Grise v. Flair Interiors, Inc. Emp. Benefit Plan

• Decision Date: 27 March 2013
• Docket Number: CAUSE NO. 1:12-CV-422
• Parties: CHARLES GRISE, Plaintiff, v. FLAIR INTERIORS, INC. EMPLOYEE BENEFIT PLAN and FLAIR INTERIORS, INC., Defendants.
• Court: U.S. District Court — Northern District of Indiana

CHARLES GRISE, Plaintiff, v. FLAIR INTERIORS, INC. EMPLOYEE BENEFIT PLAN and FLAIR INTERIORS, INC., Defendants.

CAUSE NO. 1:12-CV-422

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA FORT WAYNE DIVISION

Enter: March 27, 2013

OPINION AND ORDER

I. INTRODUCTION

On July 31, 2012, Charles Grise was cleaning a building he owned—part of which housed his small welding business—when he fell either through a false ceiling or an opening, to the floor below, breaking his neck and necessitating extensive medical treatment. Grise's medical providers submitted their bills to his health insurance, a self-insured employee benefit plan entitled Flair Interiors, Inc. Employee Benefit Plan (the "Plan"), sponsored and administered by his wife's employer, Flair Interiors, Inc. ("Flair").

The Plan, however, denied Grise benefits based on an exclusion in the policy. Grise then brought this lawsuit against the Plan and Flair under 29 U.S.C. § 1132(a)(1)(A) and (B), better known as § 502(a)(1)(A) and (B) of the Employee Retirement Income Security Act ("ERISA"), alleging that the Plan's denial was arbitrary and capricious.¹

Both Grise and Defendants have now moved for summary judgment. (Docket # 27, 34.) The primary issue before the Court is whether the Plan was arbitrary and capricious when it denied Grise benefits because his accident purportedly came under the Plan's "employment-related conditions/workers' compensation" exclusion. In short, the Plan maintains that Grise is not entitled to benefits under the plan because his accident occurred while he was either employed or covered under workers' compensation. For the following reasons, the Court finds that the Plan's determination was arbitrary and capricious; thus, Grise's motion will be GRANTED and Defendants' motion will be DENIED as it pertains to the Plan.²

II. FACTUAL BACKGROUND

Grise operates a little welding business, Alum A Craft, Inc., in part of a building he owns in Elkhart, Indiana.³ (See AR 36, 38.) On July 31, 2012, while cleaning the building's second floor, he either fell through an opening or a false ceiling, breaking his neck and causing paralysis. (AR 8; Compl. ¶¶ 1, 7.) Grise is a beneficiary of a self-insured employee benefit plan for health care sponsored by his wife's employer, Flair. (Compl. ¶ 1.) Flair, as the Plan Administrator, delegated certain ministerial duties, including claim processing, to a third-party administrator, North America Administrators, L.P. ("NAA"). (Defs.' Ex. 1 at 42.)

It was not long afterward that NAA started receiving bills from Grise's health care providers for his rapidly mounting medical expenses. (See AR 59-72, 80-87, 92-97, 101-12.) Notably, almost all of these claims reported that Grise's condition was not related to any employment. (AR 59-65, 68-70, 72, 80-84, 86, 92-97, 101-12.) Nonetheless, inexplicably, NAA almost immediately started issuing Explanation of Benefit ("EOB") notices to Grise's wife—first on August 23, again on August 30, and finally on September 13, 2012—cryptically indicating that the charges were ineligible for medical coverage because they were "for workers comp." (AR 91, 100, 117.)

On September 13, 2012, Mrs. Grise wrote a letter to the Plan on behalf of her husband appealing the denial of health insurance coverage, stating that while Alum A Craft, "is still viable on paper," it produces little income and Grise kept it going to offset the cost of the building he occupies.⁴ (AR 36.) Describing the building as mostly a warehouse, Mrs. Grise said Grise would go there to feel useful. (AR 36.) Although Grise owned the building—and was there almost every day for that reason—Mrs. Grise said that very little welding was actually performed there and a workers' compensation policy was not in place because, according to Mrs. Grise, the market did not offer an affordable policy for sole proprietors. (AR 36.)

Commenting on the denial of health insurance coverage, Mrs. Grise indicated that "an outside source" told her that a newspaper article in The Goshen News on August 12, 2012, "was the factor in changing the course of Chuck's medical claim."⁵ (AR 36.) She then expressed thatthe article was "for the most part bogus." (AR 36.) Mrs. Grise further asserted that no one representing the insurance company contacted her or Grise to obtain any information before denying Grise's claims. (AR 36.)

Mrs. Grise's appeal spawned a request from NAA for more information about Grise's claims. (See AR 8.) In response, Mrs. Grise sent a second letter to NAA on September 20, 2012, in which she reported that, at the time of the accident, Grise was in a commercial building that he owned with his father and "was doing some maintenance work on the building as an owner," when he lost his balance and fell through an opening. (AR 8.) She reiterated that, although there is a space in the building for Grise's small welding business, the accident happened in a different area; she further reported that Grise was not working on the welding business at the time of the accident. (AR 8.) Mrs. Grise also observed that since Grise was not working for the welding business at the time of the accident, workers' compensation coverage would not apply. (AR 8.)

NAA sent a letter to Mrs. Grise on September 25, 2012, informing her that it had received her appeal letter and had referred her file to the Plan Administrator for an appeal. (AR 7.) That same day, NAA forwarded a copy of the Grises' appeal to Flair, the Plan Administrator. (AR 5-6.) The Plan grants the Plan Administrator discretion to, among other things, interpret and apply all of the Plan's provisions, including eligibility provisions, and make factual determinations about claim coverage. (Defs.' Ex. 1 at 42.) The letter referring the appeal to Flair as Plan Administrator—which NAA described as Mrs. Grise "requesting [ ] an exception"—recited the Plan's exclusion language for "employment-related conditions/workers' compensation" (AR 5-6), as follows:

16. Employment-Related Conditions/Workers' Compensation - Charges incurred as the result of or in connection with any activity pertaining to any act of employment for profit, gain, or compensation for which you receive a W-2 or 1099 from an Employer, or for which you file a self-employment schedule for federal income taxes; or charges incurred as the result of a disease, illness, or condition for which benefits are payable under any Workers' Compensation Act, any Occupational Diseases Act or any other similar such benefit program.

(Defs.' Ex. 1 at 17.) The letter to Flair then explained that Grise's claims were denied because they were "considered as in connection with activity pertaining to an act of employment." (AR 5.)

On October 3, 2012, the Plan Administrator upheld the initial decision denying Grise's claims based on this exclusion. (AR 3-4.) NAA notified Mrs. Grise of the Plan's final decision on November 2, 2012, providing the full language of the exclusion and explaining that "[b]ecause the charges were considered as in connection with an activity pertaining to an act of employment, the claims were denied by the Plan and no further benefits are payable."⁶ (AR 2.)

III. SUMMARY JUDGMENT STANDARD

Summary judgment may be granted only if there are no disputed genuine issues of material fact. Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003). When ruling on a motion for summary judgment, a court "may not make credibility determinations, weigh the evidence, ordecide which inferences to draw from the facts; these are jobs for a factfinder." Id. The only task in ruling on a motion for summary judgment is "to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial." Kodish v. Oakbrook Terrace Fire Prot. Dist., 604 F.3d 490, 507 (7th Cir. 2010) (quoting Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994)). If the evidence is such that a reasonable factfinder could return a verdict in favor of the nonmoving party, summary judgment may not be granted. Payne, 337 F.3d at 770. A court must construe the record in the light most favorable to the nonmoving party and avoid "the temptation to decide which party's version of the facts is more likely true," as "summary judgment cannot be used to resolve swearing contests between litigants." Id. However, "a party opposing summary judgment may not rest on the pleadings, but must affirmatively demonstrate that there is a genuine issue of material fact for trial." Id. at 771.

"When cross-motions for summary judgment are filed, 'courts look to the burden of proof that each party would bear on an issue of trial; [courts] then require that party to go beyond the pleadings and affirmatively to establish a genuine issue of material fact.'" M.O. v. Ind. Dep't of Educ., 635 F. Supp. 2d 847, 850 (N.D. Ind. 2009) (alteration in original) (quoting Santaella v. Metro. Life Ins. Co., 123 F.3d 456, 461 (7th Cir. 1997)). For claims seeking benefits under an ERISA plan, the plaintiff bears the burden of proving the claimant's entitlement to the benefits of insurance coverage, while the defendant insurer bears the burden of establishing the claimant's lack of entitlement. Diaz v. Prudential Ins. Co. of Am., 499 F.3d 640, 643 (7th Cir. 2007).

"The contention of one party that there are no issues of material fact sufficient to prevent the entry of judgment in its favor does not bar that party from asserting that there are issues ofmaterial fact sufficient to prevent the entry of judgment as a matter of law against it." M.O., 635 F. Supp. 2d at 850 (citation omitted); see Zook v. Brown, 748 F.2d 1161, 1166 (7th Cir. 1984). "[C]ross-motions for summary judgment do . . . not alter the respective burdens on cross-motions for summary judgment—more particularly here, the responsive burden of a plaintiff who moves for summary judgment and is confronted with a cross-motion for summary judgment. The motions are treated separately." McKinney v. Cadleway Props., Inc., 548...