Opinion
Case No. 5:03CV2108.
December 6, 2005
MEMORANDUM, OPINION and ORDER [Resolving Docs. 31, 32]
This matter comes before the Court on cross-motions for Judgment on the Administrative Record filed by the parties to this action. Plaintiff Michael Fendler asks the Court to overturn the decision of Defendant CNA Group Life Assurance Company to deny his claim for life insurance benefits. Defendant asks the Court to affirm its decision denying Plaintiff's claim. The Court has reviewed the parties' motions and, for the reasons set forth herein, grants Defendant's motion and denies Plaintiff's motion.
I. Facts Procedure
Plaintiff is the beneficiary of his mother's life insurance policy. His mother, Eleanor Fendler, the insured, was employed by GOJO Industries, Inc. ("GOJO") as Director of Skin Care Technology. Mrs. Fendler was covered under GOJO's Life and Accidental Death and Dismemberment Benefit Policy ("the Policy"), which Defendant issued.
The Policy defines "Classes Eligible for Insurance" as "All active, full-time Employees of the Holder." An "Employee" is defined as a person "Employed on a full-time basis by the Holder." According to the terms of the policy, "Employed on a full-time basis means actively at work an average of 40 or more hours per week at his customary place of employment."
The Policy's "Waiver of Premium" provision states that insurance will be continued without premium charge, subject to any reduction for age or retirement, during the continuance of a permanent and total disability if total disability begins while the insured is still insured under the policy and the disability occurs before the insured's sixtieth birthday. Insurance terminates under the Policy on the date the insured is no longer eligible for insurance. Notwithstanding, absence from work is not treated as a termination of insurance for a period of nine months if the insured is disabled, or until the insured is eligible under the "Waiver of Premium" provision.
The Policy, however, allows an insured, who is no longer a member of a "Class Eligible for Insurance" to convert his or her life insurance from the group policy (under the employer) to an individual policy of insurance. The conversion must be made within thirty-one days after coverage terminates. The Policy's Summary Plan Description ("SPD") gives GOJO, the named plan administrator, "the discretionary authority to determine eligibility for benefits and to construe the terms of the plan." The terms of the Policy, however, indicate that Defendant also has some discretion. For instance, Defendant has the discretion to determine what constitutes "due proof" of death and disability.
On November 21, 2001, Mrs. Fendler was diagnosed with metastatic breast cancer. She filed for short-term disability benefits and did not report to work at GOJO's offices after that date. GOJO allowed Mrs. Fendler to work from home, although the amount of work she did from home and the exact dates she worked are not evident from the record. Regardless, GOJO considered Mrs. Fendler a full-time employee and paid the premiums on her insurance.
Sometime in May 2002, Mrs. Fendler became totally disabled, incapable of even minimal sedentary activity, and was confined to bed. In June 2002, GOJO filed Defendant's "Life Waiver of Premium Form" on Mrs. Fendler's behalf. The form states that Mrs. Fendler last reported for work on November 20, 200[1]. At the same time, it states that Mrs. Fendler was currently employed.
The form itself says that Mrs. Fendler last reported to work on November 20, 2002; however, she was deceased by that date. The parties' briefing indicates that she last reported to work on November 20, 2001.
On July 24, 2002, Defendant, in a letter carbon copied to GOJO, wrote a letter to Mrs. Fendler explaining that she was not eligible for the "Waiver of Premium" coverage. Using the November 20, 2001 date as the "date of loss," Defendant explained that Mrs. Fendler was not eligible for the waiver because she was over the age of sixty. Defendant also informed her that she had the option to convert her group coverage to individual coverage within a certain time frame.
Mrs. Fendler died on October 9, 2002. Shortly thereafter, Plaintiff applied for death benefits under the plan. Defendant denied the benefits. It stated that Mrs. Fendler's "Waiver of Premium" claim had been denied in July 2002 and that she was covered only until September 21, 2002 (applying the nine month elimination period, plus an additional thirty-one days for assumed conversion). Defendant also stated that Mrs. Fendler had not converted her insurance from group coverage to individual coverage, which rendered her ineligible for benefits.
On December 16, 2002, Kay Hood, GOJO's Compensation and Systems Manager, wrote a letter to Defendant stating that GOJO was appealing Defendant's decision to deny Plaintiff's claim. GOJO stated that Mrs. Fendler was unable to appeal or apply for a conversion because of her health condition. GOJO also stated that Mrs. Fendler's disability date was May 21, 2002 (not November 1, 2001) and that it had paid premiums on her benefit through the date of her death. Ms. Hood also stated that she had spoken with Linda Miller, one of Defendant's representatives, who assured her that there would be no problem with Mrs. Fendler's benefit. Defendant never responded to this letter.
On April 4, 2003, Joseph Smerick, Jr., GOJO's Human Resource Director, wrote another letter to Defendant. In his letter, Mr. Smerick stated his belief that the Waiver of Premium application, which was denied, had no impact on Mrs. Fendler's insurance coverage because GOJO continued to pay the premiums. Mr. Smerick also stated his belief that Mrs. Fendler did not become disabled until May 21, 2002, which was the date when Mrs. Fendler first qualified for long-term disability benefits. Mr. Smerick himself, however, referred to the May 21, 2002 date as a "possible" date for the onset date of Mrs. Fendler's total disability and admitted that this date was "somewhat arbitrary."
On April 8, 2003, Defendant responded to the letter, but did not address GOJO's contention that Mrs. Fendler was still an employee and eligible for benefits irrespective of the waiver. Rather, it stated that she was over the age for the waiver regardless of the date of disability, or date of loss. Defendant, despite its response indicating that coverage was not available, processed the appeal. Shortly thereafter, the appeal was denied and Defendant's decision to deny benefits was affirmed by the appeals board as a final and binding decision. Again, no mention was made of GOJO's contention that Mrs. Fendler was an active employee who was entitled to benefits regardless of the waiver provision.
Later that same year, Plaintiff filed this action seeking to recover benefits under his mother's life insurance policy. Both parties submitted motions for judgment on the administrative record, which are the motions currently before the Court. Plaintiff, in his motion, argues that GOJO, the named plan administrator, had the discretion to deem Mrs. Fendler an employee who was eligible for benefits. Plaintiff, among other things, argues that Mrs. Fendler was eligible for benefits irrespective of the waiver of premium because she was an active, full-time employee. Thus, he urges the Court to find that Defendant's decision to deny benefits was arbitrary and capricious. Defendant, on the other hand, argues that it's decision was not arbitrary and capricious because it had the discretion to determine eligibility for benefits and Mrs. Fendler was not entitled to benefits under the plain terms of the Policy.
II. Standard of Review
The Court must apply the arbitrary and capricious standard when reviewing this case. This standard applies when "the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). A plan administrator does not act arbitrarily and capriciously if it is "possible to offer a reasoned explanation, based on the evidence" for its decision to deny benefits. Perry v. United Food Commercial Workers Dist. Unions, 64 F.3d 238, 242 (6th Cir. 1995). A fiduciary's decision to deny benefits is neither arbitrary nor capricious if the denial was "rational in light of the plan's provisions." Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir. 1997) (quotation omitted). "Absent a showing that a fiduciary acted inconsistently with the terms of the policy, or in bad faith, the Court must affirm the denial of benefits under the arbitrary and capricious standard." Wells v. United States Steel Carnegie Pension Fund, Inc., 950 F.2d 1244, 1253 (6th Cir. 1991). This deferential standard of review does not equate to no review at all, nor does it serve as a mere "rubber stamp" of Defendant's decision to deny Plaintiff's claim. McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 172 (6th Cir. 2003) (citations omitted).
III. Law Analysis
After examining the Policy at issue, the Court agrees with Defendant that Mrs. Fendler ceased being an active, full-time employee on November 21, 2001 — the date on which she last reported to work at her GOJO office. Because Mrs. Fendler was not eligible for the waiver of premium due to her age, which is a point neither party contests, and because she did not convert her policy from the group policy to the individual policy, she was eligible for insurance benefits only for a period of nine months (and thirty-one days) from the date she last reported to work at GOJO. Accordingly, Defendant's finding that Mrs. Fendler was not entitled to insurance benefits because she neither qualified for the waiver nor converted her policy was not arbitrary and capricious.
As Plaintiff concedes, Mrs. Fendler was never eligible for the waiver. Moreover, she did not convert the policy to an individual policy within the required time frame. Plaintiff's primary argument in support of benefits is that Mrs. Fendler continued to be an active employee throughout the first half of 2002. However, the Policy defines "active, full-time" as an employee working forty or more hours per week at his or her "usual and customary place of employment." It appears from the record and the parties' briefing that Mrs. Fendler had an office at GOJO and that her office was her usual and customary place of employment until her diagnosis of cancer. Furthermore, it does not appear that GOJO permitted Mrs. Fendler to work from home until after her diagnosis in November 2001. Plaintiff, in asking the Court to find Defendant's decision arbitrary and capricious, is asking the Court to find that Mrs. Fendler's usual and customary place of employment — over a period of more than ten years — was her home. Again, even if GOJO allowed Mrs. Fendler to work from home, there is no evidence that this was her usual and customary place of employment. Furthermore, there is no evidence in the administrative record to show that Mrs. Fendler was working 40 or more hours per week, as the Policy requires. Accordingly, Defendant's finding that Mrs. Fendler was not entitled to coverage was not arbitrary and capricious.
Even if, as Plaintiff argues, GOJO was able to determine eligibility for benefits because it was the named plan administrator, its interpretation must also be rational in light of the plain meaning of the words in the policy. See Miller v. Met. Life Ins. Co., 925 F.2d 979, 984 (6th Cir. 1991) (noting that a plan administrator's denial of benefits is not arbitrary and capricious as long as it is rational in light of the plan's provisions). GOJO, as plan administrator, was still required to follow the Policy. As previously stated, the Policy required an active, full-time employee to work 40 or more hours per week. The only evidence in the administrative record is that Mrs. Fendler was provided a laptop computer and used e-mail to correspond with GOJO up to the date of her total disability. Again, there is no evidence to show that she worked 40 or more hours per week. Additionally, GOJO, even if it deemed Plaintiff an active, full-time employee, could not define the Policy term "customary place of employment" to mean Mrs. Fendler's home in this one isolated instance merely because it was the plan administrator. See generally Williams v. International Paper Co., 227 F.3d 706, 711 (6th Cir. 2000) (noting that contract provisions are interpreted according to their plain meaning in an ordinary and popular sense). While there appears to have been some confusion regarding Mrs. Fendler's benefits, the only issue before the Court is whether Defendant's denial of the claim was arbitrary and capricious, and the Court finds that it was not.
IV. Conclusion
The Court finds that Defendant's denial of benefits was not arbitrary and capricious because it was rational in light of the plan's provisions and consistent with its terms. Accordingly, Defendant's motion is GRANTED and Plaintiff's motion is DENIED.
IT IS SO ORDERED.