Band v. Paul Revere Life Insurance, 99-404.
| Decision Date | 27 April 2000 |
| Docket Number | No. 99-404.,99-404. |
| Citation | 114 F.Supp.2d 378 |
| Parties | Bernard A. BAND, M.D., Plaintiff, v. PAUL REVERE LIFE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Maryland |
Bryan D. Bolton, James Taylor, Funk & Bolton, Baltimore, MD, for Defendant.
The parties before the Court are Bernard A. Band. M.D. (hereinafter "Plaintiff") and Paul Revere Life Insurance Company (hereinafter "Defendant"). Plaintiff moves for summary judgment on its breach of contract claim alleging that Defendant failed to pay him 48 months of disability benefits as specified under an insurance policy. Defendant filed a cross-motion for summary judgment contending Plaintiff is ineligible for 48 months of disability benefits because Plaintiff misstated his age on his initial application, thereby making him eligible for only 42 months of disability payments. Plaintiff's request for a hearing will be denied as it is not deemed necessary. See Local Rule 105.6 (D.Md.). For the reasons discussed below, the Court will grant Plaintiff's motion for summary judgment and deny Defendant's cross-motion for summary judgment.
This action concerns a disability insurance policy (hereinafter "Policy") issued by Defendant to Plaintiff in February 1990. Defendant issued the Policy after receiving a handwritten application memorializing Plaintiff's oral statements. Defendant's agent, Mr. Kevin Tumey, recorded the necessary information for the policy application during an interview with Plaintiff. Thereafter, Tumey typed the application and submitted it to Defendant. Tumey incorrectly recorded the Plaintiff's birth date as August 24, 1933 when in fact the Plaintiff's birth date is August 24, 1932. While Defendant ultimately decided whether to issue the Policy based on Plaintiff's application, it also relied on the underwriter's evaluation results which included Plaintiff's correct birth date: August 24, 1932. The insurance policy at issue incorporates the "application" in its entirety without particular reference to the handwritten or typed applications.
Policy benefits are determined by the birth date of the insured. The Policy provides that if the insured becomes disabled before his 62nd birthday but after his 61st birthday, he is entitled to 48 months of disability insurance benefits. See Policy, Plaintiff's Exhibit 1. However, if the insured becomes disabled after his 62nd birthday but before his 63rd birthday, he is entitled to only 42 months of benefits. Plaintiff became disabled on December 21, 1994, at the age of 62. Under the Policy and the incorporated application, he was entitled to 48 months of benefits. According to Plaintiff's correct birth date, however, he was entitled to only 42 months of benefits. Sometime in June 1997, Dr. Band sought confirmation as to when his benefit period would expire by calling Defendant and informing an agent that the birth date on the policy was incorrect and asking whether his benefits would be adjusted. Defendant informed Plaintiff that he would be sent a letter with the correct information regarding his benefits entitlement under the Policy. In a letter dated June 12, 19971, Defendant stated that Plaintiff was entitled to benefits until March 21, 1999, or 48 months of disability benefits, meaning Plaintiff would receive benefits as if he was born August 1933, his incorrectly recorded birthday. See Plaintiff's Exhibit 7. As a result, Plaintiff took additional time off from work as prescribed by his physician, believing he would continue to receive disability payments until March 1999 as stated in the letter.
Defendant sent another letter dated March 2, 1998 to Plaintiff, acknowledging that the letter dated June 12, 1997 contained mistakes. In the March 1998 letter2 , Defendant acknowledged its mistake and attempted to correct the situation by stating:
In order to be of service to you for any inconvenience caused by your belief that your benefits would be paid to March 21, 1999, please find a check in the amount of $30,047.27 which represents $26,827.92 in Base Benefits plus Cost of Living.
See Plaintiff's Exhibit 9. This amount submitted to Plaintiff allowed him the maximum monthly amount under the Policy for the duration of the coverage period, but did not extend the coverage to 48 months. The letter concludes by informing Plaintiff that his disability payments would end by September 1998, allowing him 42 months of disability insurance, the amount he would receive considering his correct age.3 On April 29, 1998, Plaintiff's attorney, H. Kenneth Armstrong, sent a letter to Defendant stating Plaintiff was entitled to 48 months of benefits he was promised in the June 1997 letter, whereby Plaintiff's benefits would cease on March 21, 1999. See Plaintiff's Exhibit 10. In the April 1998 letter, Plaintiff relies on the "Incontestable Clause" of the policy which provides:
a. After your Policy has been in force for 2 years, excluding any time You are Disabled, We cannot contest the statements in the application.
Policy, at Section 10.2. Although the Policy includes a definition section, it does not state whether age is considered a statement in the policy that is covered by the Incontestable Clause. Plaintiff argues that this provision of the policy is in conflict with the "Misstatement of Age" provision of the Policy which reads:
If your age has been misstated, the benefits under the Policy will be those that the premium You paid would have purchased at Your correct age.
Policy, at Section 9.9. In a letter dated May 11, 1998, Defendant explained that the Misstatement of Age provision overrides the Incontestable Clause, and that Defendant would only pay Plaintiff 42 months of benefits. The last paragraph, however, of this May 1998 letter, which is at the center of this dispute, provides:
In addition, the contract also contains a Misstatement of Age Provision Section 9.9 which states, if your age has been misstated, the benefits under the policy would be those that the premium you paid would have purchased at your correct age. Please understand that we waive this provision in the insured's favor and we will not pursue this issue.
Plaintiff's Exhibit 11 (emphasis added). The Defendant provides no explanation for this statement in the record.
On January, 13, 1999, Plaintiff filed a complaint in the Circuit Court for Montgomery County, Maryland for breach of contract. Defendant removed the case to this Court pursuant to 28 U.S.C. § 1441 as the policy at issue is governed by the Employee Retirement Income Security Act ("ERISA"), as amended, 29 U.S.C. §§ 1132(a)(1)(B), which authorizes a beneficiary of an employee welfare benefit plan to recover benefits due to him and other appropriate equitable relief. At all times material to this action, Plaintiff was covered under a disability insurance policy issued by Defendant and established and maintained by Drs. Band, Badway & Goodridge, P.A. (employer) for the purpose of providing employees with Policy benefits in the event of a disability. The Policy is an employee welfare benefit plan within the meaning of ERISA. See 29 U.S.C. §§ 1002(1). Defendant filed a counterclaim and an amended counter-claim for reimbursement of funds it allegedly overpaid Plaintiff. Both parties now move for summary judgment on their respective claims.
Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment will be granted when no genuine dispute of material facts exists and the moving party is entitled to judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). While the evidence of a nonmoving party is to be believed and all justifiable inferences drawn in his or her favor, a party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences. See Deans v. CSX Transportation, Inc., 152 F.3d 326, 330-31 (4th Cir. 1998); Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.1985). To defeat such a motion, the party opposing summary judgment must present evidence of specific facts from which the finder of fact could reasonably find for him or her. Anderson, 477 U.S. at 252, 106 S.Ct. 2505; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy, and inexpensive determination of every action." Celotex, 477 U.S. at 327, 106 S.Ct. 2548 (citations omitted). In determining whether genuine and material factual disputes exist, the Court has reviewed the parties' respective memoranda and the many exhibits attached thereto, construing all facts, and all reasonable inferences drawn therefrom, in the light most favorable to the non-movant. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
The Court reviews this benefits claim decision de novo. Under the Supreme Court's decision in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), this Court is to review Defendant's decision on Plaintiff's claim for benefits under a de novo standard, "unless the benefit plan gives the administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Id. at 115, 109 S.Ct. 948. The Policy at issue does not contain any language that confers discretion on Defendant to determine eligibility for benefits or to construe the terms of the Policy. Thus, the standard of review is de novo. Under de novo review, the Court interprets an ERISA insurance policy using the "ordinary principles of contract...
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