Baird v. Unum Grp.
| Decision Date | 15 October 2012 |
| Docket Number | Case No. 2:11-cv-634 |
| Parties | Joy L. Baird, et al., Plaintiffs, v. Unum Group, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION AND ORDER
Plaintiffs Joy and Jack Baird filed this ERISA-based action after Joy's workplace insurer, Unum, terminated long-term disability benefits which had been awarded to her in 1994. Unum also told Joy that she should only have received benefits for two years and that it had overpaid her to the tune of some $180,000.00. She has exhausted her administrative remedies. In this case, she seeks reinstatement of her benefits, an award of past due benefit payments, and a finding that she is eligible to keep getting benefits until she turns 65, which will happen in 2015.
Unum filed the administrative record under seal on October 11, 2011. After efforts at mediation failed to resolve the case, Joy filed a motion for judgment on the administrative record on May 15, 2012. Unum responded on June 15, 2012. Joy did not file a reply brief. The case is now ready to decide, and will be decided by the Magistrate Judge pursuant to the parties' consent and the Court's order of reference entered pursuant to 28 U.S.C. §636(c). For the reasons which follow, the Court decides this case in favor of the defendants and directs the Clerk to enter judgment in their favor.
The parties have stated the facts accurately in their memoranda, and few of them are disputed. It is helpful to note at the outset that this is not a case about whether Joy is disabled. The reason her benefits were terminated has nothing to do with her medical condition. Rather, Unum based its decision on a limitation in the policy that, in its view, capped Joy's benefit period at 24 months. Were that the case, Unum should have stopped paying her benefits in 1996. Unum claims that the error which caused it to keep paying her after that date was not discovered until 2010. When it came to light, Unum stopped her payments. Joy argues that the record does not support that decision.
There are not many documents in the record that bear on this issue. One, of course, is the policy issued to Joy's employer, a company now known as GATX Logistics. In Section I, entitled "Policy Specifications," eligible employees are divided into two classes: "[e]xempt employees with a salary grade of 25 and higher," and "[e]xempt employees with salary grades of 20 through 24." (Doc. 19, PAGEID #121)("PAGEID" numbers are generated by the Court's electronic filing system, and the Court will use those numbers when it refers to the administrative record). Section I(3) of the policy specifies the "Maximum Benefit Period." For Class 1 employees who become disabled at less than 60 years of age, the maximum benefit period is "[t]o age 65 but not less than 60 months." Id. For Class 2 employees who become disabled at less than 68 years of age, the maximum benefit period is "2 years." Id. at #122. The policy makes it clear that "[d]isability benefits will cease on the earliest of," among other dates, "the end of the maximum benefit period." PAGEID #130. Somewhat oddly, however, the policy also defines disability for a Class 2 employee as meaning, first, that theemployee (or insured) "cannot perform each of the material duties of his regular occupation," and then, "after benefits have been paid for 24 months, the insured cannot perform each of the material duties of any gainful occupation for which he is reasonably fitted by training, education or experience." PAGEID #126. It is curious that if a Class 2 employee cannot recover more than 24 months of benefits under any circumstances, the drafters of the policy found it necessary to define under what circumstances such an employee would be considered disabled after that time. More on that later.
Notwithstanding this apparent inconsistency, it seems plain that the policy intended to tie payment of benefits to employees who meet the definition of disability to two factors: age and salary grade, which is translated into "class." Everyone agrees that Joy was less than 60 years of age when she became disabled. The crucial question is whether she was a Class 1 or a Class 2 employee. The policy does not define or explain the differences in these two types of employees beyond the salary grades recited above; presumably, the employer was the one who set the salary grades of its employees, and the policy meant to refer to those grades.
As noted, only a handful of documents speak either directly or tangentially to this issue. It is true that, in connection with some offers made by Unum to pay Joy a lump sum rather than continued monthly payments, Unum represented that "Ms. Baird's group disability policy provides a monthly benefit that will continue for the duration of her lifetime, or age 65, whichever is less, as long as she continues to meet the policy definition of disability." (Doc. 19, PAGEID #183). And it is apparent that Unum believed this statement, made in 2004, to be correct, or it would not have been offering her a buyout based on an actuarial calculation of the value of her continuing stream of payments.In fact, it concedes as much, stating that it was mistaken about her maximum benefit period all the way up to 2010. Its calculation forms also show that her benefits continued to age 65. See, e.g., Doc. 19, PAGEID# 187. On the other hand, a document entitled "New Claim Checklist" which begins at PAGEID #266 contains a handwritten note on the second page which says "Salaried Class 2." Someone also checked off boxes which show Joy to have been a member of "Eligible Class" and that the "Class #" was "2." PAGEID # 267. Those documents appear to have been completed by Unum in 1994 when Joy submitted her claim. Another Unum-generated document, entitled "Management File Review," PAGEID #425, which appears to be dated December 23, 1994, has the number "24" in a box titled "Claim Duration," which could also have been a reference to the 24-month maximum benefit period.
There is other evidence from which it can be inferred that Unum should have appreciated, from the beginning of the claim, the fact that Joy was a Class 2 employee. Its initial letter awarding her benefits, dated July 26, 1994, told her that benefits were "payable as long as you continue to remain disabled as defined and meet all other provisions as outlined in the contract," and it quoted the definition of disability that applied only to Class 2 employees. PAGEID #435-36. In 1995 and 1996, a Unum Disability Benefit Specialist, Beverly Valdez, wrote Joy two letters dealing specifically with the question of determining her continuing eligibility for benefits. Given the maximum benefit period stated in the policy, one would have thought that these letters would simply have told Joy she would not get any payments after 24 months had elapsed. Instead, each letter, like the initial letter, cited to the policy provisions defining "disability" and "disabled" for Class 2 employees. PAGEID #359, #408. The first letter, sent in June, 1995, advised Joy that Unum was "beginning to review your eligibility forbenefits beyond the 24th month." The second, written on January 26, 1996, addressed the specific issue of "benefit eligibility beyond 02/10/96," (which happens to be the two-year or 24-month anniversary of her first benefit payment) and told Joy that she remained "eligible for benefits at this time." Again, in somewhat contradictory fashion, the letter also said that "[b]enefits will continue to 02/10/96 ... provided you remain disabled according to the terms of the policy." PAGEID #359. Unum continued to pay benefits after February 10, 1996, however, and periodically asked Joy to update her medical records so that it could continue to judge her eligibility for benefits. See, e.g., PAGEID #353 (1996 letter from Brendan O'Donnell, Disability Benefit Specialist, to Joy Baird); PAGEID #528 (2007 letter from Judith Boucher, Benefits Center Representative, to Joy Baird). It also seems that Unum sometimes reviewed "the policy" when, for example, determining in 2009 that it had slightly underpaid Joy over the 15-year period during which she received benefits. See PAGEID 560-61.
2010 is when things changed. A document with a "Notify Date" of February 18, 2010, states this:
PAGEID #624. Joy was advised of this problem on February 26th of that year. Her attorney, Bruce Hyslop, then asked for documentation of the fact that she was a Class 2 employee. Inresponse, Unum sent Mr. Hyslop a letter attaching a document headed "Claim File Documentation" reflecting a telephone call with Sherri Cagle sometime in June, 1994. The notes indicate that "she" (no specific name is in the notes) was at pay level 23 effective on June 3, 1991. Joy Baird's name does not appear anywhere on this document, which is PAGEID #652.
Joy's appeal of the decision to terminate her benefits was made through a letter written by Mr. Hyslop to Unum on May 14, 2010. In that letter, Joy contested the determination of her salary grade, stating that "[w]e can only assume that the proper examiners with proper information determined that Joy was a Class 1 employee." She also argued that the document Unum relied upon did not sufficiently identify her and there was no explanation of how it had been misplaced or lost for sixteen years. Finally, she noted that a large number of Unum...
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