Alexander v. Provident Life and Acc. Ins. Co., 1:09-CV-27.

• Citation: 663 F.Supp.2d 627
• Decision Date: 16 October 2009
• Docket Number: No. 1:09-CV-27.,1:09-CV-27.
• Parties: Dr. William ALEXANDER, Plaintiff, v. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Tennessee

663 F.Supp.2d 627

Dr. William ALEXANDER, Plaintiff, v. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Defendant.

No. 1:09-CV-27.

United States District Court, E.D. Tennessee, at Chattanooga.

October 16, 2009.

Memorandum Denying Certification for Interlocutory Appeal November 5, 2009.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Peter H. Burke, Gregory J. McKay, Burke, Harvey & Frankowski, LLC, Birmingham, AL, for Plaintiff.

James T. Williams, IV, Stephanie R. Barnes, Miller & Martin, PLLC, Chattanooga, TN, for Defendant.

MEMORANDUM

CURTIS L. COLLIER, Chief Judge.

Before the Court are cross motions for partial summary judgment filed by Provident Life and Accident Insurance Company ("Defendant") (Court File No. 14) and Dr. William Alexander ("Plaintiff") (Court File No. 22). The Court has considered both motions for partial summary judgment as well as the responses in opposition and parties' supporting briefs and documentation (Court File Nos. 14, 15, 16, 19, 20, 21, 22, 23 and exhibits thereto). For the following reasons, the Court will GRANT Defendant's motion for partial summary judgment (Court File No. 14) and will DENY Plaintiff's motion for partial summary judgment (Court File No. 22).

I. RELEVANT FACTS

In April 1991, Plaintiff began employment with Arthur S. Keats, M.D. Associates ("Associates") and applied for a disability insurance policy from Defendant. (Court File No. 15-1 ("Mitchell Aff."), Ex. 6). Associates and Defendant had an arrangement evidenced by a "Salary Allotment Agreement" dated October 1981, whereby Defendant offered a group discount for Associates to sponsor a disability insurance plan (Mitchell Aff. ¶ 4, and Ex. 1). Pursuant to this agreement, Defendant would issue individual policies to employees whom Associates chose to include. Associates assumed responsibility for paying the premiums under a common billing invoice and in exchange, Associates received a ten percent discount (Mitchell Aff. ¶¶ 4-8, Exs. 1, 2). Defendant maintained these policies under a single risk group number related solely to that employer (Mitchell Aff. ¶¶ 6-8, Exs. 1, 2). Associates paid approximately 35% of the premiums of its employees' policies and the employee paid 65% of the cost (Court File No. 19-1, Ex. A ("Mitchell Amended Aff.") pp. 2-3, ¶¶ 6-7).

Defendant provided individually numbered policies to eligible employees of Associates and these policies were classified as an employer-sponsored group, Risk Group Number 25325 (Mitchell Aff. ¶ 7). When Plaintiff joined Associates in 1991, he was issued a disability policy through this arrangement. Plaintiff met with Michael B. Kashar ("Kashar"), an insurance agent for Defendant to discuss his disability policy and coverage needed (Court File No. 16-1, Exh. K ("Alexander Dec."), ¶¶ 3-4). When Plaintiff completed his application he indicated that his employer would pay for all disability coverage "to be carried by you with no portion of the premium to be included" in his taxable income (Mitchell Aff. Ex. 6). However, as discussed above, Plaintiff paid approximately 65% of his premiums with Associates paying the other 35% (Mitchell Amended Aff. ¶¶ 6-7, Exs. 1, 2).

During Plaintiff's employment with Associates, insurance premiums were paid pursuant to the Salary Allotment Agreement and Associates received list bills for the policies under Risk Group 25325. (Court File no. 16-1, Ex. J); (Mitchell Aff. ¶¶ 6-12, Exs. 1, 2, 4, 6, 9); (Mitchell Amend. Aff. ¶ 6-7, Ex. 1). Plaintiff does not dispute Associates contributed to his premiums, but asserts he "would reimburse Associates for the amount it forwarded to" Defendant (Alexander Dec. ¶ 6). In April 1996, Defendant sent a letter to Plaintiff informing him of a new premium owed on his policy beginning July 1, 1996, and it referred to concerns of Plaintiff that his policy "be issued on a step-rate basis with premiums low enough in the early years to enable you to obtain a realistic amount of insurance" (Mitchell Aff. Ex. 3).

Plaintiff's employment with Associates ended in July 1997 (Alexander Dec. ¶ 2). Per the terms of the original policy, the coverage was "non-cancellable and guaranteed continuable at guaranteed premiums to your 65th birthday or for five years, whichever is later" (Mitchell Aff. Ex. 3 at UNUM-ALEX-0015). This provision allowed Plaintiff to continue the policy by paying premiums on time at the same discounted rate he received through Associates (Mitchell Aff. Ex. 8). On October 17, 1997, Defendant sent Plaintiff a letter offering to continue this policy and requesting Plaintiff to remit payment before November 17, 1997 (Id.). The letter also indicated that "[i]f we do not receive [payment] by this date, your coverage will be terminated as of the above paid-to date" (Id.). The paid-to date of the letter was October 1, 1997. Plaintiff remitted a check to Defendant on November 28, 1997, along with the signed offer letter indicating "yes. I want to continue this coverage" (Mitchell Aff. Ex. 8; Court File No. 16-1, Ex. L). This payment placed Plaintiff's policy "back in force on an individual payment basis" with an effective date of October 1, 1997 (Mitchell Aff. Ex. 7). The policy number of "0007058538" referenced in the offer letter was the same number that had accompanied Plaintiff's policy during his employment with Associates (Mitchell Aff. Ex. 8).

Plaintiff submitted a claim for disability benefits to Defendant in December 2002 (Mitchell Aff. ¶ 14, Ex. 11). Defendant paid benefits to Plaintiff using an initial date of disability of August 23, 2002, and continued paying benefits until October 21, 2007 (Id.). Defendant notified Plaintiff in a letter dated October 31, 2007, Plaintiff no longer met the definition of Total Disability or Residual Disability and benefits would be discontinued (Id.). Associates's group was terminated on January 1, 2007, because Dr. Keats retired and was no longer employing any physicians (Court File No. 16-1, Exh. C ("Resp. to Plaintiff's Interrog."), No. 9).

On February 3, 2009, Plaintiff filed a three-count complaint, alleging Defendant engaged in breach of contract, breach of duty of good faith, and violation of the Tennessee Consumer Protection Act and asserting jurisdiction is proper under 28 U.S.C. § 1332 (Court File No. 1 ¶¶ 3, 46-53). Defendant answered, claiming the policy at issue is an employee benefit plan covered by the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq. ("ERISA"), thus rendering Plaintiff's action a claim for benefits under an ERISA plan and invoking federal question jurisdiction under 28 U.S.C. § 1331 (Court File No. 10). Defendant and Plaintiff have now submitted cross motions for partial summary judgment on the issue of whether or not Plaintiff's policy is covered by ERISA (Court File Nos. 14, 22).

II. STANDARD OF REVIEW

Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). First, the moving party must demonstrate no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Leary v. Daeschner, 349 F.3d 888, 897 (6th Cir.2003). The Court views the evidence, including all reasonable inferences, in the light most favorable to the non-movant. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Nat'l Satellite Sports, Inc. v. Eliadis Inc., 253 F.3d 900, 907 (6th Cir.2001). However, the non-movant is not entitled to a trial based solely on its allegations, but must submit significant probative evidence to support its claims. Celotex, 477 U.S. at 324, 106 S.Ct. 2548; McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir.2000). The moving party is entitled to summary judgment if the non-movant fails to make a sufficient showing on an essential element for which it bears the burden of proof. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. In short, if the Court concludes a fair-minded jury could not return a verdict in favor of the non-movant based on the record, the Court may enter summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir.1994).

III. DISCUSSION

Defendant alleges the policy at issue in this case is part of an employee welfare benefit plan governed by ERISA. If Defendant is correct, Plaintiff's state law claims relating to that policy are preempted and federal law applies to determine recovery. See 29 U.S.C. § 1144(a); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56-57, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987). "[T]he existence of an ERISA plan is a question of fact, to be answered in light of all the surrounding circumstances and facts from the point of view of a reasonable person." Thompson v. Am. Home Assurance Co., 95 F.3d 429 (6th Cir.1996). An "employee welfare benefit plan" is defined by ERISA as "any plan, fund, or program ... established or maintained by an employer ... for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, ... medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment ..." 29 U.S.C. § 1002(1). The United States Court of Appeals for the Sixth Circuit has developed a three-step factual analysis for determining whether a benefit plan satisfies the statutory definition set out in § 1002(1). Thompson, 95 F.3d at 434 (6th Cir.1996). See also Agrawal v. Paul Revere Life Ins. Co., 205 F.3d 297, 299-300 (6th Cir.2000). First, a court must apply the Department of Labor "safe harbor" regulations to determine whether the program is exempt from ERISA. Thompson, 95 F.3d at 434. Se...