Opinion
CIVIL ACTION FILE NO. 1:19-CV-3013-MHC
2022-03-21
Joy G. WOOD, Kaitlin M. Wood, and Kristyne N. Wood, Plaintiffs, v. LIFE INSURANCE COMPANY OF NORTH AMERICA and Floor and Decor Outlets of America, Inc., Defendants.
James Cameron Tribble, Roy E. Barnes, The Barnes Law Group, LLC, Marietta, GA, for Plaintiffs. Elizabeth Johnson Bondurant, Nikole Marie Crow, Womble Bond Dickinson (US) LLP, Atlanta, GA, for Defendants Life Insurance Company of North America. Rachel Purcell Kaercher, Wesley Earl Stockard, Littler Mendelson, Atlanta, GA, for Defendant Floor and Decor Outlets of America, Inc.
James Cameron Tribble, Roy E. Barnes, The Barnes Law Group, LLC, Marietta, GA, for Plaintiffs.
Elizabeth Johnson Bondurant, Nikole Marie Crow, Womble Bond Dickinson (US) LLP, Atlanta, GA, for Defendants Life Insurance Company of North America.
Rachel Purcell Kaercher, Wesley Earl Stockard, Littler Mendelson, Atlanta, GA, for Defendant Floor and Decor Outlets of America, Inc.
ORDER
MARK H. COHEN, United States District Judge
Plaintiffs Joy G. Wood, Kaitlin M. Wood, and Kristyne N. Wood (collectively, the "Plaintiffs"), the surviving wife and children of the deceased, Bradley Byron Wood ("Mr. Wood"), bring this action under Sections 502(a)(1)(B) and (a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B) and (a)(3), for the recovery of a $500,000 death benefit under Mr. Wood's life insurance policy and related claims of equitable relief, breach of fiduciary duty, and attorney's fees. See Compl. [Doc. 1].
Before the Court are Defendant Life Insurance Company of North America ("LINA")’s Motion for Judgment as a Matter of Law ("LINA's Mot.") [Doc. 97], Defendant Floor and Decor Outlets of America, Inc. ("Floor and Decor")’s Motion for Summary Judgment ("Floor and Decor's Mot.") [Doc. 101], and Plaintiffs’ Motion for Summary Judgment ("Pls.’ Mot.") [Doc. 104].
I. BACKGROUND Mr. Wood was employed by Floor and Decor from June 24, 2011, until the date of his death on April 11, 2017. Life Insurance Statement (AR 173-74) [Doc. 97-2 at 174-175]; ADP Portal Screen Shot [Doc. 105-1]; Pls.’ Resp. to Floor and Decor's SMF ¶ 1. At the time of his death, Mr. Wood's life was insured by a Floor and Decor-sponsored group term life insurance policy, number FLX-966802 (the "Group Policy"), which was in effect during the plan year from August 1, 2016, through July 31, 2017. Grp. Policy [Doc. 1-2]; Pls.’ Resp. to Floor and Decor's SMF ¶¶ 2-4. Plaintiffs are Mr. Wood's designated beneficiaries for the life insurance benefits under the Group Policy. Floor and Decor's Resp. to Pls.’ SMF ¶ 1; LINA's Resp. to Pls.’ SMF ¶ 1. Upon Mr. Wood's death, Plaintiffs timely made a claim for $500,000 in life insurance benefits under the Group Policy. Floor and Decor's Resp. to Pls.’ SMF ¶ 75; LINA's Resp. to Pls.’ SMF ¶ 75. LINA agreed to pay the Guaranteed Issue Amount of $110,000, but refused to pay the additional $390,000. Id.
At the outset, the Court notes that as this case is before it on two of the parties’ cross-motions for summary judgment, the Court views the evidence presented by the parties in the light most favorable to the non-movant and has drawn all justifiable inferences in favor of the non-movant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Sunbeam TV Corp. v. Nielsen Media Rsch., Inc., 711 F.3d 1264, 1270 (11th Cir. 2013). In addition, the Court has excluded assertions of facts that are immaterial or presented as arguments or legal conclusions or any fact not supported by citation to evidence (including page or paragraph number). LR 56.1B(1), NDGa. Further, the Court accepts as admitted those facts in Defendant Floor and Decor's Statement of Material Facts as to Which There is No Genuine Dispute ("Floor and Decor's SUMF") [Doc. 101-12] and Plaintiffs’ Statement of Material Facts ("Pls.’ SMF") [Doc. 104-2] which have not been controverted. See LR 56.1B(2), NDGa.; LINA's Resp. to Pls.’ SMF [Doc. 121]; Floor and Decor's Resp. to Pls.’ SMF [Doc. 125]; Pls.’ Resp. to Floor and Decor's SMF [Doc. 129].
"AR" refers to the administrative record filed by LINA [Doc. 97-2]. The corresponding numbers indicate the page numbers as they appeared within the administrative record.
The central question of this case is whether Plaintiffs are entitled to $110,000 or $500,000 under the Group Policy.
A. An Insured Must Meet the Insurability Requirement in Order to be Eligible for Any Benefit in Excess of the Guaranteed Issue Amount.
The Group Policy provides that during the initial enrollment period an employee may become insured for a benefit up to the "Guaranteed Issue Amount ... without satisfying any Insurability Requirement." Grp. Policy at 8. However, "[a]n Employee may become insured for an amount in excess of [the Guaranteed Issue Amount] only if he or she satisfies the Insurability Requirement. Any excess amount will be effective on the date the Insurance Company agrees in writing to insure the Employee." Id. Similarly, even if the employee did not initially elect an amount in excess of the Guaranteed Issue Amount, the employee could do so during the annual enrollment period, again subject to satisfying the Insurability Requirement:
References to the Group Policy will be to the actual page numbers of the policy rather than to the docket entry page numbers.
The Policy defines "Insurance Company" as follows: "The Insurance Company underwriting the Policy is named on the Policy cover page." Grp. Policy at 27. The insurance certificate page states, "We, the LIFE INSURANCE COMPANY OF NORTH AMERICA, have issued a Group Policy, FLX-966802 ... on behalf of Floor and Decor Outlets of America, Inc." Grp. Life Insurance Certificate ("Ins. Certificate") (AR 338-434) [Doc. 1-3 at 1-31].
During an Annual Enrollment Period, an Employee currently insured under the Voluntary Life Insurance portion of this Policy may increase his or her Voluntary Life Insurance Benefit ... as long as the total Benefit does not exceed the Maximum Benefit, by satisfying the Insurability Requirement. Insurance will be effective on the later of the first of the month following the Annual Enrollment Period or the date the Insurance
Company agrees in writing to insure the Employee.
Grp. Policy at 4; see also id. at 9 (making clear that if an employee elects coverage in an amount exceeding the Guaranteed Issue Amount, "[LINA] will require the eligible person to satisfy the Insurability Requirement before it agrees to insure him or her."). "Insurability Requirement" is defined in the Group Policy as follows:
An eligible person will satisfy the Insurability Requirement for an amount of coverage on the day the Insurance Company agrees in writing to accept him or her as insured for that amount. To determine a person's acceptability for coverage, the Insurance Company will require evidence of good health and may require it be provided at the Employee's expense.
Id. at 27.
B. Mr. Wood Elected the Maximum Life Insurance Benefit Under the Group Policy, Was "Approved," and Began Making Premium Payments.
The Group Policy guaranteed a benefit amount (the "Guaranteed Issue Amount") of the greater of $100,000 or "an amount equal to the Life Insurance Benefit in effect on the termination date of the Prior Plan," and a maximum benefit of "the lesser of 5 times Annual Compensation or $500,000." Grp. Policy at 2. During Floor and Decor's 2015 initial open enrollment period, Mr. Wood elected the maximum life insurance benefit available to him under the Policy, $500,000. LINA's Resp. to Pls.’ SMF ¶13; Letter from Renee H., Life Claims Specialist, to Joy G. Wood (July 5, 2017) ("Denial Letter") [Doc. 1-5] at 3 ("During Floor and Decor's 2015 initial open enrollment [Mr. Wood] elected to increase his Voluntary coverage to $500,000.").
The life insurance benefit in effect upon the termination of Mr. Wood's prior plan was $110,000. LINA's Resp. to Pls.’ SMF ¶ 74; Letter from Renee H., LINA Claim Specialist, to Joy G. Wood (July 7, 2017) (AR 146-49) [Doc. 97-2 at 147-151]. Accordingly, it is undisputed that the Guaranteed Issue Amount for Mr. Wood's Policy was $110,000. Id.
Floor and Decor's online benefits portal indicated that Mr. Wood had "elected coverage," "actual coverage," and "approved coverage," of $500,000 as of August 1, 2015. Id.; 2016 Election Screen Shot [Doc. 105-7]; Benefit Enrollment Summaries Screen Shot [Doc. 105-8] (same). Similarly, a different screen shot indicated that Mr. Wood had a "Guarantee Issue as of 4/1/2017: $100,000 (Fixed Dollar Amount)" and "Amount approved over Guarantee Issue: $400,000." ADP Portal Screen Shot [Doc. 105-1] at 3.
Floor and Decor employees like Mr. Wood had access to their benefit elections through the benefits portal. LINA's Resp. to Pls.’ SMF ¶ 19. In fact, the only way for Mr. Wood to have elected the life insurance benefits under the Group Policy was through the benefits enrollment website established by Floor and Decor (the "Benefits Portal"). Dep. Tr. Of Sarah O'Neill (Dec. 16, 2020) [Doc. 96] at 30; LINA's Resp. to Pls.’ SMF ¶ 14.
Corresponding with his election for the maximum life insurance benefits in excess of the Guaranteed Issue Amount, Mr. Wood's monthly premiums increased from $36.46 to $182.31 beginning on July 29, 2016. LINA's Resp. to Pls.’ SMF ¶ 15. Deductions for this elevated premium were made from Mr. Wood's paycheck from July 29, 2016, until sometime after his death. Id. ¶¶ 15-16. In total, $6,695.55 in premiums were deducted from Mr. Wood's paychecks from July 2016 through April 2017, the month of Mr. Wood's passing. Id. ¶¶ 16, 37; Perrine Dep. at 70, Floor and Decor remitted the $6,695.55 that was deducted in premiums from Mr. Wood's paychecks to LINA. LINA's Resp. to Pls. SMF ¶¶ 16 ("LINA admits ... that [Floor and Decor] self-billed and remitted premiums to LINA for all of its coverages by a volume bill."), 37 ("LINA admits that ADP deducted from the decedent's payroll, and [Floor and Decor] submitted to LINA, $6,696.55 in premiums for coverage which the decedent did not provide evidence of good health or get approved in writing by LINA."). LINA retained Mr. Wood's increased premium payments and had not refunded any portion of them as of February 28, 2018, over ten months after Mr. Wood's death and over seventeen months after the Evidence of Completed Insurance ("EOI") Letter was sent out and LINA was aware of the erroneous payments. See e-mail from Charles A. Bayer to Shannon A Heinen (Feb. 28, 2018) (AR 27) [Doc. 97-2 at 28]; Letter from LINA to Mr. Wood (Sept. 6, 2016) (AR 197-99) ("EOI Letter") [Doc. 97-2 at 198-201].
C. Defendants Fail to Obtain an EOI Form Prior to Collecting Premiums.
In May 2016, Floor and Decor recognized that many employees were having life insurance premiums for coverages over the Guaranteed Issue Amount deducted from their paychecks, but it was not apparent that those employees completed EOI forms that had been submitted to LINA or had otherwise been approved for the excess life insurance coverage by LINA. Dep. Tr. of Tyria Matthews (Dec. 18, 2020) ("Matthews Dep.") [Doc. 95] at 13-14, 22-25, 27; LINA's Resp. to Pls.’ SMF ¶ 21. Floor and Decor informed LINA of the erroneous deductions and provided LINA a list of these employees, which included Mr. Wood, so that LINA could send out EOI forms to those employees. Matthews Dep. at 24; Dep. Tr. of LINA's 30(b)(6) representative, Annie Perrine (Feb. 23, 2021) ("Perrine Dep.") [Doc. 89] at 18-19 ("[Floor and Decor] gave us a list of folks that they were deducting premiums on for coverages over the guaranteed issue limit, and then we sent out those manual EOI forms to partner with them to help them fix the problem."); LINA's Resp. to Pls.’ SMF ¶¶ 23-24. There were approximately 130 Floor and Decor Employees, including Mr. Wood, and seventy-four spouses to whom LINA mailed EOI forms on or around September 6, 2016. LINA's Resp. to Pls.’ SMF ¶¶ 25-26; Letter from LINA to Mr. Wood (Sept. 6, 2016) (AR 197-99) ("EOI Letter") [Doc. 97-2 at 198-201].
LINA was further made aware of the erroneous deductions by the "list bills" Floor and Decor sent regularly to LINA during the relevant time frame (August 2016 through March 2017). LINA's Resp. to Pls.’ SMF ¶¶ 38-43; Premium Reporting Emails [Doc. 108-19]; Excerpts of list bills [Doc. 108-20]; Perrine Dep. at 81-83, 92-97. The list bills detail the election coverage and premium amounts paid per month of each individual Floor and Decor employee. LINA's Resp. to Pls.’ SMF ¶ 40; Excerpts of list-bills. The monthly reports sent along with Floor and Decor's payments to LINA would summarize how much money it was sending and detail the individual employees’ elections so that LINA would know how to allocate the money internally. LINA's Resp. to Pls.’ SMF ¶ 42; Matthews Dep. at 37. For example, the list bill from September 2016 showed that Mr. Wood had a coverage amount of $500,000, and had a premium payment of $395 that was included in Floor and Decor's payment to LINA. LINA's Resp. to Pls.’ SMF ¶ 43.
The letter LINA sent to Mr. Wood states that his "recent election requires that [he] submit evidence of insurability," attaches a blank EOI form, instructs him to answer all of the questions, sign and date the form, and return it to LINA in the pre-paid envelope. EOI Letter; LINA's Resp. to Pls.’ SMF ¶ 27. Even though LINA was aware that Mr. Wood had elected coverage above the Guaranteed Issue Amount and deductions were made from his paycheck for the increased premiums, LINA continued to accept payments from Floor and Decor which included Mr. Wood's and other employees’ erroneous payments and did not take any action or otherwise inform Mr. Wood that his coverage election was denied because he had not submitted a completed EOI form. Perrine Dep. at 24; LINA's Resp. to Pls.’ SMF ¶ 32. In LINA's view, it was "Floor and Decor's responsibility to own the evidence of insurability process." Perrine Dep. at 24. Because Mr. Wood never sent LINA his EOI form, LINA takes the position that he never had a pending application for coverage in excess of the Guaranteed Issue Amount. Id. at 74.
Plaintiffs contend that the EOI Letter was sent to Mr. Wood's old address. See LINA's Resp. to Pls.’ SMF ¶ 28. The EOI letter was mailed to the address on file as of September 6, 2016, but Mr. Wood did not update his address until March 26, 2017. See Address Change Screen Shot [Doc. 94 at 609].
D. LINA Denies Plaintiffs’ Claim Because Mr. Wood Failed to Meet the Insurability Requirement Based Upon his Failure to Submit a Completed EOI Form.
On July 5, 2017, almost three months after the passing of Mr. Wood, LINA informed Plaintiffs that "[i]n order to be eligible for the additional $390,000, [Mr. Wood] would be required to submit an Evidence of Insurability application and be approved in writing [by LINA] for this coverage." Denial Letter at 3; LINA's Resp. to Pls.’ SMF ¶ 74. The Denial Letter acknowledged that Mr. Wood increased his voluntary coverage amount to $500,000 during the open enrollment season of 2015. Denial Letter at 3. However, because "Mr. Wood did not provide an Evidence of Insurability application," he "was not approved for insurance above the $110,000 he had in effect under the prior plan." Id.
Joy Wood appealed the July 5, 2017, denial, arguing that the EOI Letter was sent to Mr. Wood's prior address at Stillhouse Creek Drive and, because Mr. Wood had moved six months before, he never received it. Letter from J. Michael Treadaway to CIGNA Grp. Ins. (Sept. 1, 2017) ("Appeal Letter") [Doc. 1-6] at 1. The Appeal Letter requested review of the denial of benefits, arguing that LINA waived the Insurability Requirement by failing to take action to forward the form to Mr. Wood and by accepting increased premium payments. Id. at 2. Further, the Appeal Letter stated that Floor and Decor's actions, in representing that Mr. Wood had the extra benefit and deducting the higher premium payments, constituted an estoppel such that LINA was precluded from denying him any benefit. Id. at 2. Kristyne Wood and Kaitlin Wood also requested a review of the Denial Letter in a separate appeal letter. Letter from Kristyne Wood and Kaitlin Wood to CIGNA (Aug. 15, 2017) [Doc. 1-7].
On October 19, 2017, LINA affirmed the denial of the Plaintiffs’ $500,000 death benefits claim. Letter from Mike J., Appeals Specialist, to J. Michael Treadaway (Oct. 19, 2017) ("Affirmance Letter") [Doc. 1-8]; see also Letter from Mike J., Appeals Specialist, to Kaitlin Wood (Oct. 19, 2017) [Doc. 1-9]. The Affirmance Letter stated that LINA "advised that Mr. Wood's [EOI] Form was never submitted to LINA for review and LINA never approved him for any amount above the Guaranteed Issue Amount ...." Affirmance Letter at 4. Thus, LINA concluded that insurance benefits above the Guaranteed Issue Amount of $110,000 were properly denied. Id. The Affirmance Letter further stated
Regarding collection of payments, LINA does not maintain any individual employee records or amounts of insurance. This information, along with collection of premium[s], would be maintained by the Employer or an agent of their choosing.... The actions of the Employer shall not be considered the actions of the Insurance Company, and LINA is not
liable for any acts or omission by the Policyholder, Employer and Plan Administrator. Payment of premiums is not a guarantee of coverage.
While Mr. Wood's Employer may have collected premiums in regards to this policy, it does not constitute a guarantee of insurance. It is an Employee's responsibility to be aware of policy requirements. An insurance certificate is provided to the policyholder, and is made available to those insured by the policy upon request. For benefits to be payable an Employee must meet all policy guidelines.
The address provided for the [EOI Letter] was information provided by Mr. Wood's Employer. LINA would have no ability to know that Mr. Wood had moved. The fact that he moved does not alter any of the provisions of policy FLX 966802.
***
LINA never received proof that Mr. Wood satisfied the Insurability Requirement and never agreed in writing to insure him for any amount above the $110,000 Guaranteed Issue Amount. The $110,000 Group Term Voluntary Life Insurance benefit was paid to Mr. Wood's beneficiaries and no further benefits are payable.
Id. at 5.
Despite the fact that Plaintiffs raised the issue of waiver in their administrative appeal, LINA did not purport to address that issue in the adjudication of Plaintiffs’ appeal. See generally, Affirmance Letter. Moreover, it is evident that LINA did not consider evidence that would be relevant to the issue of waiver such as the collection of premiums for Mr. Wood's expanded coverage and any representations that were made to him that the expanded coverage was "approved." See Affirmance Letter at 3-4 (indicating that the evidence considered was limited to the Policy and evidence supporting the position that Mr. Wood failed to submit a completed EOI form). Further, the Affirmance Letter suggests that LINA never received any of the premiums Mr. Wood paid for the increased life insurance coverage, directing Plaintiffs to Floor and Decor to get a refund: "[p]lease be advised that you would need to contact Floor and Decor Outlets of America, Inc., Mr. Wood's employer, regarding a refund of premiums which were collected for the Group Term Voluntary Life Insurance benefits above $110,000." Id. at 5.
See Appeal Letter at 2 ("by accepting a premium payment which included payment for the Supplemental Life Insurance benefit, Cigna waived the submission of the Evidence of Insurability Form and is estopped to deny coverage.").
In a subsequent letter to LINA, Kristyne Wood and Kaitlin Wood summarized the following concerns: (1) LINA initially stated on July 5, 2017, that it would refund the money Mr. Wood paid in increased premiums, but then LINA denied having the premiums and asserted that Floor and Decor would need to refund the money; (2) LINA made no effort to notify Mr. Wood or Floor and Decor to stop the payment of premiums or formally deny coverage; (3) it took thirteen months for LINA to send the letter with the EOI form, and Mr. Wood's premiums were increased prior to the date of the letter; and (4) Mr. Wood never received notification that coverage was denied and his online portal view supported his belief that he had been approved. Letter from Kristyne Wood and Kaitlin Wood to Mike J, Appeals Specialist, CIGNA (Jan. 23, 2018) [Doc. 1-10]. Significantly, Kristyne Wood and Kaitlin Wood attached a screenshot from Mr. Wood's online insurance portal showing that the "Elected Coverage," "Approved Coverage," and "Actual Coverage" were all set at $500,000. Id.
E. Floor and Decor and LINA Had Fiduciary Obligations Under the Policy.
The Policy was provided as a part of Floor and Decor's Welfare Benefits Plan. LINA's Resp. to Pls.’ SMF ¶ 2; Floor and Decor Outlets of America, Inc. Welfare Benefits Plan (the "Plan") [Doc. 105-2]. Floor and Decor served as the Plan sponsor, administrator, and named fiduciary. LINA's Resp. to Pls.’ SMF ¶ 2; Plan § 2.02. LINA issued and underwrote the Group Policy provided under the Plan, and LINA was named as the fiduciary for making claims determinations under the Group Policy. LINA's Resp. to Pls.’ SMF ¶ 3; Grp. Policy at 31. Under the Group Policy, "[t]he Employer and Plan Administrator are agents of the Employee for transactions relating to insurance under the Policy. The Insurance Company is not liable for any of their acts or omissions." Grp. Policy at 25.
LINA stipulated that it was the "named fiduciary for deciding claims for benefits under the Plan, and LINA made all administrative determinations regarding plaintiffs’ claims and appeals," that LINA was the entity that sent Mr. Wood the September 6, 2016, EOI Letter referenced in the Complaint as well as other communications regarding the Plan, and that LINA was the entity which received premiums collected by Mr. Wood's employer. Consent Order (Aug. 8, 2019) [Doc. 18] at 2.
The Insurance Certificate to the Plan identifies Floor and Decor as the "Plan Sponsor" and "Plan Administrator," with the authority to "control and manage the operation and administration of the Plan," and the ability to "terminate, suspend, withdraw or amend the Plan, in whole or in part, at any time, subject to the applicable provisions of the Policy." Ins. Certificate at 24. The Insurance Certificate also provides that, "[w]hen you are eligible to receive benefits under the Plan, you must request a claim form or obtain instructions for submitting your claim telephonically or electronically, from the Plan Administrator," and "[a]fter you have completed the claim form or written statement, you must submit it to the Plan Administrator." Ins. Certificate at 25. The Plan and Supplemental Information stated that the Insurance Company is the "named fiduciary for deciding claims for benefits under the Plan, and for deciding any appeals of denied claims." Grp. Policy at 31; see also Ins. Certificate at 25 (using the term "adjudicating" instead of "deciding"); Suppl. Info. for Floor and Decor's Welfare Benefits Plan ("Suppl. Info.") [Doc. 1-3 at 32-37].
"The Insurance Company shall have the authority, in its discretion, to interpret the terms of the Plan, to decide questions of eligibility for coverage or benefits under the Plan, and to make any related findings of fact." Ins. Certificate at 25. "The Employer is required to cooperate with us in the review of claims and applications for coverage." Id. at 15.
LINA provided an Administrative Manual to Floor and Decor to assist its administration of the life insurance program. Perrine Dep. at 28; CIGNA Administration Manual for Floor and Decor Outlets of America, Inc. ("Administrative Manual") [Doc. 89 at 163-238]. The Administrative Manual instructs Floor and Decor only to deduct premiums for the guaranteed issue amount and that LINA would send a medical underwriting activity report ("MUAR") to advise Floor and Decor of the status of applications for coverage above the guaranteed issue amount. Perrine Dep. at 28. Specifically, in Section 4.3 ("Application and Enrollment Form Processing") LINA instructs Floor and Decor as follows:
You should only deduct premium for the guaranteed issue amount. Cigna will send you a Medical Underwriting Activity Report to advise you of the status of applications. The Report will indicate when coverage has been approved so that premium deductions can begin or be adjusted. Please refer to the Medical Underwriting Activity Report section of this manual for more information.
Id.; Administrative Manual at 14. The MUAR was the only manner in which LINA was advising Floor and Decor about the status of applications for coverage beyond the guaranteed issue amount. Perrine Dep. at 29, 73; LINA's Resp. to Pls.’ SMF ¶ 30. The MUAR did not include any individuals who had elected coverage beyond the Guaranteed Issue Amount but who had not submitted an EOI form, and LINA did not track this information. Perrine Dep. at 26. In other words, because LINA required completed EOI forms to be sent directly to LINA, the only way Floor and Decor could determine that an employee had returned an EOI form was from the MUAR sent by LINA to Floor and Decor. Id. at 25-26, 29. LINA's corporate representative was not aware of any MUAR that was sent to Floor and Decor for the 2016-17 plan year. Id. at 116-17.
The Group Policy contains a provision entitled "Reporting Requirements," which states that "[t]he Employer must, upon request, give the Insurance Company any information required to determine who is insured, the amount of insurance in force and any other information needed to administer the plan of insurance." Grp. Policy at 20. The Insurance Certificate contains a provision entitled "Insurance Data," which states that "[t]he Employer is required to cooperate with us in the review of claims and applications for coverage. Any information we provide to the Employer in these areas is confidential and may not be used or released by the Employer if not permitted by applicable privacy laws." Ins. Certificate at 15. The Group Policy and Insurance Certificate both contain the following "Ownership of Records" provision which requires LINA to maintain all of the records and indicates that the records are property of LINA: "All records maintained by the Insurance Company are, and shall remain, the property of the Insurance Company." Grp. Policy at 25; Ins. Certificate at 18.
II. PROCEDURAL BACKGROUND
Based on the foregoing facts, Plaintiffs filed their Complaint on June 28, 2019, asserting the following six claims: (1) recovery of benefits for LINA's breach of the insurance contract and waiver of Insurability Requirement (Count I); (2) equitable relief, as alternative to Count I, that LINA be estopped from relying on the Insurability Requirement (Count II), (3) equitable relief against LINA, as an alternative to Count I, for reformation of the Policy (Count III); (4) breach of fiduciary duty against LINA (Count IV); (5) breach of fiduciary duty against Floor and Decor (Count V); and (6) attorney's fees under 29 U.S.C. § 1132(g)(1) against LINA and Floor and Decor (Count VI). Compl. ¶¶ 54-115. By Order dated February 25, 2020, this Court granted in part LINA's Motions to Dismiss and dismissed Plaintiffs’ claims in Counts II-IV. With regard to the claim in Count I, the Court held that Plaintiffs stated a viable claim under the theory of waiver:
Under ERISA Section 502(a)(1)(B), a civil action may be brought, in relevant part, by a beneficiary "to recover the benefits due to him under the terms of his plan." 29 U.S.C. § 1132(a)(1)(B). An ERISA beneficiary is "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." Id. § 1002(8). An ERISA-covered
plan includes an "employee welfare benefit plan" or "welfare plan," which is established and maintained by the employer for the purpose of providing benefits, through the purchase of insurance, in the event of sickness, accident, disability, death, or unemployment. Id. § 1002(1). The parties do not dispute that the Plaintiffs were designated by Mr. Wood to receive the benefits of his life insurance plan upon his death or that the Plan was an ERISA-covered plan.
The plain language of the Plan requires that, if the insured seeks coverage in excess of the Guaranteed Issue Amount, he or she must satisfy the Insurability Requirement, defined as a showing of good health. Grp. Policy at 8, 27. The Plan clearly indicates that such a change of election must be approved in writing by LINA for the changes to take effect. See id. at 8. The Plaintiffs do not dispute that Mr. Wood did not submit a completed EOI form or that LINA ever approved one for him. See Pls.’ Resp. and Mem. in Opp'n to Def. LINA's Mot. to Dismiss Pls.’ Compl. [Doc. 23]. Thus, dismissal of the Plaintiffs’ denial-of-benefits claim is proper unless they have sufficiently alleged that the enforcement of the Insurability Requirement otherwise was invalid. See Pitts v. Am. Sec. Life Ins. Co., 931 F.2d 351, 356-57 (5th Cir. 1991) (noting that the common law doctrines of waiver and estoppel could be an alternative basis for holding an insurance company liable for payment of benefits).
Feb. 25, 2020, Order [Doc. 34] at 13-14. Accordingly, the only claims that remain before the Court are Plaintiffs’ claims for (1) recovery of benefits for LINA's breach of the insurance contract and waiver of insurability requirement against LINA (Count I), (2) breach of fiduciary duty against Floor and Decor (Count V), and (3) attorney's fees (Count VI).
Plaintiffs have moved for summary judgment against LINA as to Count I and, as an alternative basis, for summary judgment against Floor and Decor for breach of fiduciary duty as to Count V. See Pls.’ Mem. in Supp. of its Mot. for Summ. J. ("Pls.’ Br.") [Doc. 106]. Floor and Decor has moved for summary judgment on the lone count, Count V, asserted against it. See Floor and Decor's Br. in Supp. of its Mot. for Summ. J. ("Floor and Decor's Br.") [Doc. 102-1]. Similarly, LINA as moved for judgment as a matter of law in the lone claim asserted against it. Count I. Br. in Supp. LINA's Mot. for J. as a Matter of Law ("LINA's Br.") [Doc. 114].
III. JUDICIAL REVIEW UNDER RULE 52(a)
LINA argues that this Court should limit its review to "consideration of the material available to the [claims] administrator at the time it made its [determination]" and that the Court should apply an arbitrary and capricious standard of review. LINA's Br. at 17-19 (quoting Blankenship v. Metro. Life Ins. Co., 644 F.3d 1350, 1354 (11th Cir. 2011) ). LINA contends that a limited review of the claims administrator's decision is "the most efficient manner of resolution" of this case "rather than a Rule 56 motion." Id. at 16-17 n.4.
However, LINA acknowledges that "the Court's ruling on the Rule 12(b)(6) motions left only one issue with respect to LINA: whether it knowingly and voluntarily waived the Plan's Insurability Requirement." Id. at 6. Moreover, the waiver issue was not considered by the claims administrator. See Affirmance Letter. Because the waiver issue was not considered by the claims administrator when it denied Plaintiffs’ claim, the facts related to waiver were never presented to the claims administrator and are not a part of the administrative record. LINA's corporate representative admits as much. See Aff. of Boris Mezhinsky (Apr. 4, 2021) [Doc. 97-1] ¶ 10 ("At the time of the initial claim decision, the claim team was not aware of the amount of premiums that had been paid by Mr. Wood."); see also Dep. Tr. of LINA's 30(b)(6) representative, Boris Mezhinsky [Doc. 92] at 38-39, 48-49 (acknowledging that whether LINA knew it received premiums for coverage it had not approved was not before the claims administrator and stating that it was not relevant to the claims administrator's decision), 50-54 (noting that information regarding the acceptance of premium payments for coverage it had not approved was not relevant and therefore neither considered nor a part of the claims process). The fact that the waiver issue was not considered or even relevant to the claims administrator's decision and is dependent on facts that are not a part of the administrative record is also borne out by LINA's briefing of this issue where it makes arguments never presented to the claims administrator, see LINA's Br. at 20-23, based upon facts that are not a part of the administrative record, id. at 5-12, 15.
In addition, LINA acknowledges, as it must, that this case includes Floor and Decor as a defendant and that
the posture of this case is somewhat unusual due to the inclusion of a breach of fiduciary duty claim against [Floor and Decor], which allowed for discovery of additional evidence that goes to the issues before the Court for both the benefits claim against LINA and the breach of fiduciary duty claim against [Floor and Decor].
LINA's Br. at 16 n.4.
Because this main legal issue with regard to LINA's liability in this case is whether LINA waived the Insurability Requirement, an issue not considered by the claims administrator and based upon facts that are not a part of the administrative record, the Court concludes that it is not appropriate to limit its decision in this case to an arbitrary and capricious review of the claims administrator's determination based solely on the administrative record. The Court will review this case de novo and not limit the evidence it considers to the administrative record. Accordingly, to the extent LINA's motion is premised on a limited review under Rule 52(a) of the Federal Rules of Civil Procedure, LINA's Motion for Judgment as a Matter of Law is DENIED.
IV. LEGAL STANDARD
Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A party seeking summary judgment has the burden of informing the district court of the basis for its motion and identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions," and cannot be made by the district court in considering whether to grant summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; see also Graham v. State Farm Mut. Ins. Co., 193 F.3d 1274, 1282 (11th Cir. 1999).
If a movant meets its burden, the party opposing summary judgment must present evidence demonstrating a genuine issue of material fact or that the movant is not entitled to judgment as a matter of law. Celotex, 477 U.S. at 324, 106 S.Ct. 2548. In determining whether a genuine issue of material fact exists, the evidence is viewed in the light most favorable to the party opposing summary judgment, "and all justifiable inferences are to be drawn" in favor of that opposing party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505 ; see also Herzog v. Castle Rock Entm't, 193 F.3d 1241, 1246 (11th Cir. 1999). A fact is "material" only if it can affect the outcome of the lawsuit under the governing legal principles. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. A factual dispute is "genuine" if the evidence would permit a reasonable jury to return a verdict for the nonmoving party. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. "If the record presents factual issues, the court must not decide them; it must deny the motion and proceed to trial." Herzog, 193 F.3d at 1246. But, "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party," summary judgment for the moving party is proper. Matsushita, 475 U.S. at 587, 106 S.Ct. 1348.
V. DISCUSSION
Plaintiffs and Floor and Decor have filed separate motions for summary judgment pursuant to Fed. R. Civ. P. 56, and LINA has moved for judgment as a matter of law on the lone claim asserted against it. See generally, Pis.’ Br.; Floor and Decor's Br.; LINA's Br. The Court will consider the parties’ arguments as they relate to the two pending substantive claims seriatim.
A. Count I: Recovery of Benefits Under ERISA Section 502(a)(1)(B) Against LINA—Waiver
Plaintiffs have asserted a claim pursuant to ERISA Section 502(a)(1)(B) to recover benefits they contend are owed to them based on LINA's apparent waiver of the Insurability Requirement in the Policy. Compl. ¶¶ 54-58. While ERISA preempts state law claims of waiver, 29 U.S.C. § 1144(a), the ERISA statute itself does not specifically address whether the theory of waiver under federal common law applies to actions brought under the statute. See Otero v. Unum Life Ins. Co. of Am., 226 F. Supp. 3d 1242, 1271 (N.D. Ala. 2017) (stating that the Eleventh Circuit "has not yet resolved the issue of whether waiver applies"). "However, [ERISA] has interstices, and the Supreme Court has noted that Congress expected, in passing the statute, for the federal courts to fill those gaps with ‘a federal common law of rights and obligations under ERISA-regulated plans.’ " Glass v. United of Omaha Life Ins. Co., 33 F.3d 1341, 1347 (11th Cir. 1994) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) ). "Where ERISA is silent on an issue, Congress intended for courts to fashion a federal common law governing employee benefit plans." Griffin v. Coca-Cola Refreshments USA, Inc., 989 F.3d 923, 931 (11th Cir. 2021), cert. denied, ––– U.S. ––––, 142 S. Ct. 75, 211 L.Ed.2d 14 (2021).
An ERISA beneficiary is "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." 29 U.S.C. § 1002(8). An ERISA-covered plan includes an "employee welfare benefit plan" or "welfare plan," which is established and maintained by the employer for the purpose of providing benefits, through the purchase of insurance, in the event of sickness, accident, disability, death, or unemployment. Id. § 1002(1). The parties do not dispute that the Plaintiffs were designated by Mr. Wood to receive the benefits of his life insurance plan upon his death or that the Plan was an ERISA-covered plan.
The Eleventh Circuit has left open the possibility that waiver principles will apply under the federal common law in the ERISA context under circumstances where there is evidence that the insurer (1) intentionally relinquished a known right or (2) received an unjust benefit. Glass, 33 F.3d at 1348 (declining to find waiver of eligibility requirement where it was not shown that defendant knew the insured was ineligible or that the insurer unjustly benefitted from the mistake); see also Witt v. Metro. Life Ins. Co., 772 F.3d 1269, 1279 (11th Cir. 2014) (recognizing that the Eleventh Circuit has "left open the question of whether waiver principles might apply under the federal common law in the ERISA context.").
The Fifth Circuit has answered this question in the affirmative in Pitts, 931 F.2d at 356-57. There, the court recognized the applicability of waiver where an insurance company's acceptance of premiums, while knowing beyond a doubt that there was only one person remaining on the policy, made it clear that the insurer waived the eligibility requirements as to the plaintiff. Id. at 357.
More specifically, in Glass, the Eleventh Circuit agreed with the reasoning of the Seventh Circuit in Thomason v. Aetna Life Ins. Co., 9 F.3d 645, 648 (7th Cir. 1993), which rejected the waiver argument but left open whether waiver principles might apply in an ERISA case under other circumstances. Glass, 33 F.3d at 1348. The Seventh Circuit gave an example of a circumstance where other courts had applied waiver: when "the insurance company was attempting to reap an unjust benefit, e.g. , accepting premiums after the insurer's defense to coverage was known and clear, thus giving the insurance company the option of keeping the premiums if beneficial to it or at its option returning the premiums and cancelling the policy when it was convenient to do so, i.e. , after a claim is made." Id. at 1348 (recounting favorably Thomason, 9 F.3d at 648 n. 3 ). The Glass court, like the court in Thomason, rejected the asserted waiver argument because it was a "something-for-nothing" waiver claim where there was no evidence of any unjust benefit on the part of the insurer, i.e. , there was no allegation that the insurer collected premiums and then refused coverage. Id. ("there is no evidence that [the insurer] attempted to unjustly enrich itself at the expense of an ineligible plan participant."); see also Witt, 772 F.3d at 1279 (recognizing the possibility of applying waiver principles in the ERISA context but rejecting the waiver argument in that case because the insured asserted a "something-for-nothing" waiver claim).
"Waiver is the voluntary, intentional relinquishment of a known right." Witt, 772 F.3d at 1279 (quoting Glass, 33 F.3d at 1347 ).
Waiver requires (1) the existence, at the time of the waiver, of a right, privilege, advantage, or benefit which may be waived; (2) the actual or constructive knowledge thereof; and (3) an intention to relinquish such right, privilege, advantage, or benefit. Where a party alleges an implied waiver, the acts, conduct, or circumstances relied upon to show waiver must make out a clear case.
Id. (internal punctuation accepted and citations and quotations omitted).
Plaintiffs argue that LINA waived the Insurability Requirement in this case because the undisputed evidence indicates that LINA (1) was aware that Floor and Decor deducted life insurance premiums for individuals, including Mr. Wood, who had elected coverage above the guaranteed issue amount, but had not submitted an EOI form, and (2) retained those excess premiums after Floor and Decor remitted the money from those deductions to LINA. Pls.’ Br. at 17-20. More specifically, Plaintiffs assert that LINA knew which employees had elected the life insurance coverage in excess of the Guaranteed Issue Amount but had not submitted an EOI form when LINA agreed to mail EOI forms to those individuals on September 6, 2016. See EOI Letter; Perrine Dep. ("[Floor and Decor] gave us a list of folks that they were deducting premiums on for coverages over the guaranteed issue limit, and then we sent out those manual EOI forms to partner with them to help them fix the problem."). Plaintiffs further contend that LINA retained the premiums from these individuals for coverage in excess of the Guaranteed Issue Amount when it knew these individuals, including Mr. Wood, were ineligible because no corresponding EOI form had been submitted. Pls.’ Br. at 17-20. In this manner, Plaintiffs argue that this is not the "something-for-nothing" waiver discussed in prior cases and the facts of this case fit squarely in the type of unjust benefit the Eleventh Circuit has indicated could support a claim for waiver, as it involves a situation "in which it was apparent that the insurance company was attempting to reap an unjust benefit." Id. (quoting Glass, 33 F.3d at 1348 ).
LINA responds that it did not waive the Insurability Requirement because waiver requires a knowing relinquishment and the evidence in this case "demonstrates a concerted effort by LINA to help [Floor and Decor]’s employees comply with the requirement" when "LINA made an exception to its normal operating procedures in an effort to help [Floor and Decor] get its employees into compliance with the Plan language by mailing EOI forms to all participants who had elected coverage over the GI Amount but failed to submit EOI." LINA's Br. in Opp'n to Pls.’ Mot. for Summ. J. ("LINA's Opp'n Br.") [Doc. 119] at 10-19. LINA also argues that Plaintiffs cannot make out a case of implied waiver because the "conduct of LINA under the circumstances manifested its intention to enforce the Insurability Requirement and assist [Floor and Decor] in helping its employees comply with that requirement." Id. at 13. LINA's reliance on the solitary fact that LINA mailed the EOI letter in an apparent attempt to help Floor and Decor employees comply with Insurability Requirement does not overcome their waiver in this case.
LINA fails to address the undisputed facts regarding LINA's actions following the mailing of the September 6, 2016 EOI Letter; namely, that upon learning that premiums for unapproved coverage for over 200 individuals were collected by Floor and Decor and remitted to LINA, LINA chose not to refund those premiums but, instead, at least in the case of Mr. Wood, continued to knowingly collect and retain those premiums until over ten months after his death. Not only did LINA fail to refund any erroneously collected premiums, but LINA (1) never took any action to stop collecting premiums from individuals like Mr. Wood who it knew were not covered, (2) failed to follow up with any of the identified individuals to ensure they received the EOI form, or (3) inform the individuals whose paychecks showed deductions for the higher coverage that their coverage would not become effective until they completed the EOI form and LINA approved the increase in coverage. Instead, LINA retained the premiums and declined to take any responsibility:
Q. What actions were taken in regards to people who had made an election over guaranteed issue but did not send back these -- their EOI forms?
A. None by Cigna or Life Insurance Company of North America. It wouldn't have been our responsibility to follow up on this process for them because it's a self-administered plan. So actually, it's Floor and Decor's responsibility to own the evidence of insurability process and to know who should go through this process.
Perrine Dep. at 24.
LINA's attempt to shield itself from responsibility by compartmentalizing the administration of the life insurance program and shifting blame to the administrator is the same argument made and rejected in the nearly identical case of Lesser v. Metro. Life Ins. Co., No. CV 09-5699 RSWL (CWx), 2010 WL 4916607, at *6 (C.D. Cal. Nov. 24, 2010). In Lesser, the employer offered life insurance for its employees in a group insurance plan that was funded, maintained, and administered by the employer, but underwritten by the defendant insurance company, which also administered claims for benefits under the plan. Id. at * 1. The plaintiff elected additional coverage but failed to submit any evidence of insurability as required by the plan documents. Id. The employer accepted premiums for the additional coverage and remitted them to the insurer for ten months until the employee's death. Id. The employer provided the employee notices that stated that he was covered for the additional coverage and neither the employer nor the insurer notified the employee that he was not eligible for failure to submit such that "neither Decedent nor Plaintiff were aware that the Option 9 policy was not in effect." Id. The plaintiff's claim after the employee's death was denied based upon the failure to submit evidence of insurability. Id. at *2.
In response to the plaintiff's lawsuit alleging that the defendant insurer had waived the evidence of insurability, the insurer attempted to deflect blame by arguing that the insurance plan administrator had responsibility for managing the policies, that it had no knowledge that the decedent attempted to enroll in the optional coverage without having received the evidence of insurability, and that it had no knowledge that the premiums were being deducted from his paycheck. Id. at *5. In short, the defendant insurer relied "on the fact that the administrative process is set up in a compartmentalized manner to claim it was not responsible for the errors that occurred, and did not have knowledge of Decedent's coverage issues." Id. The district court rejected this argument:
MetLife [(the insurer defendant)] was ultimately responsible for the actions of Northrop [(the employer)], the plan administrator, and Hewitt [(the third party administrator)], given Hewitt was hired by Northrop and MetLife permits Hewitt to underwrite, manage, and review all policies to ensure they comply with the Plan requirements. MetLife therefore cannot rely on a compartmentalized system to escape responsibility here, and the Court finds that the actions taken constitute a waiver. Decedent enrolled in the Option 9 policy without submitting any EOI, yet after Decedent was allowed to enroll in this policy Northrop sent multiple forms to Decedent and Plaintiff that stated, in clear language, that he was covered under the Option 9 Plan and Plaintiff would receive 100% of these benefits. Premiums were deducted from Decedent's paycheck for this policy for a period of ten months, and MetLife, accepted these premiums. Moreover, Decedent was never informed by MetLife, Northrop, or Hewitt that there was an issue with his coverage or that he needed to submit EOI in order to qualify for the benefits.
Id. at *5. The district court found that the decedent was led to believe he had the additional coverage and that the insurer accepted the premiums which, "combined with [insurer defendant's] fiduciary duty, support a finding here that Defendants have waived the EOI requirement and are precluded from relying thereon in denying Plaintiff the Option 9 benefits." Id. at *6.
The facts of this case are indistinguishable from Lesser, except that the undisputed facts here are even worse: LINA knew that Mr. Wood was an ineligible applicant for excess coverage and that premiums were being remitted to LINA in error but nevertheless retained. Like the insurance company in Lesser, LINA is precluded from relying on a "compartmentalized administrative system" to claim that it did not have knowledge of a problem with Mr. Wood's application for excess coverage or that he erroneously paid premiums that were being remitted to and retained by LINA.
LINA also argues that it was unaware that erroneously collected premiums were remitted to LINA because
LINA was insuring multiple different benefits for thousands of [Floor and Decor] employees and receiving premiums in lump sums without indication of which group policy of insurance to which the premiums applied, let alone the specific elections of each individual employee. When LINA requested information to assist with applying the premiums to the appropriate coverages, [Floor and Decor] sent spreadsheets with thousands of lines of employee information that LINA did not use in the ordinary course of business.
LINA's Br. at 22. In effect, LINA argues that it had too much business to bother with culling through the information it admittedly received regarding premiums that were collected (i.e. , the list bills) to determine if those premiums came from individuals who did not qualify for the excess coverage. This argument becomes even more suspect by the fact that LINA was put on notice as of September 6, 2016, that as many as 200 individuals for which it was accepting premiums were ineligible for coverage because they had not submitted completed EOI forms.
In opposition to the argument that it waived the EOI requirement in Mr. Wood's case, LINA attempts to analogize this case to Gagliano v. Reliance Standard Life Ins. Co., 547 F.3d 230, 239 (4th Cir. 2008), in which the Fourth Circuit—a Circuit where waiver is a "prohibited concept[ ]" under ERISA—reversed a district court's ruling that effectively found that the insurance company waived the pre-existing condition limitation when the insurance company did not initially assert the pre-existing condition limitation as a basis to terminate the claimant's disability benefits. See LINA's Opp'n at 14-15. Gagliano is inapposite to the facts in this case.
LINA also asserts that this case is analogous to Glass, where the Court declined to apply a "something-for-nothing" waiver claim where the insured "adduced insufficient evidence either of intentional relinquishment of a known right or of any unjust benefit circumstance" because the evidence indicated that the insurer "did not know beyond doubt" that the insured was ineligible. LINA's Opp'n at 12 (citing Glass, 33 F.3d at 1348 ). Additionally, the court in Glass found that the insured failed to proffer any evidence of an unjust benefit because the insurer, upon learning the circumstances of the ineligibility, "immediately raised the issue of their eligibility" and "promptly attempted to return the few premium payments that it had accepted." Glass, 33 F.3d at 1348.
The facts of this case clearly are distinguishable from Glass. The undisputed evidence shows LINA (1) knew of the election of the excess coverage, (2) knew that Mr. Wood (and indeed many others) had not submitted a completed EOI form, (3) knew that premiums nevertheless were continuing to be paid for that excess coverage, and (4) willingly continued to accept those payments until after Mr. Wood's death. Accordingly, the facts of this case fit within the scenario discussed by the Eleventh Circuit in Glass (and accepted by the Fifth Circuit in Pitts, 931 F.2d at 356-57 ) where the insurance company knows the insured is not eligible yet
was attempting to reap an unjust benefit, e.g. , accepting premiums after the
insurer's defense to coverage was known and clear, thus giving the insurance company the option of keeping the premiums if beneficial to it or at its option returning the premiums and cancelling the policy when it was convenient to do so, i.e. , after a claim is made.
Glass, 33 F.3d at 1348 ; see also Witt, 772 F.3d at 1279.
There is no genuine dispute of material fact that LINA knowingly continued to collect premiums from Mr. Wood for months after it knew he was ineligible for the excess coverage and unjustly retained Mr. Wood's premium payments for at least ten months after his death. Consequently, upon consideration of the facts as viewed in the light most favorable to LINA, the Court finds that LINA voluntarily relinquished its right to rely upon the Insurability Requirement and the receipt of the EOI form in order to provide excess coverage to Mr. Wood.
In making this ruling, the Court finds persuasive the rulings from the other district courts in this Circuit that have found that an insurance company may waive the right to deny benefits in situations where it was clear that the insurer knew of the insured's ineligible circumstances but collected premiums anyway. See Otero, 226 F. Supp. 3d at 1271-75 (holding that waiver was applicable where the insurer (1) directed the insured to resume making premium payments, even when it knew he was ineligible for coverage and (2) accepted those premiums for years until a claim was made); see also Burger v. Life Ins. Co. of N. Am., 103 F. Supp. 2d 1344, 1348-49 (N.D. Ga. 2000) (distinguishing Glass and finding that the insurance company voluntarily relinquished its right to recalculate the plaintiff's benefits because it was undisputed that it knew of the plaintiff's ineligibility of coverage for over three years before it took any action; "[i]f it is ever appropriate to apply waiver principles under ERISA, then this is such a case.").
See also Gaines v. Sargent Fletcher, Inc. Grp. Life Ins. Plan, 329 F. Supp. 2d 1198, 1222 (C.D. Cal. 2004) (finding that an insurance company waived any right to deny a claim based on the failure to submit evidence of good health where the employer and insurance company "knew that Plaintiff (and indeed many others) had not submitted a personal health statement, knew of the coverage being purchased, knew that premiums were being paid for that-coverage, and received and accepted payments without giving any indication that any of the ... employees had failed to comply with a precondition to obtaining insurance coverage.").
In this case, LINA knew beyond all doubt that Mr. Wood was ineligible for the excess coverage on September 6, 2016, yet it continued to accept premiums from him until after his death and did not refund the premiums until at least ten months after his passing. LINA attempts to distinguish Otero by erroneously claiming that "the evidence in this case does not show that LINA knowingly collected premiums to obtain an unjust benefit" because "LINA was not likely to notice the overpaid premiums because it was a relatively insignificant amount in light of the volume of premiums paid for multiple types of coverage." LINA's Opp'n Br. at 17-18. If this Court were to credit this excuse, then any insurance company could turn a blind eye toward an insured's obvious failure to provide required documentation, continue to reap the benefits of increased premiums, and wait until the insured's death to assert a challenge to the insured's eligibility that it was aware of months before the death. Thus, viewing all the evidence in a light most favorable to LINA, the Court finds that LINA waived the Insurability Requirement and that Plaintiffs are, therefore, entitled to summary judgment on Count I of the Complaint. Accordingly, Plaintiffs’ Motion for Summary Judgment is GRANTED as to Count I of the Complaint, and LINA's Motion for Judgment as a Matter of Law is DENIED.
LINA is careful not to argue that did not have notice of Mr. Wood's payments, because the evidence is undisputed that LINA was on notice of the fact that over 200 individuals were having premiums deducted for coverage in excess of the Guaranteed Issue Amount when they had not yet been approved.
B. Count V: Breach of Fiduciary Duty Under ERISA Section 502(a)(3) Against Floor and Decor
Because the Court has found for Plaintiffs on their claim against LINA, which affords Plaintiffs all of the relief they are entitled to in their Complaint, the Court need not reach Plaintiffs’ alternative claim for breach of fiduciary duty against Floor and Decor (Count V). Accordingly, Plaintiffs’ Motion for Summary Judgment as to Count V, in the alternative, and Defendant Floor and Decor Outlets of America, Inc.’s Motion for Summary Judgment are DENIED AS MOOT.
C. Count VI: Attorney's Fees (Count VI).
In Count VI, Plaintiffs assert a claim attorney's fees pursuant to 29 U.S.C § 1132(g)(1), which provides that a district court "in its discretion may award fees and costs to either party" if that party achieved "some degree of success on the merits." Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 244-45, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010) (internal punctuation and citation omitted). This standard requires more than "trivial success on the merits" or a "purely procedural victory." Id. Because this Court ruled in favor of Plaintiffs on their ERISA claim against LINA for recovery of benefits under 29 U.S.C. § 1132(a)(1), they certainly obtained "some degree of success on the merits."
Once it is established that a party had "some degree" of success, the Eleventh Circuit directs district courts to consider five nonexclusive factors in deciding whether to award fees:
(1) the degree of the opposing parties’ culpability or bad faith;
(2) the ability of the opposing parties to satisfy an award of attorney's fees;
(3) whether an award of attorney's fees against the opposing parties would deter other persons acting under similar circumstances;
(4) whether the parties requesting attorney's fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; [and]
(5) the relative merits of the parties’ positions.
Freeman v. Cont'l Ins. Co., 996 F.2d 1116, 1119 (11th Cir. 1993) (citations omitted). "No one of these factors is necessarily decisive, and some may not be apropos in a given case, but together they are the nuclei of concerns that a court should address in applying [ 29 U.S.C § 1132(g)(1) ]." Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir. 1980).
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down before October 1, 1981.
Accordingly, Plaintiffs shall submit a motion for attorney's fees, including a discussion of the Freeman factors, so that the Court can determine if an award pursuant to 29 U.S.C. § 1132(g)(1) is proper in this case and, if so, the reasonable amount of fees should be awarded. VI. CONCLUSION
For the foregoing reasons, it is hereby ORDERED that Defendant Life Insurance Company of North America's Motion for Judgment as a Matter of Law [Doc. 97] is DENIED and Defendant Floor and Decor Outlets of America, Inc.’s Motion for Summary Judgment [Doc. 101] is DENIED AS MOOT.
It is further ORDERED that Plaintiffs’ Motion for Summary Judgment [Doc. 104] is GRANTED IN PART and DENIED IN PART. Plaintiffs’ Motion is GRANTED as to its claim in Count I against Defendant Life Insurance Company of North America and Plaintiffs are entitled to a judgment against Defendant Life Insurance Company of North America in the amount of $390,000.00, plus interest. Plaintiffs’ motion as to Count V, in the alternative, is DENIED AS MOOT.
It is further ORDERED that Plaintiffs shall file an application for an award of attorney's fees within thirty (30) days of the date of this Order. Defendants shall have fourteen (14) days from the date of that filing to file a response and Plaintiffs shall have fourteen (14) days from the date of the filing of the response to file any reply.
IT IS SO ORDERED this 21st day of March, 2022.