Ray v. Sun Life & Health Ins. Co.

752 F.Supp.2d 1229

Myra RAY, Plaintiff,

v.SUN LIFE & HEALTH INS. CO., Defendant.

No. CV–09–BE–0238–M.

United States District Court, N.D. Alabama, Middle Division.

Sept. 29, 2010.

Myron K. Allenstein, Rose Marie Allenstein, Allenstein & Allenstein LLC, Gadsden, AL, for Plaintiff.Christopher Yeilding, Steven F. Casey, Balch & Bingham LLP, Birmingham, AL, for Defendant.

MEMORANDUM OPINION

KARON OWEN BOWDRE, District Judge.

This ERISA case comes before the court on Plaintiff's “Objection to Declaration of Kathleen Peters and Motion to Strike Affidavit” (doc. 36); Plaintiff's “Motion to Supplement the Record or, in the alternative, Motion to Remand” (doc. 20) (attaching documents as supplements to the Record); Plaintiff's “Motion for Partial Summary Judgment on Issues of which Policy is Applicable, What Benefit Rate is Applicable and Whether Discretionary Authority has been Granted to Sun Life” (doc. 21) (with attached exhibits); “Sun Life and Health Insurance Company's Motion for Summary Judgment” (doc. 23); and “Plaintiff's Motion for Partial Judgment on the Record on Count I, or in the Alternative, Motion for Summary Judgment with Discovery Submitted in Support Thereof” (doc. 27) (with attached exhibits). These motions, in this case brought pursuant to 29 U.S.C. § 1132 for ERISA benefits and for related claims, have been thoroughly briefed. For the reasons stated in this Memorandum Opinion, the court finds that Plaintiff's Motion to Strike is due to be DENIED; Plaintiff's Motion for Partial Summary Judgment on the remaining issue regarding the existence of discretionary authority is due to be DENIED; Plaintiff's Motion to Supplement the Record is due to be DENIED and the alternative Motion to Remand is due to be DENIED; Plaintiff's Motion for Judgment on the Record is due to be DENIED and her alternative Motion for Summary Judgment is due to be DENIED; Defendant's cross motion, which the parties agreed to be a submission on the merits, is due to be GRANTED as to all counts in the Complaint but DENIED without prejudice as to the Counterclaim.

I. PLAINTIFF'S MOTION TO STRIKE AFFIDAVIT

In its motion (Doc. 36), Plaintiff requests that the court strike the declaration of Kathleen Peters (Doc. 25–1), because Ms. Peters implies in that declaration that Genworth Life and Health Insurance Company became Sun Life & Health Insurance Company, and Plaintiff asserts that this implication is false. However, Defendant has produced evidence to support Ms. Peters's statement or implication that Genworth Life and Health Insurance Company legally changed its name to Sun Life and Health Insurance Company ¹. Accordingly the court DENIES Plaintiff's motion to strike.

II. PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON ISSUES OF WHICH POLICY IS APPLICABLE, WHAT BENEFIT RATE IS APPLICABLE AND WHETHER THE DISCRETIONARY AUTHORITY HAS BEEN GRANTED TO SUN LIFE

A. The Applicable Policy

In her reply (Doc. 35) to the Defendant's motion for partial summary judgment (Doc. 21), Plaintiff withdrew her motion to the extent that it requests rulings on the issue of which policy and which benefit rate applies; she acknowledges that Defendant presents the correct policy as in force and effect at the time of the claims decision in question and that the applicable benefit rate is 60% of salary. Accordingly, those portions of Plaintiff's motion (Doc. 21) are MOOT as withdrawn.

B. The Authority Accorded to Sun Life

The remaining issue in Plaintiff's motion for partial summary judgment is whether the applicable policy accords discretionary authority to Sun Life to carry out claims decisions. Plaintiff's argument disputing Sun Life's discretionary authority is twofold: (1) she asserts that an insurance company cannot retain discretionary authority, and GE Group Life Assurance Company's attempt to do so in this case was invalid; and (2) she asserts that when a change occurs in the insurance company acting as claims fiduciary, the grant of discretionary authority to the original company—here, GE Group Life Assurance Company, does not transfer to the new company, Sun Life.

The policy, an ERISA plan document, contains the following provisions regarding the authority of the claims fiduciary:

CLAIMS FIDUCIARY:

GE Group Life Assurance Company is a fiduciary, as that term is used in ERISA and the regulations which interpret ERISA, with respect to insurance policies under which you, and if applicable, your dependents are insured. In this capacity, we are charged with the obligation, and possess discretionary authority to make claim, eligibility and other administrative determinations regarding those policies, and to interpret the meaning of their terms and language.

GE Group Life Assurance Company, as Claims Fiduciary, shall have the sole and exclusive discretion and authority to carry out all actions involving claims procedures explained in the Policy. The Claims Fiduciary shall have the sole and exclusive discretion and power to grant and/or deny any and all claims for benefits, and construe any and all issues relating to eligibility for benefits. All findings, decisions, and/or determinations of any type made by the Claims Fiduciary shall not be disturbed unless the Claims Fiduciary has acted in an arbitrary and/or capricious manner. Subject to the requirements of law, the Claims Fiduciary shall be the sole judge of the standard of proof required in any claims for benefits and/or in any question of eligibility for benefits. All decisions of the Claims Fiduciary shall be final and binding on all parties. Whenever a decision on the claim is involved, the Claims Fiduciary is given broad discretionary powers, and the Claims Fiduciary shall exercise said powers in a uniform and nondiscriminatory manner in accordance with the Plan's terms. Our authority is limited to such insurance policies and we are not a fiduciary of any other aspect of the Plan, insured or otherwise. We are not the Plan Administrator (as that term is understood under ERISA) and we are not responsible for any assert or property which belongs to the Plan.

(Def.'s Evid. Sub., Doc. 25–4, at 148). The court agrees with Defendant that this language, which is part of the plan, expressly confers discretionary authority upon GE Group Life Assurance Company, and concomitantly, disagrees with Plaintiff that these provisions represent an improper or ineffective retention of discretionary authority.

As to Plaintiff's second argument, the court agrees with Defendant that GE Group Life Assurance Company's legal changes to its name would not destroy or otherwise alter the grant of discretionary authority to the Defendant entity. The only case that Plaintiff cites in support of its argument, McKeehan v. Cigna Life Insurance Company, is inapposite. 344 F.3d 789 (8th Cir.2003). In that case, a plan sponsor first hired a third party insurance company to perform ministerial claims processing functions that did not involve wielding discretionary authority on claims. Before a final claims decision occurred on plaintiff's claim, the sponsor underwent a change in ownership. The new owner/sponsor replaced the original insurance company with a different company and gave the new insurance company broader function in the processing of claims. However, the Plan itself did not change and contained no explicit discretion-granting language. Because the new owner/sponsor and new insurance company could produce no agreement in the Plan constituting an express delegation of discretionary authority to the new insurance company, the court found that the new insurance company did not have express discretionary authority to trigger a deferential standard of review. Thus, the court reviewed the denial of benefits under a de novo standard of review. Id. at 793.

The instant case involves distinguishable facts, because in this case, the Plan expressly confers discretionary authority, and the insurance company upon which the plan conferred discretionary authority is the same entity as the company making the benefits decision; the entity did not change, but the entity simply changed its name. Defendant has provided evidence establishing that it has undergone a series of legal name changes from GE Group Life Assurance Company to the current name of Sun Life and Health Insurance Company. See Def.'s Evid. Sub., Doc. 25–5 & 25–6. Throughout the name changes, the rights and obligations, including the grant of discretionary authority in the instant policy, remained with the Defendant entity, which is now known as Defendant Sun Life. Plaintiff does not dispute that evidence regarding name changes. The legal name change does not destroy or otherwise alter the grant of discretionary authority to Sun Life.

Therefore, the court finds that the ERISA plan at issue expressly confers discretionary authority to the Defendant, now known as Sun Life, and further, that the Plaintiff's motion for partial summary judgment (Doc. 21) is due to be DENIED as to that remaining issue.

III. PLAINTIFF'S MOTION TO SUPPLEMENT THE RECORD, OR IN THE ALTERNATIVE, MOTION TO REMAND

Plaintiff requests this court's permission to supplement the Record with the following documents: the statement of Dr. Bourge dated 8/20/09 and medical records dated 10/22/08, 3/11/09, and 6/17/09—Exhibit A (Doc. 20–2, at 1–9); and Plaintiff's affidavit dated 9/2/09—Exhibit B (Doc. 20–2, at 10–11). Alternatively, Plaintiff requests that this court remand the case, ordering Defendant Sun Life to consider those records. The attachments to the motion reflect that Plaintiff's counsel sent these medical records and Dr. Bourge's statement to the Defendant on August 26, 2009, after the administrative rulings and over six months after the instant suit was filed. The motion does not reflect whether Exhibit B, which is Plaintiff's affidavit, was provided to Defendant before the motion's filing, but it appears to be dated September 2, 2009, and if that date is correct, it postdated the...