United States District Court, E.D. New York
MEMORANDUM AND ORDER
SANDRA L. TOWNES, District Judge.
In 2009, plaintiff Raymond Thomas commenced this action under the Employment Retirement Income Security Act, 29 U.S.C. § 1001 et seq., seeking to recover life insurance benefits allegedly owed to him by the Countrywide Financial Corporation Group Insurance Plan, an employee benefit plan administered by Life Insurance Company of North America ("LINA"), following the death of his sister, Judith Thomas ("Ms. Thomas" or "Decedent"). In 2011, plaintiff; defendant Bank of America Corporation (the "Bank"), of which Countrywide is now a wholly owned subsidiary; and defendant CIGNA Group Insurance ("Cigna") and its subsidiary, LINA (collectively, the "Insurers") moved for summary judgment. In a memorandum and order dated January 4, 2013 (the "Prior M&O"), this Court denied the defendants' summary judgment motions except to the extent that they asserted that plaintiff's Second Amended Complaint did not allege any viable claims other than the claim pursuant to 29 U.S.C. §1132(a)(1)(B). The Court granted plaintiff's motion to the extent of remanding the matter for further factfinding and a new eligibility determination. Specifically, the Court directed that LINA investigate whether Countrywide "furnished the SPD... in accordance with the relevant regulations" and whether the SPD placed participants in the Basic Life Insurance Plan on notice of certain "Waiver of Premium" provisions. Prior M&O, p. 44.
On May 9, 2013, after conducting its investigation, LINA determined that the Decedent was "appropriately informed of her Waiver of Premium rights" under the life insurance plans, but "failed to timely exercise those rights within the allowable timeframes." LINA 602. LINA further determined that "no coverage was in-force under the group policy insuring the plan at the time of her death and that no benefits are... payable...." Id. In the wake of this decision, the Insurers and plaintiff again cross-move for summary judgment. For the reasons set forth below, the Insurers' motion for summary judgment is denied and plaintiff's motion is granted to the extent of remanding this matter to LINA for further proceedings consistent with this memorandum and order.
Although this memorandum and order assumes familiarity with the Prior M&O, the Court will re-state the salient facts for the convenience of the reader. These facts are either undisputed, as reflected by the Insurer's Statement of Undisputed Facts Pursuant to Local Civil Rule 56.1 (the "56.1 Statement") and plaintiff's response thereto (the "56.1 Response"), or drawn from the Administrative Record.
In mid-May 2002, Decedent began working for Countrywide as a "Home Loan Consultant - External." LINA 534. As an active employee, she automatically received various benefits, including Basic Life Insurance. LINA 1357. However, she also opted to enroll in Countrywide's Voluntary Life Insurance Plan, which required her to pay "contributions" to cover the premiums. LINA 1359. Decedent was covered under both insurance plans as of August 1, 2002. LINA 403.
In October 2004, Decedent stopped working, alleging that she was disabled. 56.1 Statement ¶ 15; 56.1 Response ¶ 15. Decedent never returned to work, LINA 403, and passed away on May 24, 2008. 56.1 Statement ¶ 17; 56.1 Response ¶ 17. Prior to her death, Decedent had named her brother, plaintiff Raymond Thomas, as the beneficiary under both policies. 56.1 Statement ¶ 14; 56.1 Response ¶ 14.
At the time Decedent allegedly became disabled, Countrywide's Basic Life Insurance Plan and Voluntary Life Insurance Plan were underwritten by LINA pursuant to two group insurance policies-FLX-980007 and FLX 980008 (the "Policies"). 56.1 Statement ¶¶ 1, 2; 56.1 Response ¶¶ 1, 2. Both Policies had been issued by LINA to policyholder Trustee of the National Consumer Insurance Trust. Id. Countrywide became a subscriber to the Policies effective January 1, 2003. Id.; LINA 28, 60.
Although FLX-980007 provided benefits under the Voluntary Life Insurance Plan, LINA 31, and FLX-980008 provided benefits under the Basic Life Insurance Plan, LINA 63, both Policies contained many of the same provisions. Both provided that an insured employee's coverage ends when the employee is "no longer in Active Service, " unless it has already ended for one of several other, listed reasons. LINA 40, 67. However, the Policies also provided that employees who were no longer in Active Service could remain "eligible to continue insurance" under certain circumstances. LINA 40, 68. These "continuation options" were characterized in the Policies as "benefits" and described in the "Schedule of Benefits" set forth at the start of each policy. LINA 31-32, 63-64.
One of the continuation options available to all active, full-time employees was "Waiver of Premium." Id. Both policies described this option in the exact same terms:
If an Employee is under age 60 and his or her Active Service ends due to Disability, Life Insurance Benefits as shown in the Schedule of Benefits will continue until the end of the earliest of the following dates.
1. The date the Employee is no longer Disabled.
2. The date he or she no longer qualifies for Waiver of Premium.
3. The day after the period for which premiums are paid.
4. The date the Maximum Benefit Period for this benefit, if any, ends. LINA 40, 68.
The "Maximum Benefit Period, " set forth in the Schedule of Benefits, is "age 65." LINA 31, 34, 63, 64.
The policies also described how an employee could qualify for Waiver of Premium. Both of the Policies stated:
In order to qualify for Waiver of Premium an Employee must submit due proof that he or she has been Disabled for the Benefit Waiting Period shown in the Schedule of Benefits for this benefit. Such proof must be submitted to the Insurance Company no later than 3 months after the Employee satisfies the Benefit Waiting Period. Premiums will be waived from the date the Insurance Company agrees in writing to waive premiums for that Employee. After premiums have been waived for 12 months, they will be waived for future periods of 12 months, if the Employee remains Disabled and submits satisfactory proof that Disability continues. Satisfactory proof must be submitted to the Insurance Company 3 months before the end of the 12 month period. LINA 40, 68. According to the Schedule of Benefits for each policy, the Benefit Waiting Period for all eligible employees was "9 months from the date the Employee's Active Service ends." LINA 31, 34, 63, 64.
Plaintiffs Claim and LINA's Initial Determination
On July 11, 2008, Jennifer R. Dilbeck, a Senior Benefits Representative at Countrywide, submitted a life insurance claim on behalf of Decedent, identifying plaintiff as her beneficiary. LINA 402-04. That claim sought to recover a total of $208, 000-$104, 000 each from the Basic and Voluntary Life Insurance Plans-but specifically stated that premiums had been paid only through September 2005. LINA 402-03. However, the claim form also reflected that Decedent had never been required to make any contributions with respect to the Basic Life Insurance. LINA 403.
The claim was assigned to Colleen Spicuzza, a Waiver Claims Specialist. She treated the claim as incorporating a late claim for the Waiver of Premium benefit and attempted to ascertain if there was a reasonable excuse for the delay in filing the claim. As discussed in detail in the Prior M&O, Spicuzza wrote plaintiff a letter, asking plaintiff to "provide a reason why the Waiver of Premium claim was not filed within the guidelines" outlined in the policies. LINA 221. Plaintiff responded by stating that he had been caring for Decedent since 2004, but that Decedent "never received any information from Countrywide nor CIGNA regarding a contract or policy explaining Waiver of Premium standard or an explanation of same." Id.
Spicuzza also contacted Dilbeck to ask, inter alia, whether Decedent "was... ever given information or a claim to file for Waiver of Premium benefits when she became disabled." LINA 227. Dilbeck's response to that inquiry and the subsequent correspondence between Spicuzza and Dilbeck is discussed at length in the Prior M&O. For purposes of this memorandum and order, it suffices to note that Dilbeck believed that Decedent had not needed to file a claim for Waiver of Premium because she had already filed for, and was receiving, long-term disability benefits. Dilbeck readily admitted that she was not even aware that a Waiver of Premium form existed and, accordingly, had not asked Decedent to complete such a form. See LINA 222.
On August 26, 2008, Spicuzza sent her colleague Jeffrey Vaupel, a "Technical Specialist, " a "referral" which summarized what she had learned from plaintiff and Dilbeck. LINA 218. Spicuzza noted that Decedent "resided in New York, ... a reasonable excuse state, " and requested that Vaupel "review the beneficiary's and the group's reasons for the late filing." Id.
The same day he received Spicuzza's referral, Vaupel sent a memorandum to an in-house attorney, Karen Fortune, seeking legal advice on how to proceed. LINA 114-18. That memorandum explained that plaintiff's claim was "being evaluated as a post-mortem waiver of premium claim, " and summarized Vaupel's understanding of the "current guidelines" relating to the claim as follows:
Ms. Thomas resided in the state of New York, which is classified as a reasonable excuse state. In these states, we will only accept the claim for continued investigation for waiver of premium if it is determined that the claimant's explanation for the late filing of the claim is reasonable. Typically, we must generally view reasonableness as subjective and from the point of view of the claimant. However, in this case, since this claimant was deceased at the time the claim was received, conducting this assessment is rather unique. LINA 117.
After setting forth the facts relating to the claim in detail, the memorandum closed with three questions, including:
Based on the above information, from a legal standpoint, would the explanation provided by the beneficiary for the late filing of the claim be considered reasonable?
Is there support based on the available evidence and applicable policy provisions for denial of this claim on the basis of late filing? LINA 118.
About one month later, Fortune responded to Vaupel's inquiries in a five-page memorandum dated September 19, 2008. LINA 108-12. That document, which characterized Vaupel's memorandum as inquiring "whether a postmortem claim for waiver of premium benefits is barred by a defense of late notice of claim, " LINA 108, contained a lengthy discussion of legal authorities relating to the issue, including citations to various federal and state cases. That discussion noted, inter alia, that "ERISA imposes disclosure requirements on a plan administrator to inform participants of circumstances that may cause them to lose benefits." LINA 111. The discussion specifically noted the plan administrator's duty to provide a Summary Plan Description ("SPD") to its participants and stated, "As... mentioned above, among other things the SPD must inform participants of the name and type of benefit plan at issue, the plan's requirements with respect to eligibility for participation and benefits and circumstances that may result in disqualification, ineligibility, or denial or loss of benefits." Id.
In the conclusion section of the memorandum, Fortune noted, "The file materials do not address what information was provided to Ms. Thomas by Countrywide regarding her life insurance benefits, if any, and specifically her waiver of premium benefit." LINA 112. Accordingly, Fortune advised Vaupel to ask Countrywide for this information, stating:
[W]e suggest that LINA ask Countrywide to advise what information was provided to Ms. Thomas. A copy of the SPD provided to her would be helpful as would any other information provided to her that dealt with waiver of premium benefits. We point out that Department of Labor regulations control whether the distribution of an SPD is sufficiently broad to allow the assumption that Ms. Thomas received a copy. LINA 112.
Fortune then concluded:
If Countrywide advised participants generally of the requirements of a waiver of premium benefit claim, we believe that a federal court would find that Ms. Thomas was put on notice of what she had to do in order not to lose her benefits. Neither Ms. Thomas (nor her beneficiary) would be able to contend that her delay is excusable due to lack of knowledge, and the court would likely sustain LINA's late notice defense. Assuming (i) Countrywide can supply the information suggested above... and (ii)... the SPD... advises of the notice deadline for claiming waiver of premium benefits, we suggest that LINA deny the claim. Should the facts develop differently, we would like to see this claim again before reaching a final decision on those new facts. LINA 112.
On September 22, 2008, Spicuzza sent Dilbeck another e-mail, inquiring about "what information was provided to Ms. Thomas regarding her life insurance." LINA 205. Dilbeck responded by faxing Spicuzza a portion of an SPD dated January 1, 2004, along with a one-page cover sheet. The cover sheet, which stated that the fax related to "Life Insurance Information, " included the following comment:
Please see attached per your request. The oldest information I could find was from 2004 (as you can see the document is dated 1/1/04). This was posted along with several hundred other pages of information regarding Countrywide's various benefits on the Intranet system. Due to the volume of information on the Intranet system, employees rarely read every page of the information available and rely on benefit summaries (such as the inactive packet I sent you previously) to advise them of any action required regarding any change in status. And as mentioned previously, Judith would not have had access to this information once she went out on leave. LINA 183.
On September 25, 2008-two days after Dilbeck faxed the SPD-Vaupel sent an e-mail to Fortune containing two, paragraph-long follow-up questions. LINA 104. In his e-mail, Vaupel expressed uncertainty as to the adequacy of the method Countrywide employed for delivering the SPD, noting that Countrywide employees were "not specifically provided" with copies of the SPD, but that the SPD was made "available for employees to view via their intranet site." Id. Vaupel asked: "Would this suffice as putting Ms. Thomas on notice of the waiver of premium and the time period in which to file a waiver of premium claim?" Id.
Fortune did not respond to Vaupel's e-mail until October 7, 2008, a few hours after Vaupel sent a follow-up e-mail apologizing for being "a pest" and inquiring whether Fortune "had a chance to review the information" in his previous e-mail. LINA 103. In marked contrast to her earlier, well-researched memo, Fortune's response consisted of a two-paragraph e-mail, devoid of any citations. In the first paragraph, relating to Vaupel's question relating to the SPD, Fortune wrote:
I'm not certain that the issue of availability of SPD's [sic] via website has been tested in litigation. I know that we make ours available on-line and that it has become a common practice. However, if it was Countrywide's practice in 2004 when Ms. Thomas went out on disability, to provide the SPD via the website, then I think we have an argument that she was put on notice of the WOP benefit. In any event, the burden lies with Countrywide to make the SPD available, not LINA. Therefore, we can only rely on the fact that the policyholder made the SPD available to the employee to support our assertion that she was on notice. LINA 103.
On October 10, 2008, Spicuzza wrote plaintiff a six-page letter, denying his claim for life insurance benefits. LINA 161-66. That letter quoted the relevant portions of the Policies and the "Waiver of Premium" section of the SPD and determined, based on those provisions, that plaintiff's claim for Waiver of Premium benefits should have been filed prior to October 19, 2005-one year after Decedent went out on disability. LINA 164. Spicuzza then opined that the SPD explained "the Waiver of Premium Benefit and the filing provisions and was made available to [Countrywide] employees." LINA 165. After considering plaintiff's "reason for the late submittal of the claim, " Spicuzza concluded that "the delay in the filing of your claim was not reasonable." Id.
After his claim was denied, plaintiff retained an attorney, Lowell B. Davis. In early April 2009, Davis filed a formal appeal from the denial of plaintiffs claim. LINA 145-48. That appeal raised five points, the fourth of which noted that there was "no evidence that Judith S. Thomas was ever provided with Notice of her obligations with regard to the Waiver of Premium requirements contained in Countrywide's Summary Plan Description." LINA 147.
Within a week of receiving Davis's appeal, Vaupel forwarded it to Fortune along with a request for guidance regarding how to respond to it (LINA 87). For reasons which are unclear, Vaupel's inquiry was forwarded to another in-house attorney, Michael T. Grimes. Grimes ultimately responded to Vaupel's inquiries in an e-mail dated July 22, 2009, proposing replies to each of Davis's five points. LINA 16-17. With respect to Davis's fourth point, Grimes suggested replying as follows:
[T]he law does not presume a violation of the law. Your suggestion that the [sic] Ms. Thomas was not provided with Countrywide's Summary Plan Description does not possess any factual support from her Employer, who would have been legally obligated to provide same. Contrary to your assertion that LINA has not produced any evidence demonstrating receipt of either of these documents, it would be incumbent upon the claimant, at this point in time, to establish a failure to comply with ERISA's legal requirements to provide such information. LINA 16.
On July 31, 2009, Vaupel sent Davis a letter denying plaintiff's appeal. LINA 121-27. Vaupel not only relied on the exact same rationale set forth in Spicuzza's letter to plaintiff dated October 10, 2008, but repeated most of Spicuzza's analysis verbatim. Vaupel stated, inter alia:
[R]eview of the information provided for our consideration reflects that information regarding the policies... was made available to Judith Thomas. Countrywide... has confirmed that they made available to their employees, via their intranet system, a copy of the Summary Plan Description outlining their coverage under the Group Term Life Insurance policy. The Summary Plan Description made available to Judith Thomas clearly outlines the Waiver of Premium benefit and the filing provision contained within. LINA 125.
Vaupel also addressed each of the five points raised in plaintiff's appeal. With respect to Davis's fourth point, Vaupel cut and pasted Grimes proposed reply-including the ...