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Guglielmi v. Northwestern Mutual Life Insurance Co.

July 6, 2007


The opinion of the court was delivered by: Gerard E. Lynch, District Judge


In this action governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq., plaintiff Giuseppe Guglielmi challenges the denial of his claim for disability benefits under an insurance plan funded and administered by defendant, Northwestern Mutual Life Insurance Company ("Northwestern Mutual"). Defendant moves for a "judgment on the administrative record" or, in the alternative, for summary judgment, arguing that the denial is supported by substantial evidence in the administrative record and is therefore reasonable, and that plaintiff's claim was thus not wrongly denied. For the reasons stated below, summary judgment shall be granted to defendant.


Plaintiff was a co-owner of a restaurant business that purchased a group disability insurance policy from defendant for the benefit of qualifying employees or proprietors. The group benefits plan ("Plan"), which defendant both funded and administered, became effective on March 27, 2002.

In September 2003, plaintiff submitted a statement to Northwestern Mutual to claim benefits under the Plan. His employer and attending physician each furnished statements in relation to plaintiff's claim. Also in relation to the claim, defendant received medical records indicating that plaintiff had been hospitalized for over a week in early January 2002 due to at least one stroke, which occurred in December 2001. A month after he submitted his claim under the Plan, plaintiff also filed a claim under a disability insurance policy he had purchased from defendant as an individual. The substance of these documents will be described as necessary during discussion of the legal issues.

By a letter dated October 2, 2003, defendant rejected plaintiff's claim under the Plan. The letter stated, among other information, that "it appears that you are claiming disability" as of July 1, 2002, "due to the limitations and restrictions imposed by your stroke and related conditions," and explained that, because the submitted information showed plaintiff to have been treated for problems stemming from his 2001 stroke within a certain prohibited period, the disability was a pre-existing condition excluded from coverage. (P. Ex. A.) It is not disputed that the disability for which plaintiff was attempting to obtain benefits stemmed from problems associated with his December 2001/January 2002 stroke and complications. Terms imposing a pre-existing condition exclusion existed in the Plan as issued to plaintiff.

Guglielmi wrote later the same month to appeal the claim rejection. He protested defendant's determination of his disability date as July 1, 2002, writing that "[a]lthough my strokes and subsequent impairment occurred in January of 2002 I did return to work in July of 2002 but have been experiencing a gradual decline beginning in July of 2003 up to today." (P. Ex. H.) He sought a review of his claim, "keeping in mind the July 2003 date," and offered to provide, without actually providing, "additional information that would help in your decision process including physician's comments, statements from my physical therapists or any other inform[ation] you may require." (Id.)

On October 24, 2003, defendant affirmed its denial of liability on plaintiff's claim based on the pre-existing condition exclusion but also cited a new, alternative reason: "[Y]ou never met the Actively At [W]ork requirement, and thus, you were never an insured Member." (P. Ex. B.) The Plan as issued set forth various eligibility requirements including, as will be further described, qualification by performing a certain level of work for a certain time. The second rejection recited information that plaintiff had disclosed in his claim form submitted to Northwestern Mutual under his individual insurance policy:

In . . . the attached "request for disability benefits" you filed with our Milwaukee office, you checked the box[,] "I performed some job duties and/or worked only part time and am claiming Partially Disabled Benefits during the following period(s): From 7/1/2002 To 12/31/2002 70% of time at all duties From 1/1/2003 To 6/30/2003 50% of time at all duties From 7/1/2003 To Present 30% of time at all duties." (Id.) Alongside this list describing the decline of his ability to work over time, however, plaintiff had consistently written "40" or "40" as his "hours worked per week" during each period. (P. Ex. G.) Referencing plaintiff's individual-policy claim form, and apparently to explain its rejection on the basis of the pre-existing condition exclusion under the Plan, the letter stated among other conclusions that, "regardless of when we assume you became an insured 'Member,' your ability to work always fell within the definition of partial disability." (Id.)

Following the second rejection of his claim, plaintiff hired a lawyer, Bruno Gioffre, who demanded and received the entire extant record regarding the claim. Gioffre subsequently wrote, on September 13, 2004, to request another review of plaintiff's claim. (P. Ex. I.) His letter did not address either of defendant's stated bases for denial -- the pre-existing condition exclusion or ineligibility for lack of sufficient work -- but rather raised an issue unrelated to the claim's actual viability under the Plan terms. He contended that plaintiff had been "misled" by a Northwestern Mutual representative -- apparently at the start, when plaintiff had first begun paying premiums on the policy -- "as to the nature and effectiveness of coverage offered him" and thus had been falsely induced to forgo other insurance options, presumably in the expectation that he could count on coverage under the Plan. (Id.)

Defendant responded on September 20, 2004, reiterating the two prior cited bases for rejection under the terms of the Plan. Administrator Laurens Dronkers's letter elaborated, "[W]e received a telephone call from Mr. Guglielmi on July 15, 2004, during which he informed me that he never returned to work for more than 30 hours per week after July, 2002. Therefore, Mr. Gug[]lielmi was never considered a Member under the provisions of the group policy . . . . [He] work[ed] less than the required amount of hours to be considered a Member." (P. Ex. J.) Dronkers added that, after investigating plaintiff's accusation of having been misled by a Northwestern Mutual agent, "we do not find any reference or support that a false or misleading representation was made." (Id.)

It does not appear that plaintiff sought a further review by defendant. In March 2006, he filed a complaint in state court alleging that defendant was improperly denying him disability benefits amounting to $6000 per month beginning July 1, 2003. Defendant successfully removed the action to federal court, on the ground that plaintiff's claims were covered by ERISA.


I. Legal Standards

A. Form of Decision

Defendant seeks either a "judgment on the administrative record" or summary judgment. The Second Circuit has noted that the mechanism of a "motion for judgment on the administrative record . . . does not appear to be authorized in the Federal Rules of Civil Procedure," although such motions "are frequently made by insurers in ERISA benefits cases." Muller v. First Unum Life Ins. Co., 341 F.3d 119, 124 (2d Cir. 2003). These motions are properly treated either as motions for summary judgment or -- if made at a stage after issues of fact have been found to remain, and if those issues properly may be resolved by the district court -- as motions requiring a court in deciding them to set forth findings of fact and conclusions of law pursuant to Rule 52(a). See id. Substantively, this understanding of requests for decision as brought by defendants in ERISA-benefits cases does not differ from the understanding of such requests as brought by any litigant.

The non-Rules-authorized label, "motion for judgment on the administrative record," seems, at least in this ERISA case, to serve as an unnecessary rhetorical device of the defendant to urge that the Court defer to the claim determination as made, on the then-available evidence, below. But any such deference properly depends on the circumstances of the case, not on the wording of a particular request for decision; to this extent, defendant confuses the potential issue of decisional standard with the nonissue of decisional form. Thus, the Court treats defendant's motion as a request for summary judgment.*fn1

B. Summary Judgment

Summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits . . . show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). A "genuine issue of material fact" exists if the evidence is such that a reasonable jury could find in favor of the non-moving party. Holtz v. Rockefeller & Co., 258 F.3d 62, 69 (2d Cir. 2001). The moving party bears the burden of establishing the absence of any genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). In deciding a summary judgment motion, the court must "resolve all ambiguities and draw all reasonable references in the light most favorable to the party opposing the motion." Cifarelli v. Vill. Of Babylon, 93 F.3d 47, 51 (2d Cir. 1996). The nonmoving party, however, may not rely on "conclusory allegations or unsubstantiated ...

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