Joyner v. Cont'l Cas. Co.

837 F.Supp.2d 233

Ramona JOYNER, Plaintiff,

v.CONTINENTAL CASUALTY CO., Defendant.

No. 11 Civ. 6005 (JSR).

United States District Court, S.D. New York.

Dec. 19, 2011.

Michail Zolotoff Hack, Evan S. Schwartz, Quadrino & Schwartz, P.C., Garden City, NY, for Plaintiff.

Michael H. Bernstein, John T. Seybert, Sedgwick LLP, New York, NY, for Defendant.

MEMORANDUM ORDER

JED S. RAKOFF, District Judge.

Plaintiff Ramona Joyner brings this suit challenging the denial of her long-term disability insurance benefits claim under the Employee Retirement Income Security Act of 1974 (“ERISA”), 88 Stat. 891. In connection with her claims, plaintiff seeks discovery beyond the scope of the administrative record of defendant Hartford Life Group Insurance Company (“Hartford”), successor-in-interest to named defendant Continental Casualty Co. (“Continental”). Defendant objects to any extra-record discovery. After the initial scheduling conference in this case, held on October 12, 2011, the Court directed the parties to submit letter briefing defending their respective positions on the standard of review and discovery outside the administrative record. Both parties submitted their briefs on October 19, 2011, and their responses to each other's brief one week later, on October 26, 2011.

Having carefully considered the parties' briefs, the Court determines that limited discovery on some of the issues plaintiff raises is warranted. In particular, the Court concludes that plaintiff can seek discovery on two issues. First, plaintiff may seek discovery of any further plan documents that show whether defendant Hartford was a proper “named fiduciary” identified in “the plan instrument” as required by ERISA. See29 U.S.C. 1102(a)(2). Second, in accordance with the Supreme Court's direction in Met. Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008), plaintiff may seek discovery on the issue of Hartford's alleged conflict of interest as both payor and evaluator of plaintiff's disability claim, limited to document requests and a deposition of a Hartford representative pursuant to Rule 30(b)(6). Fed.R.Civ.P. 30(b)(6). All of plaintiff's other requests for discovery are hereby denied. Additionally, the Court concludes that the appropriate standard of review is an arbitrary and capricious standard, as Hartford had discretionary authority to interpret the terms of the plan. See Fay v. Oxford Health Plan, 287 F.3d 96, 104 (2d Cir.2002) (holding where insurer has discretionary authority, the benefits decision is reviewed under the arbitrary and capricious standard).

“Point I” of plaintiff's submission seeks discovery to ascertain whether Hartford was properly delegated discretionary authority to determine plaintiff's eligibility for benefits and to interpret the terms and provisions of the policy, and whether Hartford is the proper “named fiduciary” with the right to review, evaluate and decide plaintiff's appeal of her denied disability claim. Letter Brief of Plaintiff Ramona Joyner dated Oct. 19, 2011 (“Pl. Br.”) at 2. The Court must address three separate questions contained in plaintiff's “Point I”: first, whether the Plan originally conferred discretionary authority on Continental Casualty; second, whether Continental transferred that authority to defendant Hartford, the successor-in-interest to Continental's group disability business, when Hartford purchased the disability plan at issue; and third, whether Hartford was a “named fiduciary” that could provide plaintiff with a “full and fair review” of her claim pursuant to 29 U.S.C. § 1133(2).

As to the question of whether the Plan conferred discretionary authority on Continental Casualty, no further discovery is necessary. The “Group Long Term Disability Certificate” clearly states that “When making a benefit determination under the policy, We have discretionary authority to determine Your eligibility for benefits and to interpret the terms and provisions of the policy.” Hartford Letter Brief dated Oct. 19, 2011 (“Def. Br.”) Ex. A, at 6. “We” in the Certificate is defined by the contract to mean the “Continental Casualty Company, Chicago, Illinois.” Pl. Br., Ex. 1 at 17. This clear language shows the Plan vests discretionary authority in Continental. See Krauss v. Oxford Health Plans (N.Y.), Inc., 517 F.3d 614, 622–23 (2d Cir.2008) (holding that reservation of discretion must be “clear” but need not use the words “discretion” or “deference”).

Plaintiff, however, argues that because this Certificate is admittedly not the “Policy,” Def. Br. Ex. A at 6, “it is not a governing plan document and of no force or effect.” Pl. Br. at 4–5; see CIGNA Corp. v. Amara, –––U.S. ––––, 131 S.Ct. 1866, 1878, 179 L.Ed.2d 843 (2011) (holding “summary documents” do not constitute the terms of the plan for purposes of § 502(a)(1)(B)). But CIGNA is inapplicable to this case. In CIGNA, the Supreme Court held that the insurer's Summary Plan Description, a document required by 29 U.S.C. § 1022(a), did not constitute the terms of the plan for purposes of ERISA § 502(a)(1)(B). Id. Here, however, the Certificate is not designated a Summary Plan Description, nor does it comport with the SPD requirements outlined in 29 U.S.C. § 1022. Further, the integration clause in the Group Policy states “The policy, the Employer's application, Your certificate of coverage, and Your application, if any, and any other attached papers, form the entire contract between the parties.” Pl. Br. Ex. 1, at 15. Thus, unlike a Summary Plan Description, this Certificate, according to the plain language of the Policy, is part of the plan's terms and is “legally binding,” and thus gives Continental discretionary authority to interpret the plan. See CIGNA, 131 S.Ct. at 1877–78 (refusing to “make the language of a plan summary legally binding”).

Turning to whether Continental transferred its discretionary authority to Hartford when Hartford purchased Continental's group disability business, Hartford has provided this Court and Joyner with the asset purchase documents for that transaction, filed under seal. See Protective Order dated Oct. 31, 2011. Those documents show that the CNA Group Life Assurance Company (“CNA”), the reinsurer of Continental's group health insurance businesses, was purchased by Hartford Life, Inc. and Hartford Life and Accident Insurance Company (“Hartford Inc.”) and that CNA would administer the insurance plans sold to Hartford Inc., including the instant plan. See Declaration of Leslie T. Soler (“Soler Decl.”) Ex. A at JOYNER 002623–24, 002628, 002647 CONFIDENTIAL. ¹ As part of the Administrative Services Agreement entered into between Continental and CNA, CNA, the Administrator, was appointed to perform claim adjustment services for the policies. See Soler Decl. Ex. B § 4.01. In its role as Administrator, the Administrative Services Agreement states CNA would, among other responsibilities:

[R]eview all Claims and determine whether the Claimant is eligible for benefits and if so, the nature and extent of such benefits. Such determination shall be made (i) in accordance with the terms of the Policies (such Policies and any Certificates issued thereunder being collectively referred to herein as the “Insurers' Source Documents”), and (ii) consistent with applicable law. Such review shall include, without limitation: (A) determining eligibility and Policy benefits ....

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[N]otify Claimants whose Claims have been denied of such denial and state the reasons therefore in accordance with the Policies and applicable law ..., it being understood that Administrator shall establish a review committee with respect to Claims determinations to the extent required under ERISA and other laws applicable to Claims determinations and that Administrator shall also pursue, defend, and otherwise conduct appeals of Claims determinations to the extent either required under ERISA or other laws or deemed advisable by Administrator.

Soler Decl. Ex. B § 4.02(c), (i) (emphasis supplied). Given that CNA was to administer the plans in accordance with the terms of the Policies and any Certificates issued under the Policies, and given that the instant Certificate stated that Continental had “discretionary authority” to interpret provisions of the Plan, that discretionary authority was vested in CNA, and thus transferred to Hartford.

Other courts that have examined whether Hartford held discretionary authority after purchasing the Continental plans have concluded similarly. In Schnur v. CTC Comms. Corp. Group Disability Plan, No. 05–CV–3297(RJS), 2010 WL 1253481 (S.D.N.Y. Mar. 29, 2010), aff'd413 Fed.Appx. 377 (2d Cir.2011), the Court held that Hartford acquired discretionary authority through the transfer agreements and a plan provision broad enough to indicate that “those charged with implementing [the plan] will have such discretion.” Id. at *10 (quoting Butts v. Continental Casualty Co., 357 F.3d 835, 838–39 (8th Cir.2004)). The Court in Schnur also noted, that, as a “de-facto successor-in-interest” to Continental, CNA likely “succeeds to any deference granted to the original administrator by the terms of the Plan.” Id. at *10 n. 3 (citing Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 960 (9th Cir.2006); Giannone v. Metro. Life Ins. Co., 311 F.Supp.2d 168, 175 (D.Mass.2004)); see also Young v. Hartford Life & Acc. Ins. Co., No. 09 Civ. 9811(RJH), 2011 WL 4430859, at *6 (S.D.N.Y. Sept. 23, 2011) (holding the plan's vesting of discretionary authority with Continental gives Hartford discretionary authority); Barnes v. Hartford Life & Acc. Ins. Co., No. 07–12141, 2008 WL 4298466, at *2 (E.D.Mich. Sept. 12, 2008) (relying on “successor-in-interest” theory to conclude Hartford held discretionary authority). Accordingly, the arbitrary and capricious standard applies to any determinations made by Hartford pursuant to the plan. See Fay v. Oxford Health Plan, 287 F.3d 96, 104 (2d Cir.2002) (holding where insurer has...