Epolito v. Prudential Ins. Co. of Am.

• Decision Date: 02 September 2010
• Docket Number: Case No. 3:09-cv-334-J-34MCR
• Citation: 737 F.Supp.2d 1364
• Parties: Patricia EPOLITO, Plaintiff, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant.
• Court: U.S. District Court — Middle District of Florida

737 F.Supp.2d 1364

Patricia EPOLITO, Plaintiff,

v.The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant.

Case No. 3:09-cv-334-J-34MCR.

United States District Court,

M.D. Florida,

Jacksonville Division.

Sept. 2, 2010.

John V. Tucker, Tucker & Ludin, PA, Clearwater, FL, for Plaintiff.

John W. Bolanovich, Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, Orlando, FL, Edna S. Bailey, Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, Chicago, IL, for Defendant.

ORDER

MARCIA MORALES HOWARD, District Judge.

THIS CAUSE is before the Court on Plaintiff's Dispositive Motion for Summary Judgment with Incorporated Statement of Undisputed Facts and Memorandum of Law in Support (Doc. No. 25; Epolito's Motion) filed on December 11, 2009. On February 8, 2010, Defendant The Prudential Insurance Company of America (Prudential) filed a response in opposition to Epolito's Motion. See Defendant's Response in Opposition to Plaintiff's Dispositive Motion for Summary Judgment (Doc. No. 36; Prudential's Response). In addition,Prudential filed a cross-motion for summary judgment on December 11, 2009, see Defendant/Counterclaimant's Motion for Summary Judgment and Memorandum of Law in Support (Doc. No. 26; Prudential's Motion), and Plaintiff Patricia Epolito (Epolito) filed her response in opposition to Prudential's Motion on February 8, 2010, see Plaintiff's Memorandum of Law in Opposition to Defendant's Motion for Summary Judgment (Doc. No. 37; Epolito's Response). With Court permission, Prudential filed a reply to Epolito's Response on March 8, 2010. See Defendant's Reply Brief in Further Support of Its Motion for Summary Judgment (Doc. No. 40; Prudential's Reply). Accordingly, the Motions before the Court are ripe for review.

I. Background Facts

Kemper Auto & Home, the personal lines property and casualty insurance business of the Kemper Insurance Companies, an affiliate of Lumbermens Mutual Casualty Company (Lumbermens), hired Patricia Epolito on February 7, 1977. See Prudential's Motion, Ex 1: Administrative Record (A.R.) at 179-81; 347, 492, 574. As an employee, Epolito was eligible for and enrolled in a pension plan named the Kemper Retirement Plan. See Affidavit of Patricia Epolito ¹ (Doc. No. 24; Epolito Affidavit) ¶ 3. On June 28, 2002, Unitrin, Inc. (Unitrin) acquired Kemper Auto & Home through an asset purchase agreement. A.R. at 492, 574. As a result, Epolito received a copy of Unitrin's new employee manual on December 13, 2002, which included a letter stating: "[w]elcome to Unitrin's Kemper Auto and Home Group. Employees of Unitrin's Kemper Auto and Home Group are employed by Kemper Independence Insurance Company, which is a wholly owned subsidiary of Unitrin, Inc." Epolito Affidavit ¶ 10; Id., Ex. C. Epolito also received a letter from Unitrin, dated December 18, 2002, offering her a position with Kemper Independence Insurance Company, a Unitrin Company (Kemper Independence/Unitrin). Id. ¶ 19; Id., Ex. D. In addition, the letter requested that Epolito sign an Agreement and Release form consenting to the transfer of her employment record to her "new employer." Id., Ex. D. Upon acceptance of this offer, the letter informed Epolito that her effective date of employment would be January 1, 2003. Id.

Thereafter, Epolito enrolled in an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1381, and funded through an insurance policy issued by Prudential. Unitrin, Inc. is the Plan's Contract Holder and "all full-time non-commissioned employees of Kemper Auto and Home Insurance Company" constitute the Covered Class. A.R. at 4. On February 3, 2003, Epolito stopped working due to health complications caused by Graves' Disease. Id. at 76, 347. She filed a claim for long term disability (LTD) benefits under the Plan and was initially approved to receive benefits in the amount of $3,891.87 per month, effective August 2, 2003. Id. at 62. Near the end of December 2003, Epolito decided to begin withdrawing her pension benefits from the Kemper Retirement Plan as well. See Epolito Affidavit ¶ 22.² Thus, on February1, 2004, Epolito started receiving pension benefits in the amount of $1,864.42 per month. Id., Ex. F. In addition, on December 11, 2003, Epolito filed an application with the Social Security Administration (SSA) for social security disability (SSD) benefits in connection with the disabling effects of her Graves' Disease and depression. A.R. at 513. Pursuant to Prudential's request, Epolito signed a Reimbursement Agreement in which she acknowledged that Prudential was entitled to reduce her LTD benefits by the amount she received for her disability under the Social Security Act. See id. at 65, 227. As part of that Agreement, Prudential agreed to "postpone making the reduction of benefits" described above, in return for Epolito's promise to reimburse Prudential for the payments made to her in excess of the amount to which she would have been entitled under the terms of the Plan, "if any benefits under the Social Security Act are awarded retroactively." Id. at 227. Although her SSD benefits claim was denied initially and upon reconsideration, ultimately, an Administrative Law Judge approved her claim on November 7, 2006. Id. at 510-19. As a result, Epolito began receiving SSD benefits, including a retroactive award of benefits dating back to July 2003. Id. at 562; 565. The initial amount of her monthly benefit payment was $1,687.20. Id.

On July 26, 2005, Prudential advised Epolito that her LTD benefits would be terminated as of August 1, 2005, because she no longer met the definition of "Total Disability" under the Plan.³ Id. at 66. After unsuccessfully administratively appealing this determination, Epolito brought a lawsuit challenging Prudential's decision on July 10, 2006. See generally Epolito v. Prudential Ins. Co. of Am. (Epolito I), 523 F.Supp.2d 1329 (M.D.Fla.2007). In Epolito I, the Court determined that Prudential's "decision to deny [Epolito] LTD benefits was both wrong and unreasonable," and directed that Epolito be awarded past due benefits from the benefit termination date. Id. at 1344. The case was then remanded to Prudential for a calculation of Epolito's LTD benefits. Id.

On remand, Prudential determined that under the terms of the Plan it was entitled to offset the amount of Epolito's LTD benefits by the amount she was receiving in pension and SSD benefits.⁴ A.R. at 467-68. In reaching this conclusion, Prudential relied on a provision in the Plan which provides: "Prudential will deduct from your gross disability payment the following deductible sources of income: ... The amount that you: ... (b) voluntarily elect to receive as retirement or early retirement payments under your Employer's retirement plan." Id. at 17-18. The Plan defines the term "Employer" to mean "the Contract Holder, and includes any division, subsidiary or affiliate who is reported to Prudential in writing for inclusion under the Group Contract, provided that Prudential has approved such a request." Id. at 34. Additionally, "Contract holder" is defined as "the Employer to whom the Group Contract is issued," id. at 33, and Unitrin, Inc. is specified as the Contract Holder, id. at 4. Because it had not previously offset Epolito'sLTD benefits by the amount she was receiving in pension benefits, Prudential concluded that it had overpaid Epolito's LTD benefits for the period spanning from August 2, 2003 to August 31, 2005. Id. at 487. In addition, because Epolito received a retroactive award of SSD benefits, Prudential found that it had overpaid Epolito's LTD benefits on that basis as well. Id. According to the Plan,

Prudential has the right to recover any overpayments due to: fraud; any error Prudential makes in processing a claim; and your receipt of deductible sources of income. You must reimburse us in full. We will determine the method by which the repayment is to be made. Prudential will not recover more money than the amount we paid you.

Id. at 28. As such, Prudential instructed Epolito to fully reimburse Prudential in the amount of $87,849.79 to account for the pension and SSD benefits that Prudential had not previously offset. See id. at 471. Due to this "gross overpayment," Prudential applied the net retroactive LTD benefit award due Epolito, pursuant to Epolito I, to the overpayment. Id. at 487. Prudential also began applying Epolito's net monthly LTD benefit payments to the balance of the overpayment, such that Epolito's benefit statements reflected a $0 benefit. Id. at 487, 581, 582.

In response to Prudential's offset calculations, Epolito conceded that her LTD benefits must be offset by her SSD benefits, but argued that applying an offset due to her pension benefits was improper because her pension benefits were from a former employer. Id. at 573. The Plan states that "Prudential will not deduct from your gross disability payment income you receive from ... a retirement plan from another Employer." Id. at 19. Thus, based on this provision, Epolito contended that her pension benefits were not deductible. Id. at 573. Although Epolito pursued an administrative appeal on that basis, see id. at 568-76, 580, Prudential upheld its determination that her pension was being paid by her "Employer," not another Employer, and thus, an offset for the pension benefits was appropriate under the Plan. See id. at 496-501. In its administrative appeal decision, Prudential explained:

[a]s Ms. Epolito accrued her pension benefits while working for Kemper Auto and Home Group, draws her pension benefits under Kemper Auto and Home Group's pension plan, and receives long term disability benefits under the booklet certificate covering only employees of the Unitrin subsidiary Kemper Auto and Home Insurance Company, we uphold our decision to deduct Ms. Epolito's monthly pension retirement benefit from her monthly LTD benefit.

See A.R. at 500-01. To challenge this determination, Epolito filed the instant...