Addison v. Hartford Life and Accident Insurance

Full title: DARLENE ADDISON, Plaintiff, v. HARTFORD LIFE AND ACCIDENT INSURANCE…

Court: United States District Court, E.D. Tennessee

Date published: Dec 12, 2003

No. 1:03-cv-172 (E.D. Tenn. Dec. 12, 2003)

Opinion

No. 1:03-cv-172

December 12, 2003

MEMORANDUM

R. ALLAN EDGAR, Chief Judge, District

I. Introduction

Plaintiff, Darlene Addison, brought this action for long-term disability benefits pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), 1132(c), against her employer Nabisco, Inc., n/k/a Kraft Foods North America, Inc. ("Nabisco") and Hartford Life and Accident Insurance Co., ("Hartford"). In the first count of her two count complaint, plaintiff alleges improper denial of disability income benefits pursuant to Section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). In the second count of her complaint, plaintiff seeks statutory penalties against Hartford in the amount of $110.00 per day from August 15, 2001, pursuant to 29 U.S.C. § 1132(c)(1). Plaintiff seeks statutory penalties from Hartford on the ground that Hartford failed to comply with her written request to provide plan documents. [Court File No. 1].

In addition to an answer to plaintiff's complaint [Court File No. 6], Hartford has filed a motion seeking dismissal of plaintiff's claims for failure to provide plan documents pursuant to Fed.R.Civ.P. 12(b)(6) on the ground that plaintiff has failed to state a claim upon which relief can be granted. [Court File No. 8].

II. Background

In her complaint, plaintiff alleges that Nabisco is her employer and the sponsor of the long-term disability plan. [Court File No. 1, p. 2]. Plaintiff further asserts that the long-term disability plan is funded through an insurance policy obtained from Hartford, which she alleges is a plan fiduciary. Id. at ¶¶ 5, 9. Plaintiff further alleges that Nabisco "is the plan administrator of the plan as stated in the plan or, if not so stated, as a matter of law." Id. at ¶¶ 7, 38.

In the complaint, plaintiff alleges that in a letter, sent to Hartford via certified mail on July 16, 2001, she requested a copy of her entire claim file. She further alleges that on August 9, 2001, Hartford responded to her letter and provided certain documents, including a July 4, 2001 denial letter, a copy of the ERISA plan, and the medical records obtained from her treating physician. She further alleges, however, that Hartford did not fully respond to her request for production of documents. Rather, she asserts that Hartford did not provide certain relevant documents including, internal notes, claims manuals, all relevant medical reports and reports from medical or vocational consultants. Based upon Hartford's alleged failure to provide all the relevant medical documents, plaintiff seeks penalties from Hartford of $110.00 per day pursuant to 29 U.S.C. § 1132(c)(1) from August 15, 2001, which is 30 days after she sent the certified letter to Hartford requesting a copy of her entire claim file. [Court File No. 1, ¶ 39]. III. Hartford's Fed.R.Civ.P. 12(b)(6) motion to dismiss . [Court File No. 8].

Hartford seeks dismissal of plaintiff's claims for civil penalties under 29 U.S.C. § 1132(c)(1) for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). [Court File No. 8]. Hartford asserts that although 29 U.S.C. § 1132(c) provides for civil penalties in the amount of $110.00 per day, the law is clear that in the Sixth Circuit only a plan administrator can be liable under 29 U.S.C. § 1132(c)(1). [Court File No. 8, p. 2]. Hartford asserts that because, by plaintiff's own admission, Nabisco, not Hartford, served a plan administrator, as a matter of law, Hartford cannot be found liable for civil penalties under 29 U.S.C. § 1132(c)(1). Id.

In her response to Hartford's Rule 12(b)(6) motion, plaintiff asserts that the information she requested from Hartford, particularly Hartford's own claims manuals, were solely under Hartford's control. [Court File No. 15]. She further asserts that because these documents were solely under Hartford's control, it would be irrational for the court to require her to request the information from Nabisco/Kraft. Id.

Further, plaintiff argues that two circuit courts — the First and Eleventh Circuits — have held that 29 U.S.C. § 1132(c)(1) allows civil penalties against de facto plan administrators. [Court File No. 8, p. 4]. She asserts that in this instance Hartford has retained a substantial amount of control over plan determinations, including, the right to make plan determinations and control investigations of claims for benefits under the plan. Id. at 5-6. Thus, plaintiff asserts that Hartford should be deemed the de facto plan administrator and, as such, should be held liable for civil penalties under 29 U.S.C. § 1132(c)(1). In support of her assertion that Hartford is the de facto adminstrator of the plan, plaintiff has attached three letters from Hartford — dated June 26, 2002; January 4, 2002; and, June 4, 2001 — to her response to Hartford. [Court File No. 15, exhibit A].

Hartford has filed a reply brief. [Court File No. 16]. Attached to Hartford's reply brief are relevant portions of the plan documents.

A complaint may be dismissed if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). However, if matters outside the pleadings are presented to and not excluded by the Court, the 12(b)(6) motion shall be treated as one for a summary judgment and disposed of as provided in Fed.R.Civ.P. 56. Fed.R.Civ.P. 56; Fugarino v. Hartford Life and Ace. Ins. Co., 969 F.2d 178, 182 (6th Cir. 1992). Thus, since the parties have submitted matters outside the pleadings which will be considered by the Court, Hartford's Rule 12(b)(6) motion will be treated as a motion for a summary judgment under Fed.R.Civ.P. 56.

Further, on October 29, 2003, the Court gave notice to the parties, and plaintiff in particular, that after a review of the record, the Court was inclined to sua sponte grant a summary judgment on plaintiff's claims for civil penalties under 29 U.S.C. § 1132(c)(1). The Court's order afforded the parties an opportunity to respond to the Court's notice that it is considering a grant of summary judgment in favor of Hartford on plaintiff's claim for civil penalties. [Court File No. 17].

Plaintiff filed her response to the Court's notice on November 20, 2003. [Court File No. 18]. Hartford filed its reply to the plaintiff's response on December 3, 2003 [Court File No. 19].

A. Summary Judgment Standard of Review

Summary judgment is appropriate where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). In ruling on a motion for summary judgment, the Court must view the facts contained in the record and all inferences that can be drawn from those facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); National Satellite Sports, Inc. v. Eliadis Inc., 253 F.3d 900, 907 (6th Cir. 2001). The Court cannot weigh the evidence or determine the truth of any matter in dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

The moving party bears the initial burden of demonstrating that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). To refute such a showing, the non-moving party must present some significant, probative evidence indicating the necessity of a trial for resolving a material, factual dispute. Celotex Corp., 477 U.S. at 322. A mere scintilla of evidence is not enough. Anderson, 477 U.S. at 252; McLean v. Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000). The Court's role is limited to determining whether the case contains sufficient evidence from which a jury could reasonably find for the non-moving party. Anderson, 477 U.S. at 248, 249; National Satellite Sports, 253 F.3d at 907.

B. Analysis

As noted by the plaintiff in her response to Hartford's Rule 12(b)(6) motion, the First Circuit has held that where "to all appearances" an entity acts as if it were an ERISA plan administrator, particularly in respect to the dissemination of plan information, liability under 29 U.S.C. § 1132(c) may properly be imposed against such entity. Law v. Ernst Young, 956 F.2d 364, 374 (1st Cir. 1992). The First Circuit reasoned that if it held that an entity, not named as administrator in the plan documents, has actual control of the dissemination of plan information, but could not be held liable under § 1132(c), employees seeking disclosure of such information would be deprived on a remedy Congress intended to create. Id.

This, however, is not the law in the Sixth Circuit. It is well-settled in the Sixth Circuit that only plan administrators can be held liable for statutory penalties under 29 U.S.C. § 1132(c). Caffey v. UNUM Life Ins. Co., 302 F.3d 576, 584 (6th Cir. 1989); Hiney Printing Co. v. Brantner, 243 F.3d 956, 960 (6th Cir. 2001); VanderKlok v. Provident Life Accident Ins. Co., 956 F.2d 610, 618 (6th Cir. 1992). Furthermore, the Sixth Circuit has expressly held that "an insurance company, which is not a plan administrator cannot be held liable for statutory damages [under § 1132(c)] for failure to comply with an information request." Caffey, 302 F.3d at 58 (citing VanderKlok, 956 F.2d at 618).

Section 1002 (16)(A) of ERISA sets forth the definition of apian "administrator" as:

The term "administrator" means —

(i) the person specifically so designated by the terms of the instrument under which the plan is operated . . .

29 U.S.C. § 1002(16)(A). Along with its reply to plaintiff's brief in response to its morion to dismiss, Hartford has submitted a relevant portion of the plan documents at issue in this action. [Court File No. 16]. This portion of the plan documents show that Nabisco, Inc., is specifically designated as the plan administrator in the plan documents. Id.

In her response to this Court's notice that it was sua sponte considering a summary judgment, plaintiff again asserts her claim against Hartford for statutory penalties under Section 502(c)(1) of ERISA, 29 U.S.C. § 1132(c)(1), based upon Hartford's alleged failure to provide her with certain requested documents. In support of this argument, plaintiff asserts that pursuant to 29 C.F.R. § 2560.503-1, which governs claim procedures under ERISA, Hartford can be "deemed to be an administrator that is subject to the provisions of ERISA § 502(c)(1)." [Court File No. 18, p. 5].

However, in making this argument, plaintiff has argued that an alleged violation of § 1133, can result in liability under § 1132(c)(1) of ERISA. Section 502(c), 29 U.S.C. § 1132(c), authorizes a court to impose a sanction on plan administrators for failing to fulfill obligations imposed on the administrators. See Groves v. Modified Retirement Plan for Hourly Paid Employees of Johns Manville Corp. and Subsidiaries, 803 F.2d 109, 112-13 (3rd Cir. 1986). Those duties are imposed by section 503 of ERISA, § 1133, and two regulations promulgated thereto, 29 C.F.R. § 2560.503-1(f) and 29 C.F.R. § 2560.503-l(g). Id. at 113. However, "failure to perform the duties imposed by ERISA § 503 [ 29 U.S.C. § 1133]. . . do[es] not render a plan administrator liable to § 502(c) [ 29 U.S.C. § 1132(c)] sanctions . . . " Id. at Ill. See also Stuhlreyer v. Armco, Inc., 12 F.3d 75, 79 (6th Cir. 1993) ("Aplan administrator cannot violate § 1133 and thus potentially incur liability under § 1132(c), because § 1133 imposes obligations on the `plan' rather than the `plan administrator'".)

Thus, plaintiff's attempt to characterize Hartford as the plan "administrator" under 29 U.S.C. § 1133 for purposes of the imposition of statutory penalties under § 1132 must fail. As is noted above, under the law of the Sixth Circuit, Hartford is not a plan administrator. Caffey, 302 F.3d at 58 (citing VanderKlok, 956 F.2d at 618). Furthermore, even assuming arguendo that Hartford has failed to comply with 29 U.S.C. § 1133 and its implementing regulations at 29 C.F.R. § 2560.503-1, such noncompliance is not a grounds for the imposition of statutory penalties under § 1132(c) because § 1132(c) does not apply to its breach, if any, of the duties imposed by § 1133. Groves, 803 F.2d at 112-13; Stuhlreyer, 12 F.3d at 79.

Accordingly, the Court finds that there is no genuine issue of material fact and that as a matter of law, Hartford is entitled to a summary judgment on plaintiff's claims for statutory damages against it under 29 U.S.C. § 1132(c)(1).

A separate order will enter.

ORDER

In accordance with the accompanying memorandum opinion, the Court sua sponte GRANTS defendant Hartford Life and Accident Insurance a summary judgment on plaintiff's claims against it for statutory penalties under 29 U.S.C. § 1132(c). plaintiff's claims against Hartford for statutory penalties under 29 U.S.C. § 1132(c) are DISMISSED WITH PREJUDICE. Further, Hartford's Rule 12(b)(6) motion [Court File No. 8] to dismiss plaintiff's claims for statutory penalties under § 1132(c) on the ground that plaintiff has failed to state a claim upon which relief can be granted is STRICKEN as having been rendered MOOT.

SO ORDERED.