $ 12,760 in statutory penalties under 29 U.S.C. 1132(c).2 (Doc. 54). Plaintiff objects to Magistrate J udge Lee’s recom m endation that: (1) Plaintiff’s Em ployee Retirem ent Incom e Security Act (“ERISA”) § 50 2(a)(3) claim should be dism issed because it was m erely a repackaged ERISA § 50 2(a)(1)(B) claim ; and (2) Defendant Board of Trustees should not be assessed a statutory penalty under 29 U.S.C. 1132(c) for its failure to provide Plaintiff with a copy of the Plan Docum ent associated with the Sum m ary Plan Description (“SPD”). (Doc. 55). The Court has conducted a de novo review of record and the R & R—specifically reviewing those portions to which Defendant Board of Trustees and Plaintiff have objected—and will address each party’s objections, or lack thereof, in turn. I. BACKGROU N D Magistrate J udge Lee’s R & R outlined the procedural and factual background of this case at great length. (Doc. 52 at 3– 14). The Parties have not objected to the Magistrate J udge’s recitation of the facts, and the Court concludes that it is accurate. 1 Defendant United did not file a timely objection to Magistrate J udge Lee’s R & R. 2 Defendant Board of Trustees argues that it should not be assessed any statutory penalty, or, in the alternative, that the penalty should be reduced to $ 9,0 20 .0 0 . (Doc. 54 at 6– 8). 2 Thus, for purpose of addressing the Parties’ objections, the Court AD OPTS BY REFEREN CE the entire “Facts” section of the R & R. (See id.). II. STAN D ARD OF REVIEW The Court m ust conduct a de novo review of those portions of the R & R to which an objection is m ade. 28 U.S.C. § 636(b)(1). Upon review, the Court m ay accept, reject, or m odify, in whole or in part, the Magistrate J udge’s findings or recom m endations. Id. III. D EFEN D AN T U N ITED Defendant United has not filed an objection to Magistrate J udge Lee’s R & R. 3 Nevertheless, the Court has conducted a review of the R & R, as well as the record, and it agrees with Magistrate J udge Lee’s well-reasoned conclusions regarding Defendant United’s Motion for J udgm ent on the Pleadings (Doc. 21). The Court will thus ACCEPT AN D AD OPT Magistrate J udge Lee’s recom m endations regarding Defendant United’s claim s. Accordingly, Plaintiff’s claim for benefits under 29 U.S.C. § 1132(a)(1)(B) will be REMAN D ED for consideration under the Disability Continuation Provision as of J anuary 31, 20 12 and Defendant United’s Motion for J udgm ent on the Pleadings (Doc. 21) will be D EN IED . IV. D EFEN D AN T BOARD OF TRU STEES’ OBJECTION S A. Exh au s tio n o f Ad m in is trative Re m e d ie s an d D e fe n d an t Bo ard o f Tru s te e s ’ Statu s as a Pro p e r D e fe n d an t Defendant Board of Trustees objects to Magistrate J udge Lee’s finding that Plaintiff has exhausted her adm inistrative rem edies and that Defendant Board of 3 Magistrate J udge Lee specifically advised the parties that they had 14 days in which to object to the Report and Recom mendation and that failure to do so would waive their right to appeal. (Doc. 52 at 34 n.13); see Fed. R. Civ. P. 72(b)(2); see also Thom as v. Arn, 474 U.S. 140 , 148-51 (1985) (noting that “[i]t does not appear that Congress intended to require district court review of a magistrate’s factual or legal conclusions, under a de novo or any other standard, when neither party objects to those findings”). Even taking into account the three additional days for service provided by Fed. R. Civ. P. 6(d), the period in which Defendant United could timely file any objections has now expired. 3 Trustees is a proper defendant in this action. These objections, however, m erely restate the argum ents presented in Defendant Board of Trustees’ Mem orandum in Support of its Motion for Sum m ary J udgment, which were fully addressed in Magistrate J udge Lee’s R & R (Com pare Doc. 38 w ith Doc. 54; see Doc. 52). The Court has conducted a review of the R & R, as well as the record, and it agrees with Magistrate J udge Lee’s well-reasoned conclusions. The Court notes that on rem and, Defendant Board of Trustees is free to ensure that the requirements of 29 C.F.R. § 2560 .50 3-1(g)(1)(iv) are satisfied, nam ely that any adverse benefit determ ination notification include a full “description of the plan’s review procedures and the tim e limits applicable to such procedures.” This will afford Defendant Board of Trustees any independent review the plan m ay require 4 regarding an adverse benefit determ ination m ade by Defendant United with respect to Mr. Harris’ eligibility under the Disability Continuation Provision as of J anuary 31, 20 12.5 Accordingly, Defendant Board of Trustees’ objections with respect to Magistrate J udge Lee’s findings that Plaintiff has exhausted her adm inistrative rem edies and that Defendant Board of Trustees is a proper defendant in this action will be OVERRU LED , and Defendant Board of Trustees’ Motion for Sum m ary J udgm ent (Doc. 37) with respect to Plaintiff’s claim under 29 U.S.C. § 1132(a)(1)(B) will be D EN IED . 4 Plaintiff disputes that Defendant Board of Trustees is entitled to review denials of life insurance benefits. (Doc. 45 at 1– 2). 5 In her R & R, Magistrate J udge Lee correctly found that “Defendant Board of Trustees’ failure to satisfy its own requirem ent in the SPD to describe review procedures in any notice of an adverse benefit determ ination (AR 216) provides additional grounds for deeming Plaintiff to have exhausted her adm inistrative rem edies.” (Doc. 52 at 19). 4 B. Statu to ry Pe n altie s U n d e r 2 9 U .S.C. § 113 2 ( c) ( th e Po licy) Next, Defendant Board of Trustees objects to Magistrate J udge Lee’s conclusion that it should be assessed $ 12,760 .0 0 in statutory penalties for its failure to provide Plaintiff with a copy of the Life Insurance Policy (“the Policy”). Specifically, Defendant Board of Trustees contends that because Plaintiff was not prejudiced by the Board’s failure to provide the Policy and because Defendant Board of Trustees did not act in bad faith, statutory penalties under 29 U.S.C. § 1132(c) are inappropriate. Alternatively, Defendant Board of Trustees objects to Magistrate J udge Lee’s tim eline, arguing that March 28, 20 13, not May 1, 20 13, should be the cutoff date for calculation of the statutory penalty. For the reasons stated herein, the Court agrees with Magistrate J udge Lee’s well-reasoned conclusions. 29 U.S.C. § 1132(c) provides, in relevant part, Any Adm inistrator . . . who fails or refuses to com ply with a request for any inform ation which such adm inistrator is required by this subchapter to furnish to a participant or beneficiary (unless such failure or refusal results from m atters reasonably beyond the control of the adm inistrator) by m ailing the m aterial requested to the last known address of the requesting participant or beneficiary within 30 days after such request m ay in the court's discretion be personally liable to such participant or beneficiary in the am ount of up to $ 10 0 a day from the date of such failure or refusal, and the court m ay in its discretion order such other relief as it deem s proper. The $ 10 0 .0 0 per day lim it was increased to $ 110 .0 0 per day for violations after J uly 29, 1997. See Final Rule Relating to Adjustm ent of Civil Monetary Penalties, 62 Fed. Reg. 40 696, 40 697 (J uly 29, 1997). Notwithstanding Defendant Board of Trustees’ repeated argum ents that statutory penalties are inappropriate due to the lack of prejudice to Plaintiff and Defendant Board of Trustees’ alleged good faith, neither prejudice nor bad 5 faith is required to impose a penalty under 29 U.S.C. 1132(c). See McGrath v. Lockheed Martin Corp., 48 F. App’x 543, 557 (6th Cir. 20 0 2) (“In awarding the $ 7,70 0 .0 0 in penalties [under 29 U.S.C. 1132(c)], the district court was not required to m ake a finding that plaintiff’s right to adm inistratively appeal ES Plan benefit decisions was prejudiced, or that Westm oreland acted in bad faith.”); see also Gregory v. Goodm an Mfg. Co., L.P., 20 12 WL 685283 at *3 (E.D. Tenn. Mar. 2, 20 12) (“To the extent that Defendant suggests that penalties m ay be im posed only after explicit findings of bad faith and prejudice, it is m istaken.”). The purpose of the penalty is not to punish defendants’ bad faith actions or for any resulting prejudice to plaintiffs, but rather “to induce adm inistrators to tim ely provide participants with requested plan docum ents, and to penalize failures to do so.” Bartling v. Fruehauf Corp., 29 F.3d 10 62, 10 68 (6th Cir. 1994). The Court agrees with Magistrate J udge Lee’s conclusion that penalties are appropriate in this case, as Defendant Board of Trustees repeatedly failed to provide Plaintiff with a copy of the Policy despite Plaintiff’s explicit warnings regarding the possibility of statutory penalties for failure to do so. Accordingly, Defendant Board of Trustees’ objection to the award of any statutory penalty under 29 U.S.C. § 1132(c) will be OVERRU LED . Having rejected Defendant Board of Trustees’ contention that statutory penalties are wholly inappropriate, the Court now turns to the am ount of penalties to be assessed for Defendant Board of Trustees’ failure to provide Plaintiff with a copy of the Policy. It is uncontested that Defendant Board of Trustees’ period in which to respond tim ely to Plaintiff’s first request expired on J anuary 5, 20 13 (30 days after Plaintiff’s initial request for docum ents). Magistrate J udge Lee found that Plaintiff im plicitly withdrew her request for a copy of the Policy in a letter dated April 29, 20 13, and received by 6 Defendant Board of Trustees on May 1, 20 13.6 (Doc. 52 at 11, 11 n.8, 31 n.12 and accom panying text). Magistrate J udge Lee therefore concluded that the proper end date for assessing penalties under 29 U.S.C. § 1132(c) was May 1, 20 13, as Defendant Board of Trustees could reasonably conclude that, having been inform ed by Plaintiff that she had received a copy of the Policy from Defendant United, Defendant Board of Trustees no longer needed to send her a copy of sam e. (Doc. 52 at 31– 32). In its objections, Defendant Board of Trustees argues that the proper end date for assessing statutory penalties should be March 28, 20 13, the day on which Plaintiff indicated that she received a copy of the Policy from Defendant United. (Doc. 54 at 7– 8). As discussed above, however, the purpose of the statutory penalties under 29 U.S.C. § 1132(c) is “to induce adm inistrators to tim ely provide participants with requested plan docum ents.” Bartling, 29 F.3d at 10 68. 29 U.S.C. § 1132(c), therefore, seeks to punish adm inistrators for their failure to respond to beneficiaries’ requests, not to com pensate beneficiaries for their lack of access to requested docum ents. Therefore, assessing statutory penalties against Defendant Board of Trustees through May 1, 20 13 properly addresses its failure to respond to Plaintiff’s request for a copy of the Policy. Accordingly, Defendant Board of Trustees’ objections to Magistrate J udge Lee’s calculation of statutory penalties under 29 U.S.C. § 1132(c) for failure to provide Plaintiff a copy of the Policy will be OVERRU LED . For this failure, Defendant Board of Trustees will be assessed a statutory penalty of $ 12 ,76 0 .0 0 , calculated at $ 110 .0 0 per day for the 116 days between J anuary 5, 20 13 and May 1, 20 13. 6 In this letter, Plaintiff stated that she had received a copy of the Policy from Defendant United. (Doc. 52 at 11). 7 V. PLAIN TIFF’S OBJECTION S A. Plain tiff’s 2 9 U .S.C. § 113 2 ( a) ( 3 ) , ERISA § 50 2 ( a) ( 3 ) Claim Plaintiff objects to Magistrate J udge Lee’s finding that Plaintiff is not entitled to equitable relief under 29 U.S.C. § 1132(a)(3), ERISA § 50 2(a)(3). Specifically, Plaintiff argues that her breach of fiduciary duties claim is not m erely a repackaged ERISA § 50 2(a)(1)(B) claim , but rather alleges a separate and distinct injury. For the reasons stated herein, the Court disagrees with Magistrate J udge Lee’s recom m endation that Plaintiff’s breach of fiduciary duties claim is m erely a repackaged ERISA § 50 2(a)(1)(B) claim ; the Court finds, however, that as to this claim , there is no genuine dispute as to any m aterial fact, and Defendant Board of Trustees is entitled to judgm ent as a m atter of law. Therefore, the Court will grant Defendant Board of Trustees’ Motion for Sum m ary J udgm ent (Doc. 37) as to Plaintiff’s ERISA § 50 2(a)(3) claim . ERISA § 50 2(a)(3) provides, A civil action m ay be brought . . . by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the term s of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the term s of the plan. 29 U.S.C. § 1132(a)(3). This provision “act[s] as a safety net, offering appropriate equitable relief for injuries caused by violations that § 50 2 does not elsewhere adequately rem edy.” Varity Corp. v. How e, 516 U.S. 489, 512 (1996). A claim ant is entitled to bring an ERISA § 50 2(a)(3) breach of fiduciary duties claim in addition to an ERISA § 50 2(a)(1)(B) claim for recovery of benefits “only where the breach of fiduciary duty claim is based on an injury separate and distinct from the denial of benefits or where the rem edy afforded by Congress under § 50 2(a)(1)(B) is otherwise shown to be 8 inadequate.” Rochow v. Life Ins. Co. of North Am erica, 780 f.3d 364, 372 (6th Cir. 20 15) (em phasis in original). Here, Plaintiff argues that her breach of fiduciary duties claim under ERISA § 50 2(a)(3) alleges a separate and distinct injury from the arbitrary and capricious denial of benefits under ERISA § 50 2(a)(1)(B). Specifically, Plaintiff believes her claim under ERISA § 50 2(a)(1)(B) was denied because Defendant United used the wrong date in assessing Mr. Harris’ eligibility for continued life insurance under the Disability Continuation Provision. (Doc. 41 at 15– 18). Plaintiff further argues that Defendant Board of Trustees’ breach of fiduciary duties caused Mr. Harris to believe that continued paym ent of prem ium s from his m other’s bank account qualified Mr. Harris for life insurance coverage under the Conversion provision of the life insurance policy.7 (Id. at 18– 21). Defendant Board of Trustees argues that the breach of fiduciary duties claim should be dism issed, as Plaintiff has only alleged a single injury, nam ely the denial of benefits under Mr. Harris’ life insurance policy. This injury, Defendant Board of Trustees argues, can be fully addressed by an ERISA § 50 2(a)(1)(B) claim for denial of benefits, thus leaving Plaintiff unable to m ake a claim under ERISA § 50 2(a)(3) for breach of fiduciary duties. Both Defendant Board of Trustees and Magistrate J udge Lee’s R & R m ischaracterize Plaintiff’s claim ed injuries as one and the sam e. The facts of Gore v. El Paso Energy Corp. Long Term Disability Plan, 477 F.3d 833 (6th Cir. 20 0 7), are instructive. Therein, the plaintiff worked for Tennessee Gas Pipeline Com pany, which provided plaintiff with a long-term disability plan that “provided for ‘own occupation’ 7 While Mr. Harris’ prem ium s were autom atically deducted from the bank account of his mother, Mary Hood, on a m onthly basis, Ms. Hood was not listed as a beneficiary under Mr. Harris’ life insurance policy. (Doc. 39 at 4). 9 disability benefits for a period of 24 m onths and ‘any occupation’ disability benefits thereafter until the age of 65.”8 Id. at 834. On J anuary 1, 1998, plaintiff’s policy changed in that it provided for “own occupation” disability benefits for only 12 m onths, as opposed to the previous plan’s 24 m onths. Id.at 835. After 12 months under the new plan, an em ployee had to demonstrate that his injury prevented him from working in “any occupation” in order to receive benefits. Id. Plaintiff Gore was subsequently injured on the job, and received only 12 m onths of “own occupation” benefits. His claim for subsequent “any occupation” benefits was denied. Id. at 835– 36. In his com plaint, plaintiff Gore alleged two separate and distinct injuries. First, Gore alleges that [the] ‘any occupation’ determination was wrongly decided and that as a result he is entitled to . . . benefits. Second, he alleges that even if he is not entitled to the ‘any occupation’ determ ination, he should receive ‘own occupation’ benefits for two years rather than one based on [the plan adm inistrator’s] m isrepresentation. Id. at 840 . The United States Court of Appeals for the Sixth Circuit held that plaintiff Gore’s claim for breach of fiduciary duties was not m erely a repackaged ERISA § 50 2(a)(1)(B) claim for denial of benefits. Id. at 842. The court explained that [t]he reason why the district court and the Defendant confuse Gore’s argum ent is because the rem edy available to Gore if he had succeeded in his ‘any occupation’ claim would have rendered the ‘own occupation’ m isrepresentation m oot . . . If Gore received . . . benefits under the ‘any occupation’ coverage, Gore would no longer suffer any injury from [the plan adm inistrator’s] m isrepresentation of the ‘own occupation’ benefit. Gore would receive paym ent for the second year regardless of whether [the plan adm inistrator] should have told him that the ‘own occupation’ benefits only 8 By ‘own occupation’ and ‘any occupation’ the policy-at-issue meant that, in order to receive benefits, the claim ant’s injury m ust have prevented him from working in his ‘own occupation’ or in ‘any occupation’ for which he was qualified. See Gore, 477 F.3d at 834– 35. 10 lasted a year. However, the opposite result is not true. When Gore did not receive the ‘any occupation’ wages, his m isrepresentation claim was not m oot because his injury from the m isrepresentation was not elim inated. That Gore’s ‘own occupation’ injury would be rendered m oot if rem edied by the ‘any occupation’ determ ination does not m ean that the Plaintiff’s alleged injury is ‘a repackaged denial of benefits claim .’ The fact that Plaintiff’s claim for an equitable rem edy ‘could have been’ resolved if his § 1132(a)(1)(B) claim was resolved in his favor, does not m ean that his claim is the sam e as the one barred in W ilkins. Id. at 841. In the present case, Plaintiff’s claim under ERISA § 50 2(a)(1)(B) for denying benefits under the Disability Continuation Provision resulted in a separate and distinct injury from that caused by Defendant Board of Trustees’ alleged m isrepresentation regarding Mr. Harris’ continuation of life insurance benefits under the policy’s Conversion provision. Like in Gore, Plaintiff’s injury from Defendant Board of Trustees’ alleged m isrepresentation would be rendered m oot if remedied by a favorable determ ination on the Disability Continuation Provision. But the converse is not true. If Plaintiff receives an adverse determ ination on the Disability Continuation Provision, the injury from Defendant Board of Trustees’ alleged m isrepresentation regarding Mr. Harris’ continued coverage under the Conversion provision rem ains unaddressed. Furtherm ore, as in Gore, Magistrate J udge Lee found, and it is undisputed, that Plaintiff is not entitled to benefits under the strict term s of the Plan’s Conversion Provision. (Doc. 52 at 21) (“Mr. Harris subm itted a COBRA election form before his eligibility ended, but Defendants never received an application for conversion or portability of Mr. Harris’s life insurance coverage. The only m ethod by which Plaintiff m ay be entitled to benefits under 29 U.S.C § 1132(a)(1)(B), therefore, is the Disability Continuation 11 Provision.”) Because Plaintiff’s “claim of breach of fiduciary duty could not have been characterized as a denial of benefits claim ,” dism issal of Plaintiff’s ERISA § 50 2(a)(3) claim as a repackaged ERISA § 50 2(a)(1)(B) claim is inappropriate.9 Gore, 477 F.3d at 842. Accordingly, the Court REJECTS Magistrate J udge Lee’s finding that Plaintiff’s ERISA § 50 2(a)(3) claim is m erely a repackaged ERISA § 50 2(a)(1)(B) claim . Notwithstanding the propriety of Plaintiff’s ERISA § 50 2(a)(3) claim , it m ust be dism issed as there is no genuine dispute as to any m aterial fact, and Defendant Board of Trustees is entitled to judgm ent as a m atter of law. In its breach of fiduciary duties claim , Plaintiff alleges that Defendant Board of Trustees’ continued withdrawals of life insurance prem ium s out of Mr. Harris’ m other’s bank account after the expiration of Mr. Harris’ life insurance policy triggered an affirm ative duty for Defendant Board of Trustees to inform Mr. Harris that his life insurance policy had lapsed. (Doc. 41 at 18– 21). Several undisputed facts, however, lead the Court to conclude that this claim is without m erit. First, Southern Benefit Adm inistrators (“SBA”), Defendant Board of Trustees’ third-party adm inistrative m anager, m ailed COBRA inform ation to Mr. Harris on J anuary 20 , 20 12. (Doc. 39 at 5). With this inform ation came an explanatory letter, stating in bold lettering, [p]lease note that if your health coverage term inates, or if you elect COBRA continuation coverage, your life insurance with Mid-South Carpenters Regional Council Health and 9 Defendant Board of Trustees acknowledges that Plaintiff im plicitly abandoned her argum ent that denial of benefits under the Conversion provision of the life insurance policy am ounted to a violation of ERISA § 50 2(a)(1)(B) (Doc. 43 at 2– 3) (“The portion of the Plaintiff’s brief that addresses her § 50 2(a)(1)(B) claim entirely fails to mention that Mr. Harris had the right to convert to an individual life insurance policy through the Plan’s Conversion Privilege, as alleged in the Plaintiff’s original Com plaint. Instead, the Plaintiff’s claim to the underlying benefit now appears to rest solely on the theory that Mr. Harris was eligible for life insurance through what the Plaintiff titles the “LWOP,” or “Waiver of Prem ium Benefit” contained in the Plan’s SPD.”). Throughout this Order, the Court has referred to the ‘LWOP’ or ‘Waiver of Prem ium Benefit” as the Disability Continuation Provision. 12 Welfare Fund (Defendant Board of Trustees) will term inate. You m ay be eligible to convert your life insurance policy by com pleting the Mutual of Om aha Term Life Portability Request Form that is enclosed. (Doc. 38-1 at 1). Second, Mr. Harris signed a COBRA election form dated February 27, 20 12, and Defendant Board of Trustees never received any written application or any other com m unication from Mr. Harris that he wanted to continue his life insurance benefits after his policy lapsed on J anuary 31, 20 12. (Doc. 39 at 5– 6). Third, prem ium paym ents continued to be deducted from Mr. Harris’ m other’s bank account after Mr. Harris’ policy lapsed. After Mr. Harris’ death, his m other (who was not a beneficiary under the Policy) contacted SBA to inquire about Mr. Harris’ benefits. She was inform ed that Mr. Harris was ineligible for benefits as of the tim e of his death, and the m istaken deductions were reim bursed to Mr. Harris’ m other by check on August 27, 20 12. (Id. at 6– 7). Fourth, Defendant Board of Trustees claim s, and Plaintiff does not refute, that “no evidence exists that Mr. Harris was aware of the m istaken deductions being m ade from [his m other’s] account.” (Doc. 43 at 7). Finally, Plaintiff, who is the only beneficiary listed on Mr. Harris’ life insurance policy, did not contact Defendant Board of Trustees until Decem ber 4, 20 12, long after the m istakenly deducted prem ium s had been brought to Defendant Board of Trustees’ attention and had been reim bursed. (Doc. 39 at 7). Plaintiff cites Krohn v . Huron Mem orial Hospital, 173 F.3d 542 (6th Cir. 1999) for the proposition that Defendant Board of Trustees had a duty to inform Mr. Harris that its continued acceptance of prem ium s did not entitle Mr. Harris to coverage under the life insurance policy. (Doc. 41 at 19) (“Krohn distills relevant law by holding that . . . [the duty to inform ] entails not only a negative duty not to m isinform , but also an affirm ative d u ty to in fo rm w h e n th e tru s te e kn o w s th at s ile n ce m igh t be 13 h arm fu l.”) (em phasis in original). Plaintiff, however, ignores the court’s statem ent in the sam e paragraph that “a trustee is under a duty to com m unicate to the beneficiary m aterial facts affecting the interest of the beneficiary w hich he know s the beneficiary does not know and which the beneficiary needs to know for his protection in dealing with a third person.” Krohn, 173 F.3d at 548 (em phasis added) (citing Restatem ent (Second) of Trusts § 173, com m ent d (1959)). In the present case, there is no evidence that Defendant Board of Trustees knew that any policy holder or beneficiary to the life insurance policy knew of the m istaken deductions from Mr. Harris’ m other’s bank account, and relied on sam e to assum e that Mr. Harris was still covered under the life insurance policy. Only two such persons exist: Mr. Harris and Plaintiff. As stated above, there is no evidence that Mr. Harris was even aware of the m istaken prem ium deductions from his m other’s bank account. In fact, the undisputed evidence shows that, because Mr. Harris returned his COBRA election form , which was included in a packet with inform ation regarding the process for extending his life insurance policy, he was aware that his life insurance policy lapsed on J anuary 31, 20 12. Sim ilarly, there is no evidence on the record that Plaintiff knew of the m istakenly m ade deductions from Mr. Harris’ m other’s account. Mr. Harris’ m other, who was not a beneficiary to the life insurance policy, was the one to bring the m istake to Defendant Board of Trustees’ attention, and the m istakenly deducted prem ium s were reim bursed well before Plaintiff contacted Defendant Board of Trustees to address the life insurance policy. Accordingly, Defendant Board of Trustees had no reason to know “that silence m ight be harm ful.” Krohn, 173 F.3d at 548. Finally, Plaintiff relies on Krohn and Killian v. Concert Health Plan, 742 F.3d 651 (7th Cir. 20 13) to support her claim . These cases, Plaintiff argues, stand for the 14 proposition that “the fiduciary’s duty to provide complete and accurate inform ation, even if the beneficiary does not specifically inquire, is triggered w hen the beneficiary m akes the ERISA fiduciary ‘aw are of the beneficiary ’s status and situation .’” Killian, 742 F.3d at 669 (em phasis added). Plaintiff then analogizes this case to Palen v. Km art Corp., in which the beneficiary under the life insurance plan contacted Km art and com m unicated the policy holder’s desire to continue “all of his benefits.” 20 0 0 WL 658115 at *3 (6th Cir. May 9, 20 0 0 ). The Sixth Circuit held that because the beneficiary so indicated, Km art “becam e obligated to disclose all m aterial inform ation, including inform ation that [the beneficiary] had not specifically requested,” and that “Km art breached this duty when it responded to [the beneficiary’s] inquiries by providing inform ation about health insurance only, without a word about continuation of [the policy holder’s] life insurance.” Id. Here, Plaintiff points to no com m unication m ade by either Mr. Harris or Plaintiff to Defendant Board of Trustees that would trigger such a duty. Defendant Board of Trustees could not be under a duty to disclose any inform ation that was not “specifically requested” because nothing was requested at all. Because Plaintiff has failed to “set forth specific facts showing that” Mr. Harris or Plaintiff knew of the m istaken prem ium deductions, or that Mr. Harris or Plaintiff com m unicated with Defendant Board of Trustees as did the beneficiary in Palen, sum m ary judgm ent in Defendant Board of Trustees’ favor is appropriate. See Moldow an v. City of W arren, 578 F.3d 351, 374 (6th Cir. 20 0 9) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. at 574, 586 (1986); Fed. R. Civ. P. 56). Accordingly, Plaintiff’s Motion for Sum m ary J udgm ent (Doc. 40 ) as to its claim for breach of fiduciary duties under ERISA § 50 2(a)(3) will be D EN IED and Defendant Board of 15 Trustees’ Motion for Sum m ary J udgm ent (Doc. 37) as to the sam e claim will be GRAN TED . B. Statu to ry Pe n altie s U n d e r 2 9 U .S.C. 113 2 ( c) ( 3 ) ( Plan D o cu m e n t) Finally, Plaintiff objects to Magistrate J udge Lee’s finding that Defendant Board of Trustees should not be assessed statutory penalties under 29 U.S.C. 1132(c)(3) for its failure to provide Plaintiff with a copy of the Plan Docum ent. (Doc. 55 at 5– 9). Plaintiff argues that the Plan Docum ent is a controlling and/ or relevant ERISA docum ent, and therefore should have been produced upon each of Plaintiff’s requests for such docum ents. (Doc. 55 at 5). Defendant argues and Magistrate J udge Lee found that the SPD is the governing docum ent for the life insurance benefits under the Plan, and that Plaintiff did not clearly request the Plan Docum ent. For the reasons stated herein, the Court disagrees with Defendant and Magistrate J udge Lee, and finds that Defendant Board of Trustees is subject to statutory penalties for its failure to provide Plaintiff with a copy of the Plan Docum ent. Defendant Board of Trustees repeatedly asserts that it is undisputed that the SPD is the controlling docum ent for the life insurance benefits. (See, e.g. Doc. 57 at 4; Doc. 39 at 3). While this is not entirely clear from the record,10 it is also not the relevant inquiry. The relevant inquiry is whether the Plan Docum ent is also a controlling or relevant docum ent with regards to the ERISA plan at issue. A review of the case law and the language of the SPD itself show that the Plan Docum ent is such a docum ent. 10 In their Statem ent of Material Facts Not In Dispute, the parties stipulate that “SBA on behalf of the Board of Trustees has identified the Sum m ary Plan Description (“SPD”) and the Plan Docum ent as controlling docum ents in regards to the adm inistration of benefits under the ERISA plan.” (Doc. 39 at 11). Notably, Treva Garrison, Assistant Branch Manager at SBA, adm its in her Deposition that the Plan Docum ent is a controlling document over the life in surance policy. (Doc. 24-3 at 20 ) (“Question: Okay. How about the plan, does the plan control the life benefit claim , the plan docum ent? Answer: Th e p la n d o cu m e n t a n d t h e SPD , y e s .”) (em phasis added). 16 In CIGNA Corp. v. Am ara, the United States Suprem e Court held that “sum m ary docum ents, im portant as they are, provide com m unication with beneficiaries about the plan, but that their statem ents do not them selves constitute the term s of the plan for purposes of § 50 2(a)(1)(B).” 131 S. Ct. 1866, 1878 (20 11) (em phasis in original). Subsequent Sixth Circuit case law has expanded on this holding: “[s]ince Am ara, we have observed that SPDs are not legally binding, nor parts of the benefit plans them selves. . . SPDs lack controlling effect in the face of plan language to the contrary.” Engleson v. Unum Life Ins. Co. of Am erica, 723 F.3d 611, 620 (6th Cir. 20 13) (citations om itted) (internal quotation m arks om itted). Most recently, the Sixth Circuit shed light on this issue in Board of Trustees v. Moore, 20 15 WL 50 10 985 (Aug. 25, 20 15) (designated for publication). Therein, the question was whether the SPD was a binding docum ent that set out enforceable term s where there was no plan docum ent at all. Id. at *4 (“In a som ewhat unusual process, although not unique to the elevator industry, the Board omitted what is norm ally the next step—the drafting of a welfare benefits plan— and went straight to creation of a sum m ary plan description.”). The court distinguished this unique situation from Am ara, noting that [i]n Am ara, however, it was clear that one docum ent functioned as the plan itself, that a different docum ent functioned as the sum m ary plan description, and that the two docum ents contained conflicting term s. Nothing in Am ara prevents a docum ent from functioning both as the ERISA plan and as an SPD, if the term s of the plan so provide. Id. at *5 (em phasis added). Ultim ately, the court concluded, the SPD functions as the controlling ERISA plan “in the absence of a separate plan docum ent.” Id. The present case is easily distinguishable from Moore. First, there is no evidence on the record that the term s of the plan provide that the SPD functions both as the 17 ERISA plan and the SPD. Second, in this case Defendant Board of Trustees has not, and cannot argue that there is not a “separate plan document” associated with the SPD. In fact, the language of the SPD specifically addresses the Plan Docum ent: Although this booklet contains a great deal of inform ation about your Plan, it is not the purpose of this booklet to cover every detail or every situation that m ight arise under your health plan. However, there is a com plete set of Rules and Regulations which governs the operation and adm inistration of this plan. These Rules and Regulations are set forth in a legal docum ent referred to as the Plan Docum ent. . . The Rules and Regulations set forth in the Plan Docum ent are final and binding. Nothing in this booklet is m eant to interpret or extend or change in any way the provisions expressed in the Plan Docum ent itself. If there is any difference betw een the Plan Docum ent and the sum m ary in this booklet, the Plan Docum ent w ill control. (Doc. 18-5 at 33) (em phasis added). Defendant Board of Trustees argues that its failure to provide Plaintiff with the Plan Docum ent is excused because the Plan Docum ent contains no term s that specifically address the life insurance benefit, and because there are no conflicting term s between the SPD and the Plan Docum ent regarding sam e. This argum ent represents two sides of the sam e coin, and is dispelled with the sam e reasoning. Even if the parties agree that the SPD is a controlling docum ent for Mr. Harris’ life insurance policy, the term s of the SPD specifically state that in the event of any inconsistency between the SPD and the Plan Docum ent, the Plan Docum ent will control. Ergo, arm ed only with access to the SPD and not the Plan Docum ent, Plaintiff could not have known the unequivocal term s of the life insurance policy because she did not have the opportunity to discover any inconsistencies, or lack thereof, between the SPD and the Plan Docum ent. In this case, it happens that there are no inconsistencies between the SPD and the Plan Docum ent with regards to the life insurance policy. This, however, was not known by Plaintiff until she received the Plan Docum ent on Decem ber 18 10 , 20 14, despite m ultiple requests to Defendant Board of Trustees for copies of all controlling or relevant ERISA docum ents. In sum , to claim sim ultaneously, as Defendant Board of Trustees does, that only the SPD (and not the Plan Docum ent) is a controlling ERISA docum ent, but at the sam e tim e stating that “[i]f there is any difference between the Plan Docum ent and [the SPD], the Plan Docum ent will control,” (id.), belies logic. Accordingly, the Court finds that the Plan Docum ent is a controlling ERISA docum ent. Having found that Defendant Board of Trustees was under an obligation to furnish a copy of the Plan Docum ent at Plaintiff’s request, the Court now turns to the appropriate tim e fram e for statutory penalties under 29 U.S.C. 1132(c). It is undisputed that Plaintiff was provided a copy of the Plan Docum ent on Decem ber 10 , 20 14. This will be the end date for statutory penalties. Defendant Board of Trustees argues that Plaintiff’s requests for docum ents were “broad and did not include a specific request for the Plan Docum ent.” (Doc. 57 at 6). In Plaintiff’s third request for docum ents, however, Plaintiff states: However, since we wrote the letter to you on March 14, we have received a copy of the insurance policy from the insurance com pany, United of Om aha Life Insurance Com pany. The policy defines active eligibility for a mem ber as som eone who is ‘eligible for insurance according to the Policyholder’s rules of eligibility as stated in the current MidSouth Carpenters Regional Council Health and Welfare Fund Rules of Eligibility and as approved by Our authorized representative in Our hom e office . . . .’ Presum ably, these ‘Rules of Eligibility’ would be included in the Plan docum ents we have previously requested from you; how ever, if they are not, please consider this as a request for those docum ents. (Doc. 1-4 at 1– 2) (emphasis added). These “Rules of Eligibility” are addressed at length in the Plan Docum ent. (See Doc. 55 at 6; Doc. 39-2 at 22– 31). Defendant Board of 19 Trustees received Plaintiff’s third request for docum ents on May 1, 20 13, and Defendant Board of Trustees did not respond, (Doc. 39 at 16), despite Plaintiff asking specifically for the docum ent addressing “Rules of Eligibility,” i.e. the Plan Docum ent. Even giving Defendant Board of Trustees the benefit of the doubt that Plaintiff’s first and second docum ent requests m ay have been am biguous as to the Plan Docum ent, the Court finds that given Plaintiff’s third request, Defendant Board of Trustees was under a duty to furnish a copy of the Plan Docum ent. The proper start date for penalties under 29 U.S.C. 1132(c) is 30 days after the plan adm inistrator receives a request; the proper start date for penalties in this case, therefore, is May 31, 20 13. Given Defendant Board of Trustees’ deliberate choice not to respond to Plaintiff’s unam biguous third request for docum ents, and Defendants failure to respond at all to either the second or third request for docum ents, (see Doc. 39 at 15– 16), the Court finds that assessing the m axim um penalty is appropriate in this case. Accordingly, Defendant Board of Trustees will be assessed a penalty of $ 6 1,3 8 0 .0 0 for its failure to furnish a copy of the Plan Docum ent, calculated at $ 110 .0 0 per day for the 558 days between May 31, 20 13 and Decem ber 10 , 20 14. This penalty is in addition to the $ 12,760 .0 0 for Defendant Board of Trustees’ failure to provide a copy of the Policy, discussed supra Section IV.B. VI. CON CLU SION Having conducted a de novo review of the R & R, as well as the record, Magistrate J udge Lee’s R & R (Doc. 52) is hereby ACCEPTED AN D AD OPTED in p art and REJECTED in p art. Accordingly: Defendant United’s Motion for J udgm ent on the Pleadings (Doc. 21) is hereby D EN IED . 20 Defendant Board of Trustees’ Motion for Sum m ary J udgm ent (Doc. 37) is hereby GRAN TED IN PART to the extent that it seeks judgm ent on Plaintiff’s claim for relief for breach of fiduciary duties under 29 U.S.C. § 1132(a)(3) and D EN IED IN PART in all other respects. Plaintiff’s Motion for Sum m ary J udgm ent (Doc. 40 ) is hereby GRAN TED IN PART to the extent it seeks statutory penalties of $ 74,140 .0 0 under 29 U.S.C. § 1132(c) and D EN IED IN PART to the extent that it seeks additional penalties under 29 U.S.C. § 1132(c) and relief under 29 U.S.C. § 1132(a)(3). Plaintiff’s claim for benefits under 29 U.S.C. § 1132(a)(1)(B) is hereby REMAN D ED for consideration under the Disability Continuation Provision as of J anuary 31, 20 12. SO ORD ERED this 21st day of Septem ber, 20 15. / s/ Harry S. Mattice, Jr._ _ _ _ _ _ _ HARRY S. MATTICE, J R. UNITED STATES DISTRICT J UDGE 21
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
