American Society for Technion-Israel Institute of Technology, Inc. ("Plaintiff" or "ATS") brings this action against First Reliance Standard Life Insurance Company ("Defendant" or "First Reliance") seeking money damages for First Reliance's alleged violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. § 1001, et seq. ATS alleges that First Reliance wrongfully denied the full amount of life insurance benefits claimed for Jason Yoskowitz, an ATS executive. Presently before this Court are the parties' cross-motions for summary judgment.
From 1992 to 2007, Plaintiff has purchased a group life insurance policy from First Reliance for Plaintiff's employees. (Pl.'s Mem. Supp. Summ. J. at 2; Pegno Affirmation, Ex. 1 AR 1--AR 20.) Following Mr. Yoskowitz's death on May 2, 2006, Plaintiff submitted a claim for $758,000. Defendant denied Mr. Yoskowitz's claim, arguing that, because of an alleged failure to meet Defendant's policy requirements for additional coverage, Mr. Yoskowitz was only entitled to benefits in the amount of $360,000 plus interest. ATS paid the additional $398,000 to Mr. Yoskowitz's widow,*fn1 taking an assignment of all her rights under the group life insurance policy ("the Policy") as well as those of Mr. Yoskowitz's estate.*fn2 ATS subsequently brought suit to recover benefits under ERISA § 502(a)(1)(B).*fn3
Defendant moves for summary judgment on all claims. Plaintiff cross-moves for summary judgment on Count I of the Amended Complaint, the recovery of benefits under ERISA § 502(a)(1)(B).*fn4 Because we find that there are material issues of fact with respect to the ambiguous language of insurance policy requirements, whether these requirements were communicated to Plaintiff, and whether Defendant was aware of the premium submitted by Plaintiff, we deny both motions for summary judgment but reject Plaintiff's claims for recovery on the basis of estoppel and waiver.
From 1992 to 2007, ATS purchased a group life insurance policy from First Reliance, covering ATS employees. Under the Policy, life insurance coverage for executive-level employees was calculated based on their earnings. The Policy provides that for Class 2 Executives such as Mr. Yoskowitz, who served as Senior Vice President, the available insurance was three times the annual salary minus $100,000 up to a maximum of $900,000. (Pegno Affirmation, Ex. 1 AR 7.) The Policy states that "[a]mounts of basic insurance over $360,000 are subject to our approval of a person's good health." (Pegno Affirmation, Ex. 1 AR 7, Schedule of Benefits.) The Policy also defines, in another section, the effective date of individual insurance as follows: "[T]he date we approve any required proof of good health. We require proof of good health if a person applies: (a) after thirty-one (31) days from the date he/she first becomes eligible; or (b) after he/she terminated this insurance but he/she remained in a class eligible for this insurance." (Pegno Affirmation, Ex. 1 AR 11, Individual Eligibility, Effective Date and Termination.)
At the time of his death in May 2006, Mr. Yoskowitz's salary was $286,000 and thus, according to the Policy formula, Mr. Yoskowitz was eligible for a death benefit from First Reliance in the amount of $758,000. For the seven years preceding Mr. Yoskowitz's death, Plaintiff sent a monthly list to First Reliance of employee names, coverage amounts, and calculation of premiums due to First Reliance. This list reflected Mr. Yoskowitz's coverage of $758,000. (Pegno Affirmation, Ex. 1 AR 46--AR 59.) The parties do not dispute, however, that neither Mr. Yoskowitz nor ATS ever submitted documentation of good health. It is also uncontested that First Reliance did not ever grant approval of good health for Mr. Yoskowitz.
Shortly after Mr. Yoskowitz's death in May 2006, ATS filed a claim on his behalf for $758,000. In response, Defendant's senior claims examiner asserted that Mr. Yoskowitz was entitled to only the basic coverage of $360,000 plus interest. Defendant's letter cited the Policy provision stating that coverage over $360,000 was "subject to [Defendant's] approval of a person's good health]" and stated that Plaintiff never submitted, and thus Defendant never approved, any such documentation of good health. Plaintiff appealed this denial of benefits. Defendant denied the appeal. In its denial of the appeal, Defendant asserted that Plaintiff was responsible for submitting proof of good health for Mr. Yoskowitz because Plaintiff's Policy was self-administered. The parties contest whether "self-administration" implied that Plaintiff was required to affirmatively submit documentation absent a request from Defendant, or whether "self-administration" merely referred to Plaintiff's duty to process the premiums and maintain basic records.
Plaintiff subsequently filed suit in the Supreme Court of New York, and Defendant removed the case to federal court. As the claim arises out of an employee welfare benefit plan governed by ERISA, the Court has original subject matter jurisdiction pursuant to 28 U.S.C. § 1331, and the case was validly removed pursuant to 28 U.S.C. § 1441.
Summary judgment is warranted "if 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 and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). A material fact is one that might affect the outcome of a suit under governing law. Kinsella v. Rumsfeld, 320 F.3d 309, 311 (2d Cir. 2003). To show the existence of a genuine issue, the nonmoving party must have more than a scintilla of evidence to support its position. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 252 (1986). In evaluating cross-motions for summary judgment, "each party's motion must be examined on its own merits, and in each case all reasonable inferences must be drawn against the party whose motion is under consideration." Morales v. Quintel Entm't, Inc., 249 F.3d 115, 121 (2d Cir. 2001).
B. Review of First Reliance's Determination
In evaluating the cross-motions, the Court must first determine the appropriate standard of review for the Defendant's denial of additional life insurance benefits. In reviewing a "denial of benefits challenged under [ERISA § 502(a)(1)(B)]," courts apply a de novo standard "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Where the written plan documents provide the plan administrator with discretionary authority to determine eligibility, the court will not disturb the administrator's conclusion unless it is arbitrary and capricious. Id.; Pagan v. NYNEX Pension Plan, 52 F.3d 438, 441 (2d Cir. 1995). A decision to deny benefits is arbitrary ...