56 F.3d 807 (7th Cir. 1995), 94-2387, Filipowicz v. American Stores Ben. Plans Committee

Docket Nº:94-2387, 94-2692 and 94-3339.
Citation:56 F.3d 807
Party Name:Chester J. FILIPOWICZ, Plaintiff-Appellee, v. AMERICAN STORES BENEFIT PLANS COMMITTEE, a corporation, Prudential Insurance Company of America, a corporation, Defendants-Appellants.
Case Date:June 06, 1995
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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56 F.3d 807 (7th Cir. 1995)

Chester J. FILIPOWICZ, Plaintiff-Appellee,

v.

AMERICAN STORES BENEFIT PLANS COMMITTEE, a corporation,

Prudential Insurance Company of America, a

corporation, Defendants-Appellants.

Nos. 94-2387, 94-2692 and 94-3339.

United States Court of Appeals, Seventh Circuit

June 6, 1995

Argued Jan. 4, 1995.

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[Copyrighted Material Omitted]

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Gary S. Mueller (argued), Kenneth A. Grey, McKeown, Fitzgerald, Zollner, Buck, Hutchison & Ruttle, Joliet, IL, for plaintiff-appellee Chester J. Filipowicz in No. 94-2387.

Francis D. Morrissey, Michael A. Pollard, Lisa S. Brogan (argued), Baker & McKenzie, Chicago, IL, for defendant-appellant American Stores Benefit Plans Committee, a corp.

Timothy J. Rathbun, Gary S. Mueller (argued), Kenneth A. Grey, McKeown, Fitzgerald, Zollner, Buck, Hutchison & Ruttle, Joliet, IL, for plaintiff-appellee Chester J. Filipowicz, individually in No. 94-2692.

Timothy J. Rathbun, Gary S. Mueller (argued), Kenneth A. Grey, McKeown, Fitzgerald, Zollner, Buck, Hutchison & Ruttle, Joliet, IL, for plaintiff-appellee Chester J. Filipowicz in No. 94-3339.

Alan W. Brothers, Ellen E. Douglass, Lisa S. Brogan (argued), Carney & Brothers, Chicago, IL, for defendant-appellant Prudential Ins. Co. of America, a corp.

Before BAUER and MANION, Circuit Judges, and MILLER, District Judge. [*]

MANION, Circuit Judge.

Chester J. Filipowicz brought this ERISA suit against American Stores Benefit Plans Committee and Prudential Insurance Company of America to recover $22,000 of benefits

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under a supplemental life insurance policy issued to his late wife Ruth Filipowicz. Following a bench trial, the district court found in favor of Chester and awarded him $22,000, plus interest, costs and attorney's fees. American Stores and Prudential appeal from the district court's judgment in the underlying ERISA suit and its award of attorney's fees and costs. We affirm in both respects.

I. Factual Background

On September 29, 1981, Ruth Filipowicz was hired by Jewel Food Stores, a subsidiary of American Stores, as a deli clerk. American Stores offers its employees (including employees of a subsidiary) the opportunity to purchase both basic and supplemental life insurance. Ruth enrolled for $11,000 of basic life insurance and $22,000 of supplemental life insurance. She designated her husband, Chester, as beneficiary.

To explain the terms of the life insurance plans, American Stores provided Ruth a copy of the American Stores Life Insurance Plan for Non-Exempt Employees ("Plan Summary"). Of relevance in this case was a provision in the Plan Summary which provided that an employee may carry supplemental life insurance while on disability leave, but only for the first fifty-two weeks of disability. This is significant because in April of 1988, Ruth was diagnosed with terminal breast cancer and on April 22, 1988 she went on disability leave. During her disability leave, Ruth continued to carry supplemental life insurance. On April 21, 1989, after obtaining a medical release, Ruth returned to work. This was just prior to the expiration of the fifty-two-week period. By returning to work before fifty-two weeks elapsed, Ruth was able to continue to carry supplemental life insurance.

Ruth continued to work until January 7, 1991, when her condition worsened and she once again went on medical disability leave. As the end of the fifty-two-week period for her second disability leave approached, Ruth received another medical release and was placed on Jewel Store's work schedule for December 31, 1991. On December 30, 1991, however, Jewel's store manager told Ruth that she could not return to work until her employment status was verified. Before the store could verify her employment status, Ruth died on February 18, 1992. This was more than fifty-two weeks after Ruth went on disability leave for the second time.

Following Ruth's death, American Stores and its insurer Prudential Insurance Company of America ("Prudential"), denied Chester, Ruth's husband and the named beneficiary, benefits under the supplemental insurance policy. American Stores and Prudential claimed that at the time of her death Ruth was not entitled to carry supplemental insurance because she had been on disability leave for more than fifty-two weeks. After receiving two confirmations of the denial of the supplemental life insurance benefits, Chester filed a complaint pursuant to ERISA against American Stores Benefit Plans Committee and Prudential, seeking recovery of the supplemental life insurance benefits.

A bench trial was held. At trial, Chester argued that Ruth was not a "disabled employee" for more than fifty-two weeks because she had received a medical release allowing her to return to work within fifty-two weeks of the beginning of her disability leave. Thus, Chester asserted, the provision contained in the Plan Summary which limited supplemental insurance coverage to the first fifty-two weeks of disability leave was inapplicable. In support of his argument, Chester presented testimony from Ruth's doctor and co-workers indicating that Ruth had received a medical release and was ready, willing, and able to return to work. Prudential argued in response that since Ruth never actually performed any work for Jewel before the fifty-two-week period expired she was still on disability leave at the time of her death.

Up to this point, the trial focused entirely on whether Ruth was still on "disability leave." Then Rene Peralta, Prudential's claim adviser, testified that she had never seen the Plan Summary and did not rely on it to deny Chester benefits. Rather, Peralta testified, she relied on the terms of Prudential's insurance policy to deny Chester benefits. This admission sent the parties and the judge into a tailspin because everyone up to this point had proceeded on the assumption

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that Chester had been denied benefits based on the Plan Summary's provision limiting supplemental life insurance to the first fifty-two weeks of disability. In response, the district court extensively questioned the parties and their attorneys concerning the terms and differences, if any, between the Plan Summary and Prudential's insurance policy.

When the dust settled, the district court was able to elucidate the following facts. American Stores provided its employees with the opportunity to carry life insurance, including supplemental life insurance. To assist its employees in understanding the terms of the life insurance policies, American Stores provided its employees with a copy of the Plan Summary. The Plan Summary, however, was not the actual life insurance policy. Rather, from time to time American Stores entered into contracts with different insurance carriers to underwrite the insurance coverage American Stores offered to its employees. The employees, however, were not provided with copies of the insurance policies, only with the Plan Summary.

Prior to January 1, 1992, American Stores contracted with Equitable Life Assurance Society to provide its employees with supplemental life insurance. Beginning January 1, 1992, Prudential underwrote the supplemental life insurance American Stores offered its employees. American Stores, however, did not redraft the Plan Summary when it changed insurance carriers. The Plan Summary, therefore, continued to refer to Equitable Life Assurance as the provider of the supplemental life insurance, even though after January 1, 1992 Prudential provided that coverage.

When Prudential took over for Equitable in providing supplemental insurance coverage, it issued a Group Insurance Contract which was supposed to track the coverage previously provided by...

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