Fine v. Sun Life Assurance Co. of Can.

• Citation: 97 F.Supp.3d 799
• Decision Date: 06 April 2015
• Docket Number: No. 1:14cv551 LMB/TCB.,1:14cv551 LMB/TCB.
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Jeffrey P. FINE, Plaintiff/Counterclaim Defendant, v. SUN LIFE ASSURANCE COMPANY OF CANADA, Defendant/Counterclaimant.

97 F.Supp.3d 799

Jeffrey P. FINE, Plaintiff/Counterclaim Defendant

v.SUN LIFE ASSURANCE COMPANY OF CANADA, Defendant/Counterclaimant.

No. 1:14cv551 LMB/TCB.

United States District Court, E.D. Virginia, Alexandria Division.

Signed April 6, 2015.

Andrew Philip Sherrod, Collin Jefferson Hite, Rachel Ann Greenleaf, Hirschler Fleischer PC, Richmond, VA, for Plaintiff/Counterclaim Defendant.

David Edward Constine, III, Rebecca Elaine Ivey, Troutman Sanders, Richmond, VA, for Defendant/Counterclaimant.

MEMORANDUM OPINION

LEONIE M. BRINKEMA, District Judge.

This action under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., arises from defendant Sun Life Assurance Company of Canada's (“Sun Life” or “defendant”) termination of plaintiff Jeffrey P. Fine's (“Fine” or “plaintiff”) long-term disability (“LTD”) benefits. The parties disagree as to whether Fine ceased being eligible to receive LTD benefits under the terms of an employee benefit plan administered and insured by Sun Life. Specifically, Fine argues that he never ceased being eligible for LTD benefits and has filed suit to recover the benefits that have accrued since Sun Life terminated his benefits (the “ERISA claim”). In contrast, Sun Life argues that Fine has been ineligible for LTD benefits since January 1, 2012, and has counterclaimed against Fine to recover payments made after that date. The parties' filed cross-motions for summary judgment on both the ERISA claim and the counterclaim, on which the Court heard oral argument. For the reasons discussed in open court and those that follow, the Court finds that Sun Life did not abuse its discretion in terminating Fine's benefits but that equitable considerations now prevent Sun Life from recouping most of the amount previously paid in error.

I. BACKGROUND

Fine is the former president and CEO of CIBT Inc. (“CIBT” or “the company”), a McLean, Virginia, multinational travel document expediting company with hundreds of employees in the United States and abroad. S654, S1594–95, S1682–83.¹ He held this position from 2003 until his resignation on August 31, 2010, due to disability. S1593. During his tenure as CEO, Fine grew CIBT “from a small business with 65 employees to a well-recognized, worldwide expeditor of visas and passports,” and he oversaw CIBT's acquisition of 20 different companies. S1594–95. His base compensation for 2010, his final year as CEO, was $407,201, exclusive of his annual bonus. S655, S1126.

Fine began seeing an attending physician for chronic pain in his back and lower extremities in 2004. S93, S434, S1641–42. Since that time, he has been diagnosed with failed back syndrome and nerve dysfunction, has sought treatment from many specialists, and has undergone a number of different procedures, all of which have failed to relieve his pain. S434–41, S444, S1641–42. Fine now takes prescription pain medications, including narcotics. S674, S1108–12, S1642. Due to his chronic pain and the effects of his medications, the conclusion was reached, in consultation with Fine's primary attending physician, that Fine could no longer perform his duties as CEO (part of which required him to travel extensively domestically and abroad). S94–95, S676–77, S1409, S1595, S1641–42. John Donoghue (“Donoghue”), who had served under Fine, took over the position of president and CEO on September 1, 2010. S1397.

Fine, who was 47 years old at the time of his resignation, remained with CIBT as Non–Executive Chairman, a position created exclusively for him, which he presently still holds. S654, S1389, S1398. In this capacity, Fine primarily functions as an advisor and mentor to Donoghue on a part-time basis and attends regular meetings of the CIBT board of directors. S55, S1152, S1619. Fine's first Non–Executive Chairman Agreement with CIBT, dated August 20, (the “2010 NEC Agreement”), provided in a section titled “Compensation” that he was “entitled to” receive “$50,000 per year paid in ratable installments in accordance with the Company's payroll practices” and “an annual bonus for calendar years beginning after December 31, 2010 in an amount determined by the Board in its sole discretion.” S1152–53.

Following a stock purchase involving CIBT's parent company, Fine executed a new Non–Executive Chairman Agreement, effective December 15, 2011 (the “2011 NEC Agreement”), in which his role as Non–Executive Chairman remained unchanged. Compare S55 (describing Fine's responsibilities under the 2011 NEC Agreement), with S1152 (describing Fine's responsibilities under the 2010 NEC Agreement). Fine's compensation also remained largely unchanged except for minor alterations to the language of the “Compensation” section of the 2011 NEC Agreement, which provided that he was “entitled to” receive “an annual fee of $50,000 per year ... paid in ratable installments in accordance with the Company's payroll practices” and he was “eligible to receive ... a profit sharing bonus in such amount, if any, as may be determined by the ... Board, in its sole and absolute discretion, if the Company's performance is sufficient.” S56.

Initially following his resignation as CEO, Fine also entered into a Consulting Agreement through Everest Financial Corp. (“Everest”), his consulting company, to provide acquisitions consultation to CIBT. S1119–25. CIBT paid Everest a $12,500 monthly retainer for these services until May 31, 2011, at which time the Consulting Agreement terminated because of Fine's inability to perform the required services due to his disability. S21, S1120. In addition, Fine agreed in January 2012 to serve on the board of directors of Relectric Holdings, LLC (“Relectric”), a company unrelated to CIBT. S84–88. For this position, he is paid $50,000 per year through Everest. S84, S88.

At all relevant times, Fine was a participant in an employee benefit plan sponsored by CIBT (the “Plan”) and insured by Sun Life. S654–57. Sun Life provides LTD benefits for the Plan under the terms of a group policy issued to CIBT (the “Policy”). S686–756 (full text of the Policy). CIBT delegated to Sun Life its entire authority to make all final determinations regarding benefits claims under the Plan, as well as the authority to construe the terms of the Policy.² S749. To qualify for LTD benefits under the Policy, a claimant must meet both medical and financial requirements.³ See S704–05, S729. For employees earning $100,000 or more annually,⁴ the following definitions apply:

Partial Disability or Partially Disabled means the Employee, because of Injury or Sickness, is unable to perform the Material and Substantial Duties of his Own Occupation and the Employee has Disability Earnings of less than 80% of his Indexed Total Monthly Earnings....

Total Disability or Totally Disabled means the Employee, because of Injury or Sickness, is unable to perform the Material and Substantial Duties of his Own Occupation....

Partial Disability Benefit

...

If an Employee is Partially Disabled, the Net Monthly Benefit will be calculated based on the Partial Disability Benefit formula. An Employee qualifies for this benefit if:

- the Employee is working and has Disability Earnings of more than 20% but less than 80% of his Indexed Total Monthly Earnings; and

- the Employee, because of Injury or Sickness, is unable to perform the Material and Substantial Duties of his Own Occupation.

Total Disability Benefit

...

If an Employee is Totally Disabled, the Net Monthly Benefit will be calculated based on the Total Disability Benefit formula. An Employee qualifies for this benefit if:

- the Employee is not working or is earning less than 20% of his Indexed Total Monthly Earnings; and

- the Employee, because of Injury or Sickness, is unable to perform the Material and Substantial Duties of his Own Occupation.

S704–05, S729–30.⁵ Additionally, the Policy provides that “Total or Partial Disability Benefits will cease on the earliest of” a list of occurrences, including “the date the Employee is no longer Totally or Partially Disabled,” and, for an employee who earns $100,000 or more annually, “the date the Employee's Disability Earnings exceed 80% of his Indexed Total Monthly Earnings.” S734.

In turn, “Disability Earnings” means “the employment income an Employee receives while Partially Disabled or income an Employee receives while participating in an approved Rehabilitation program. Disability Earnings does not include income an Employee receives from work performed prior to his Total or Partial Disability, nor income that is not derived from work performed.” S702. To determine whether a claimant's Disability Earnings exceed 80% of his Indexed Total Monthly Earnings, thereby rendering him ineligible for LTD benefits, Sun Life first calculates his “Total Monthly Earnings” (“TME”), which is defined as the “basic monthly earnings as reported by the Employer immediately prior to the first date Total or Partial Disability begins” but “does not include commissions, bonuses, overtime pay or any other extra compensation,” and then applies an annual indexing adjustment.⁶ S703, S706. The “Maximum Monthly Benefit” Sun Life will pay to an eligible claimant is $10,000. S692.

After Fine resigned as CEO, he timely filed a claim for LTD benefits under the Policy, listing September 1, 2010, as the date for the onset of his disability status. S54–56, S659–64. Sun Life initially denied Fine's claim in January 2011⁷ because it concluded that his medical condition did not preclude him from performing the duties of a CEO and, instead, he had voluntarily chosen to resign from his position as president and CEO of CIBT. S1548, S1561–62. In its denial letter, Sun Life also indicated that even if Fine had met the medical criteria, its independent consulting Certified Public Accountant (“CPA”), William G. Bristol (“Bristol”), of Bristol Consulting Group, had been unable to calculate Fine's Disability Earnings due to missing supporting documentation. S1557–59. Among other things, Sun Life stated that it...