The opinion of the court was delivered by: Michael A. Telesca United States District Judge
Plaintiff Christian Brondon ("Brondon") brings this action against defendant The Prudential Insurance Company of America ("Prudential") seeking payment of life insurance benefits that he claims are owed to him by the defendant following the death of his wife Lois Brondon, ("Mrs. Brondon"). Specifically, Brondon, who is the named beneficiary of the policy held by his wife, claims that upon the death of his wife, and his proper and timely application for benefits under the policy, Prudential became obligated to pay the $50,000.00 death benefit to him under the policy. He claims that in denying coverage for Mrs. Brondon's death, Prudential breached the insurance contract, and violated the Employee Retirement Income Security Act of 1974 ("ERISA").
Prudential denies the plaintiff's claims, and contends that Mrs. Brondon's failure to accurately disclose an underlying heart condition in her application for insurance coverage warranted the recision of her insurance policy, and the denial of plaintiff's claim. Defendant has brought a counter-claim against the plaintiff seeking a declaration that it owes no coverage to plaintiff under Mrs. Brondon's insurance policy, and that it rightfully rescinded the policy upon learning that Mrs. Brondon had failed to disclose in her insurance application a material, underlying heart condition.
The parties now cross-move for summary judgment arguing that there are no material issues of fact in dispute, and that judgment may be rendered as a matter of law. Plaintiff seeks judgment in his favor, arguing that as a matter of fact and law, Mrs. Brondon did not lie on her application, and under the terms of the policy, plaintiff is entitled to coverage under the death benefit provision. Prudential seeks judgment in its favor contending that it acted properly in rescinding plaintiff's policy once it learned that she had omitted material information from her application, and that it appropriately declined coverage under the terms of the policy.
For the reasons set forth below, I grant plaintiff's motion for summary judgment, deny defendant's motion for summary judgment, and issue judgment in favor of Brondon in the amount of $50,000.00 plus attorneys' fees and costs, and prejudgment interest.
Plaintiff Christian Brondon is the beneficiary of a group term life insurance policy issued to his wife Lois Brondon ("Mrs. Brondon"). The policy, which provided a $50,000.00 death benefit, was issued by defendant Prudential Insurance Company of America to eligible members of the National Education Association. Mrs. Brondon applied for coverage in October, 2006, and became covered under the policy effective December 1, 2006.
On May 18, 2007, Mrs. Brondon, who was 49 years of age, died suddenly and unexpectedly while officiating at a soccer game. The cause of death listed on her death certificate was "myocardial fibrosis and right ventricular dilation." On August 8, 2007, plaintiff, as beneficiary of his wife's life insurance policy, filed a notice of claim with Prudential seeking payment of the $50,000.00 death benefit. Prudential reviewed the plaintiff's claims, and on several occasions requested additional medical evidence regarding Mrs. Brondon from the plaintiff.
On January 24, 2008, after reviewing Mrs. Brondon's medical records, the defendant denied plaintiff's claim for benefits on grounds that Mrs. Brondon had failed to disclose a heart condition when she applied for life insurance coverage, and that had she disclosed the condition, she would not have been approved for coverage. Specifically, Prudential stated that the plaintiff had failed to disclose that she suffered from "mild aortic sclerosis and mitral valve prolapse with mild mitral insufficiency."
Brondon appealed the denial of his claim to the Appeals Department of Prudential, which affirmed the denial of his claim. Thereafter, plaintiff filed the instant action in New York State Supreme Court, Monroe County, seeking payment of the benefits available under Mrs. Brondon's life insurance policy. Defendant removed the action to this court, and thereafter filed a counterclaim against the plaintiff seeking a declaration that it does not owe plaintiff any coverage under the policy due to the material misrepresentations made by Mrs. Brondon in applying for her life insurance coverage.
I. Summary Judgment Standard
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." When considering a motion for summary judgment, all genuinely disputed facts must be resolved in favor of the party against whom summary judgment is sought. Scott v. Harris, 550 U.S. 372, 380 (2007). If, after considering the evidence in the light most favorable to the nonmoving party, the court finds that no rational jury could find in favor of that party, a grant of summary judgment is appropriate. Scott, 550 U.S. at 380 (citing Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-587 (1986)). In the instant case, the parties agree that there are no material facts in dispute, and that judgment may be rendered as a matter of law.
II. Standards of Review Applicable to ERISA Actions
When considering an ERISA claim alleging improper denial of benefits, the Court must first determine the appropriate standard of review to conduct its analysis of the ERISA plan administrator's decision to deny benefits. In general, a de novo standard of review will apply to the plan administrator's determination, unless the plan grants authority to the administrator to use his or her discretion to construe the terms of the plan and determine eligibility for plan benefits. Firestone Tire and Rubber Co., v. Bruch, 489 U.S. 101, 115 (1989). In Firestone, the Supreme Court held that: a denial of benefits challenged under [ERISA] § 1132(a)(1)(B)is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or construe the terms of the plan.
Firestone, 489 U.S. at 115.
Under a de novo standard of review "the Court will review 'all aspects of [the] administrator's eligibility determination, including fact issues, de novo.'" O'Hara v. National Union Fire Ins. Co. of Pittsburgh, PA, 697 F.Supp.2d 474, 476 (W.D.N.Y., 2010)(quoting Troy v. Unum Life Ins. Co. of Am., 2006 WL 846355 at *4, (S.D.N.Y., March 31, 2006)). Under this standard, plan terms are "given their plain meanings," Wickman v. Northwestern Nat'l Ins. Co., 908 F.2d 1077, 1084 (1st Circ., 1990), and ambiguities in plan language are to be construed in favor of the claimant. Masella v. Blue Cross & Blue Shield of Connecticut, Inc., 936 F.2d 98, 107 (2nd Circ., 1991); Rudolph v. Joint Industry Bd. of Elec. Industry, 137 F.Supp.2d 291, 300 (S.D.N.Y., 2001). Under a de novo standard of review, no deference is given to the plan administrator's interpretation of the plan. Katzenberg v. First Fortis Life Ins. Co., 500 F.Supp.2d 177, 193-94 (E.D.N.Y., 2007)(citing Slupinski v. First Unum Life Ins. Co., 2005 WL 2385852, at *5 (S.D.N.Y. Sept. 27, 2005). Indeed, under de novo review, "the fiduciary must show that the claimant's interpretation is unreasonable and that its own interpretation is the only one that could fairly be placed on the policy." Rudolph, 137 F.Supp.2d at 300 (citing Alfin, Inc., v. Pacific Ins. Co., 735 F.Supp. 115, 119 (S.D.N.Y., 1990).
If a benefits plan grants the plan administrator discretionary authority to determine eligibility for benefits, the Second Circuit has held that an arbitrary and capricious standard of review will be applied to the administrator's determination. Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 249-252 (2d Cir. 1999). Under the arbitrary and capricious standard, a denial of benefits "may be overturned only if the decision is 'without reason, unsupported by substantial evidence or erroneous as a matter of law." Kinstler, 181 F.3d at 249 (2d Cir. 1999), quoting Pagan v. NYNEX Pension Plan, 52 F.3d 438, 442 (2d Cir. 1995); Fuller v. J.P. Morgan Chase & Co., 423 F.3d 104, 107 (2nd Cir. 2005). To establish that a Plan Administrator's decision is supported by "substantial evidence," the administrator must demonstrate that the decision is supported by "such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the [administrator] . . . ." Celardo v. GNY Automobile Dealers Health and Welfare Trust, 318 F.3d 142, 146 (2nd Cir. 2003). There must be more then a ...