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KLIMBACH v. SPHERION CORPORATION

August 19, 2005.

ROSE MARIE KLIMBACH, Plaintiff,
v.
SPHERION CORPORATION and AETNA HEALTH, INC. (FORMERLY U.S. HEALTHCARE, INC.), Defendants.



The opinion of the court was delivered by: MICHAEL TELESCA, Senior District Judge

DECISION and ORDER

Plaintiff Rose Marie Klimbach ("plaintiff") brings this action pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), alleging that defendants Spherion Corporation ("Spherion") and Aetna Life Insurance Company ("Aetna") (collectively "defendants") improperly calculated her husband's life insurance benefits.*fn1 Plaintiff now moves for summary judgment in her favor and each of the defendants cross-moves for summary judgment in its favor.*fn2 For the reasons set forth below, plaintiff's motion for summary judgment is denied; defendant Spherion's motion for summary judgment is granted in its entirety; defendant Aetna's motion for summary judgment is also granted in its entirety; and Aetna' request for attorneys' fees is denied.

BACKGROUND

  Plaintiff is the widow of Roger Klimbach ("Mr. Kilmbach"), who died on March 7, 2002 after battling cancer. Mr. Klimbach had worked for defendant Spherion as a software consultant. When he started his employment at Spherion on October 16, 2000, he was considered an hourly employee, was paid $25 per hour for each hour he worked and was not entitled to company-paid holidays, vacation time, hospital and medical benefits or life insurance. See Employment Agreement, Appendix A, ¶¶ 3 and 4, Attached to Declaration of Dov Kesselman, Ex. A (Doc. No. 43). At that time, he elected to pay for his own life insurance which Spherion made available to its hourly employees through Aetna Healthcare, Inc.*fn3

  In December 2000, Mr. Klimbach was diagnosed with cancer, and was required to take a leave of absence from Spherion until May 2001. When he returned to work on May 11, 2001, his hourly rate was reduced to $21 per hour, which if annualized would equal approximately $44,000 per year in earnings. He continued to work at the $21 per hour rate until August 17, 2001, which was the last day he worked for Spherion. From the time he was diagnosed with cancer Mr. Klimbach had several communications with Spherion employees regarding the continuation of his life insurance coverage, and he continued to make monthly premium payments until his death.

  On March 25, 2002, after Mr. Klimbach's death, Spherion prepared a Proof of Death form and submitted it to Aetna for payment of life insurance benefits to plaintiff as the beneficiary of Mr. Klimbach's life insurance policy. That Proof of Death form contained plaintiff's earnings as determined by Spherion and the level of coverage Mr. Klimbach elected. Based on that information, Aetna issued plaintiff a check for $11,000 on April 1, 2002. However, Spherion had misrepresented the level of coverage Mr. Klimbach had elected and submitted a corrected Proof of Death form to Aetna on April 24, 2002. On May 20, 2002, Aetna issued plaintiff a check representing the difference between the April 1, 2002 benefits payment and the amount to which she was actually entitled — a total of $31,000.

  Plaintiff was under the impression that she was entitled to $132,000 in benefits, and contacted Spherion to express her concerns. In June 2002, Spherion sent her a letter advising her of her right to appeal the benefits determination to Spherion's Plan Administration Committee. By letter dated October 9, 2002, Spherion's Plan Administration Committee denied plaintiff's appeal.

  The present controversy concerns interpretation of the terms of the life insurance agreement (the "Plan"). The life insurance coverage election form quantified the available amounts of coverage in terms of an employee's "salary." See Plaintiff's Statement of Undisputed Material Facts, Ex. A (Doc. No. 29). Mr. Klimbach elected coverage which upon his death would pay his beneficiary two times his "salary" and elected supplemental coverage which upon his death would pay his beneficiary an additional year's worth of his "salary." See Plaintiff's Statement of Undisputed Material Facts, Ex. A (Doc. No. 29). The life insurance policy (the "Plan"), however, quantified the coverage amounts in terms of an employee's "basic annual earnings," which is defined as "[p]rior year's gross earnings, including bonuses and commissions, or current year's gross earnings, including bonuses and commissions, whichever is greater." See Summary of Life Insurance Coverage, p. 3, Attached to Declaration of Dov Kesselman, Ex. I (Doc. No. 43).

  DISCUSSION

  Rule 56 of the Federal Rules of Civil Procedure provides that a party is entitled to summary judgment as a matter of law only where, "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact. . . ." FED.R.CIV.P. 56(c). The party seeking summary judgment bears the burden of demonstrating that no genuine issue of material fact exists, and in making the decision the court must draw all reasonable inferences in favor of the party against whom summary judgment is sought. Ford v. Reynolds, 316 F.3d 351, 354 (2d Cir. 2003) (citing Marvel Characters v. Simon, 310 F.3d 280, 285-86 (2d Cir. 2002)). "Summary judgment is improper if there is any evidence in the record that could reasonably support a jury's verdict for the non-moving party." Id.

  I. Plaintiff's § 1132 Claims

  Under 29 U.S.C. § 1132(a)(1)(B) a plan participant or beneficiary may bring an action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132 (a)(1)(B). A claim for improper denial of benefits under § 1132 is reviewed under a de novo standard unless the administrator or fiduciary can prove that it maintained discretionary authority to determine eligibility for benefits or to construe the terms of the plan, in which case an arbitrary and capricious standard applies. Firestone Tire and Rubber Company v. Bruch, 489 U.S. 101, 115 (1989). Where a district court reviews a benefits determination under the arbitrary and capricious standard, it is limited to considering only the information available to the fiduciary at the time of the benefits determination in question. Miller v. united Welfare Fund, 72 F.3d 1066, 1071 (2d Cir. 1995). A benefits determination will not be found to be arbitrary and capricious unless it is "without reason, unsupported by substantial evidence or erroneous as a matter of law." Pagan v. NYNEX Pension Plan, 52 F.3d 438, 441-442 (2d Cir. 1995).

  A. Plaintiff's Claims Against Defendant Aetna

  While plaintiff's complaint pursues several causes of action, only one is directed toward Aetna; namely that Aetna failed to pay certain life insurance benefits to plaintiff in violation of ERISA § 1132, for which plaintiff now moves for summary judgment in her favor. Aetna cross-moves for summary judgment, arguing that it is ...


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