Opinion
Case No. 3:03CV7659.
December 1, 2004
ORDER
Plaintiff, a beneficiary to a life insurance plan provided by her late husband's employer, claims that the defendant, AIG Life Insurance Company (AIG), wrongfully denied her claim for accidental death benefits under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. Plaintiff seeks review of that determination pursuant to 29 U.S.C. § 1132(a)(1)(B).
Pending is defendant's motion for partial summary judgment. For the following reasons, the defendant's motion shall be denied.
Background
On July 17, 1990, Thomas H. Andrus was employed by Champion Sparkplug in Toledo, Ohio, a division of Cooper Industries, Inc. (Cooper). He was enrolled in Cooper's benefits plan. The plan included $50,000 accidental death and dismemberment (ADD) insurance issued by AIG. Mr. Andrus properly designated his wife, Linda A. Andrus, as his beneficiary.
The Cooper policy was issued by AIG and was in effect from November 1, 1995, to January 1, 2005. In October, 1998, Mogul acquired the auto division of Cooper, which included Champion Sparkplug. Pursuant to the Purchase and Sale Agreement between Cooper and Mogul, Mogul continued the ADD benefits through AIG. Accordingly, Mr. Andrus was an insured under the plan at the time of his death on January 24, 2001.
Plaintiff filed for benefits, claiming that her husband's death was accidental. On March 13, 2002, AIG, asserting that Mr. Andrus's death was a suicide, and thus not covered by the plan, denied plaintiff's claim for accidental death benefits.
Issues
The issues to be decided in this case are: 1) whether AIG is the plan administrator; 2) whether the language of the plan granted discretion to AIG to interpret its terms; and 3) what standard of review shall apply. The pertinent language in the plan is:
CLAIM PROCEDURES Filing a Claim for Benefits
When your are reasonably sure that you are eligible to receive Benefits under this Plan, you may request a claim form from the Plan Administrator. All claims submitted to the Insurer must be on forms provided by the Insurer (unless forms are not currently available), in which case you may simply supply the appropriate party with a written statement outlining proof and extent of loss. Complete the claim form according to directions and return the claim form to the Plan Administrator.
From the date your notice of claim is returned, the insurance company has 90 days in which to review the claim to determine whether or not benefits are payable in accordance with the terms and provisions of the Group Policy. Under special circumstances the insurance company may require an extension of this 90 day period in which case you will receive written notice from the insurance company, prior to the end of the initial 90 days, informing you of the need for an extension. This extension period allows the insurance company an additional 90 days to review your claim. During this period the insurance company may require a medical examination, at its own expense, or additional information in order to make a determination on your claim.
(Emphasis added).
Discussion
The pertinent documents in an ERISA plan are the policy issued by the insurer and the summary plan description (SPD). The SPD is a summary of the plan and its benefits and must be distributed to the plan participants. When the terms of the policy and the SPD conflict, the language of the SPD controls. Helwig v. Kelsey-Hayes Co., 93 F.3d 243 (6th Cir. 1996) (citing Edwards v. State Farm Mut. Auto Ins. Co., 851 F.2d 134 (6th Cir. 1988)).
When "a denial of benefits [is] challenged under § 1132(a)(1)(B) [it] 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 to construe the terms of the plan." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989).
To vest discretion in the plan administrator and trigger the arbitrary and capricious standard of review, "magic words" are not necessary. Perez v. Aetna Life Ins. Co., 150 F.3d 550, 555 (6th Cir. 1998) (quoting Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th Cir. 1994)). The Sixth Circuit has, however, consistently required that a plan contain `a clear grant of discretion [to the administrator] to determine benefits or interpret the plan.'" Id.
The language in Perez was:
Written proof of total disability must be furnished to [Aetna] within ninety days after the expiration of the [first twelve months of disability]. Subsequent written proof of the continuance of such disability must be furnished to [Aetna] at such intervals as [Aetna] may reasonably require. . . .
[Aetna] shall have the right to require as part of the proof of claim satisfactory evidence . . . that [the claimant] has furnished all required proofs for such benefits. . . .150 F.3d at 555.
The court concluded in Perez that, because the administrator retained the authority to determine whether the submitted proof was "satisfactory," the plan granted discretion to the plan administrator. Id. at 557. Thus, the arbitrary and capricious standard applied. Id.
At issue here is what standard of review applies in determining the validity of AIG's decision to deny plaintiff's claim of entitlement to accidental death benefits. Defendant contends that, because the SPD grants AIG discretion to interpret the policy and determine eligibility for benefits, the arbitrary and capricious standard applies.
Plaintiff contends that AIG is not authorized to make eligibility determinations because the plan does not designate AIG as the plan administrator. Formal designation is however not essential. "The definition of a fiduciary under ERISA is a functional one, is intended to be broader than the common law definition, and does not turn on formal designations." Smith v. Provident Bank, 170 F.3d 609, 613 (6th Cir. 1999). AIG had the authority to exercise control over the management of the plan; accordingly, AIG is the plan administrator under ERISA. See id.
In Hoover v. Provident Life and Accident Ins. Co., 290 F.3d 801, 808 (6th Cir. 2002), the Sixth Circuit held that language in an SPD similar to that in the present case did not grant authority to the plan administrator to interpret the plan. The language in that case was:
PROOF OF LOSS
RESIDUAL DISABILITY/RECOVERY BENEFITS
If the policy provides for periodic payment for a continuing loss, you must give us written proof of loss. . . .
TIME OF PAYMENT OF CLAIMS
After we receive written proof of loss, we will pay monthly all benefits then due you for disability. Benefits for any loss covered by this policy will be paid as soon as we receive proper written proof.
We can require any proof which we consider necessary to determine your Current Monthly Income and Prior Monthly Income.Id.
In Hoover, the court held that "the requirement that the insured submit written proof of loss, without more, does not contain `a clear grant of discretion . . . to determine benefits or interpret the plan.'" Id. (quoting Perez, 150 F.3d at 557). Additionally, the language neither expressly stated that the administrator had discretion to interpret the plan nor did it require satisfactory proof. Id.
An administrator's right to require a physical examination, as required in the AIG plan, is also insufficient to constitute a grant of discretion. Id. Such requirement does not give the administrator authority to review such an examination or require that the examination provide satisfactory evidence. Id.
The court in Smith v. Aetna U.S. Healthcare, 312 F. Supp.2d 942, 951 (S.D. Ohio 2004), followed the reasoning in Hoover. The pertinent language in Smith was:
A claim must be submitted to Aetna in writing. It must give proof of the nature, occurrence and character and extent of the loss . . . the deadline for filing a claim is 90 days after the end of the waiting period. Further, written proof must be given to Aetna at such times as it reasonably requests.Id. at 950.
The court concluded this language was indistinguishable from that in the plan in Hoover. Id. at 951. Neither plan expressly conferred discretion on the administrator and neither plan required satisfactory proof. Id. In Hoover and Smith, the courts held that, because the language was insufficient to place discretion in the plan administrators, a de novo review was applicable. Hoover, 290 F.3d at 808; Smith, 312 F. Supp. 2d at 951.
Defendant asserts that the language in the plan at issue is analogous to the plan in Perez. The two plans, however, are distinguishable. As with the plans in Hoover and Smith, there is nothing in the plan in this case that requires the evidence to be satisfactory. Moreover, nothing in the language of the plan suggests that the plan grants discretionary authority to AIG to construe the terms or conditions of the plan. The plan simply provides that AIG shall decide whether to accept a claim and grant benefits.
AIG's discretion to require a medical examination is essentially the same as the similar requirement in Hoover and Smith. This provision only speaks to the plan administrator's right to collect additional information before making a benefit determination. The ability of AIG to request a medical examination or extend the review period does not give AIG discretion to interpret the terms of the plan. The appropriate standard of review in this case is de novo.
The defendant cites several cases it believes supports its contention that an arbitrary and capricious standard should apply. See Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376 (6th Cir. 1996); Adams v. Prudential Ins. Co., 280 F. Supp. 2d 731 (N.D. Ohio 2003); Weirauch v. Sprint Ret. Pension Plan, 182 F. Supp. 2d 638 (N.D. Ohio 2002); McDonald v. Western-Southern Life Ins. Co., No. C2-98-414, 2001 WL 1678793, at *1 (S.D. Ohio Dec. 14, 2001). Each of these cases, however, can be distinguished from the present case.
In McDonald, the plan specifically granted the plan administrator authority "to interpret and construe the Plan, including but not limited to the power to determine all questions with regard to . . . eligibility, coverage, [and] benefits. . . ." McDonald, 2001 WL 1678793 at *5. Similarly, the plan in Weirauch gave the administrator "the sole discretion to make decisions and take any action with respect to questions arising in connection with the Plan, including but not limited to the construction and interpretation. . . ." Weirauch, 182 F. Supp. 2d at 641.
The plan in Yeager is analogous to the case in Perez because it requires the submission of "satisfactory proof." See Yeager, 88 F.3d at 377. These cases do not support defendant's claim that an arbitrary and capricious standard should apply.
Lastly, in Firestone the Supreme Court was concerned with "discretion or final authority to construe uncertain terms." See Firestone, 489 U.S. at 112. In this case, no such discretion was needed. The plan administrator only had to make a factual determination as to whether Mr. Andrus's death was an accident or a suicide. This factual determination did not require the administrator to construe any terms of the plan.
Because the Plan did not grant authority to AIG to interpret or construe the terms of the Plan, Defendant's motion for partial summary judgment must be denied.
Conclusion
In light of the foregoing, it is
ORDERED THAT:
1) Defendant AIG Life Insurance Company's motion for partial summary judgment be, and hereby is, denied.
2) Scheduling conference be held on December 13, 2004, at 10:30 a.m.
So ordered.