Baxter v. Briar Cliff College Group Ins. Plan
| Decision Date | 18 January 2006 |
| Docket Number | No. C 05-4016-MWB.,C 05-4016-MWB. |
| Citation | 409 F.Supp.2d 1108 |
| Parties | Maureen T. BAXTER, Plaintiff, v. BRIAR CLIFF COLLEGE GROUP INSURANCE PLAN; Briar Cliff College n/k/a Briar Cliff University; Continental Casualty Company (CNA); and The Hartford, Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
William K. Stoos, William Kevin Stoos, PC, Sioux City, IA, for Plaintiff.
Timothy A. Clausen, Klass Stoik Mugan Villone Phillips Orzechowski Clausen, et al., Sioux City, IA, Debra Lynne Hulett, Michael W. Thrall, Nyemaster Goode Voigts West Hansell & O'Brien, PC, Des Moines, IA, for Defendants.
TABLE OF CONTENTS
I. INTRODUCTION ........................................................1113
A. Factual Background ..............................................1113
B. Procedural Background ...........................................1116
II. LEGAL ANALYSIS ......................................................1117
A. The Motion To Strike ............................................1117
1. Arguments of the parties ......................................1117
2. Analysis ......................................................1118
B. The Cross-motions For Summary Judgment ..........................1119
1. Standards for summary judgment ................................1119
2. Arguments of the parties ......................................1120
3. Analysis ......................................................1123
a. Reduction of benefits .....................................1123
i. Standard of review ....................................1123
ii. Did the Insurer abuse its discretion? .................1125
b. Failure to provide plan documents .........................1129
III. CONCLUSION ...........................................................1131
This litigation pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., arises from a reduction in the plaintiff's benefits under a long-term disability benefits plan. On the parties' cross-motions for summary judgment, the key issue is whether the insurer of the ERISA plan properly reduced the plaintiff's benefits under the plan by the amount of estimated Social Security disability benefits to which the insurer contends that the plaintiff has a "right," even though the plaintiff has not been awarded, or even applied for, such Social Security disability benefits. The plan, the plan administrator, and the insurer all assert that, as a matter of law, the insurer reasonably interpreted the plan to authorize, indeed to require, the insurer to make the challenged reduction in the plaintiff's benefits. The plaintiff, on the other hand, asserts that, as a matter of law, the defendants' reduction of her benefits is a breach of the plan provisions and/or is based on an arbitrary and unreasonable interpretation of the plan. A second issue on cross-motions for summary judgment is whether or not the plaintiff was timely provided with copies of all plan documents upon her request as required by ERISA and pertinent regulations. The court must decide whether the issues presented are appropriate for summary disposition.
The court will not attempt here a detailed dissertation of the undisputed and disputed facts in this case. Rather, the court will present sufficient of the facts, undisputed and disputed, to put in context the parties' arguments in support of their cross-motions for summary judgment.
The parties agree that, for approximately thirteen years, plaintiff Maureen Baxter was the vice president of finance for defendant Briar Cliff College, now known as Briar Cliff University (Briar Cliff). Baxter was a participant in the Briar Cliff College Group Insurance Plan (the Plan). The Plan is funded by an insurance policy from defendant Continental Casualty Insurance Company (CNA) and CNA's successor, defendant The Hartford. Complaint, Exhibit 1; Insurer's Appendix, 1-16. CNA and The Hartford will be referred to individually and collectively herein as "the Insurer." The Summary Plan Description, captioned as such in a document entitled "Your Rights Under ERISA," states that Briar Cliff is the Administrator of the Plan and that "[t]he Plan is administered by the Plan Administrator through an insurance contract purchased from [the Insurer]." Baxter's Appendix, Exhibit 2. The Summary Plan Description also states, "The Administrator and other Plan fiduciaries have discretionary authority to interpret the terms of the Plan and to determine eligibility for and entitlement to benefits in accordance with the Plan." Id. Baxter points out that the Summary Plan Description also states that it "does not constitute part of the Plan or of any insurance policy issued in connection with the Plan." Id.
Baxter required a pancreas transplant in February 1999. She initially received disability benefits under the Plan for a post-surgery recovery period. Although Baxter attempted to return to work full-time in June 1999, she was unable to do so successfully, owing to complications from the pancreas transplant and the effects of the drug regime she was under as a result of the transplant. Baxter ultimately resigned her position with Briar Cliff in November 1999. At that time, she began receiving long-term disability benefits under the Plan on the basis that she was "totally disabled" within the terms of the Plan.
Although the parties do not now dispute that Baxter has remained "totally disabled" within the terms of the Plan, the Insurer terminated her benefits for a few months in 2000 on the ground that the Insurer's review of medical records showed that Baxter could perform "sedentary" work. After Baxter pursued an administrative appeal, the Insurer reversed its denial of benefits, reinstated Baxter to full benefits, and paid back benefits.
Subsequently, however, the Insurers sought to reduce Baxter's disability benefits pursuant to a term of the Plan, found in Addendum 2, which states the following:
(2) The Monthly Benefit under this policy shall be reduced by:
1. Disability benefits paid, payable, or for which there is a right under:
a. The Social Security Act, excluding any amounts for which the Insured Employee's dependents may qualify because of the Insured Employee's Disability[.]
Insurer's Appendix (Administrative Record) (filed under seal) at 15. The Plan does not define "benefits paid," "benefits ... payable," or "benefits ... for which there is a right under ... [t]he Social Security Act," and Baxter contends that these terms are ambiguous. Beginning in 2001, the Insurer began making inquiries to Baxter and her attorney as to whether or not Baxter had applied for Social Security disability benefits and offered to assist Baxter in making such an application, at no cost to Baxter, if she had not done so. Although the Insurer acknowledged that Baxter could not be compelled to apply for Social Security disability benefits, the Insurer repeatedly referred Baxter and her attorney to the provision quoted above, asserting that the provision authorized a reduction of Plan benefits for Social Security benefits paid, payable, or to which Baxter had a "right," whether or not Baxter, applied for such benefits. Baxter has consistently declined to apply for Social Security benefits.1 She has also consistently asserted that the Plan does not require her to apply for Social Security benefits or permit the Insurer to punish her if she does not apply for such benefits by reducing her benefits under the Plan.
Matters came to a head in late 2004. After confirming with the Social Security Administration that Baxter had not applied for Social Security disability benefits, the Insurer sent Baxter's attorney a letter dated November 10, 2004, requesting that Baxter provide the Insurer, within the next thirty days, with information about whether or not Baxter had applied for Social Security disability benefits, and if so, the status of her claim. Insurer's Appendix at 71. The letter concluded with the following: "Please provide a copy of the application filed for Social Security Disability benefits on behalf of Maureen Baxter by 12/10/2004 to avoid a benefit reduction for a Social Security Estimate in the amount of $1,586.00 [per month]." Id. Baxter did not provide the requested information. Therefore, the Insurer reduced Baxter's monthly benefits by the amount indicated effective December 10, 2004.
By letter from her attorney dated November 23, 2004, Baxter pursued an administrative appeal of the reduction of her benefits, before that reduction took effect. Id. at 69-70. Baxter also sent letters dated December 5 and December 7, 2004, to Briar Cliff complaining about the anticipated reduction of her benefits. See id. at 57-59, 61-62. By letter dated November 29, 2004, the Insurer's "Appeals Unit" notified Baxter's counsel of receipt of her appeal and informed Baxter as follows:
The Appeals Unit will issue a ruling within 45 days of receipt of your appeal. ERISA regulations allow the Appeals Unit an additional 45 days to reach a decision if necessary. The Appeals Unit will notify you in writing if the additional time is required.
Id. at 68. The Insurer subsequently denied Baxter's administrative appeal by letter to Baxter's counsel dated February 9, 2005. Id. at 37-38, 51-52. The letter was signed by Cheryl Sauerhoff, Appeal Team Leader, Appeals Team, for The Hartford. The body of that letter, in its entirety, stated the following:
Your disagreement of [sic] the Company's reduction of Ms. Baxter's Long Term Disability benefits has been forwarded to our department for review. As you are aware, the Company gave notice...
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