Isner v. MINNESOTA LIFE INSURANCE COMPANY

• Decision Date: 22 December 2009
• Docket Number: Civil No. 08-13417.
• Citation: 677 F. Supp.2d 950
• Parties: Arnold ISNER, Plaintiff, v. MINNESOTA LIFE INSURANCE COMPANY, and Unum Life Insurance Company of America, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

677 F.Supp.2d 950

Arnold ISNER, Plaintiff, v. MINNESOTA LIFE INSURANCE COMPANY, and Unum Life Insurance Company of America, Defendants.

Civil No. 08-13417.

United States District Court, E.D. Michigan, Southern Division.

December 22, 2009.

J. Laevin Weiner, Louis C. Szura, Frank, Haron, Troy, MI, for Plaintiff.

Kevin S. Toll, Sullivan, Ward, Asher & Patton, P.C., Southfield, MI, Sheri B. Cataldo, Sullivan, Ward, Southfield, MI, D. Andrew Portinga, J. Michael Smith, Miller, Johnson, Grand Rapids, MI, for Defendants.

ORDER ADOPTING REPORT AND RECOMMENDATION

JOHN FEIKENS, District Judge.

This case was referred to United States Magistrate Judge R. Steven Whalen pursuant to 28 U.S.C. § 636(b)(1)(B). There are two pending motions to dismiss this case, one filed by Defendant Minnesota Life Insurance Company ("Minnesota Life"), and one filed by Defendant Unum Life Insurance Company of America ("Unum") (Dkt. 24 & 25). Magistrate Judge Whalen issued a Report and Recommendation on September 23, 2009 (the "Report") (Dkt. 36). The Report recommends dismissing the Complaint against both Defendants for failure to state a claim, pursuant to Fed.R.Civ.P. 12(b)(6).

Plaintiff filed timely Objections to the Report, and Defendants each filed a Response to Plaintiff's Objections (Dkt. 37-39). For the reasons set forth below, the Court will ADOPT the Report, OVER-RULE Plaintiff's Objections, and GRANT both Defendants' Motions to Dismiss.

I. BACKGROUND

A. Relevant Factual Background

The essential facts in this case are undisputed. Plaintiff, Arnold Isner, had long term disability ("LTD") insurance coverage with Minnesota Life, based upon his employment as an agent for Minnesota Life, and a separate LTD policy with Unum, based upon his employment with Kapnick & Company. Several years after the issuance of these policies, Plaintiff became disabled as a result of Parkinson's Disease. (Amended Complaint ¶¶ 7-13). Plaintiff made claims for LTD benefits under both policies, both claims were approved, and Defendants each paid LTD benefits in the full amount under their respective policies. (Id. ¶¶ 16-19). Plaintiff received approximately $2,000 each month from Unum, and $3,000 each month from Minnesota Life. (Id. ¶¶ 21-23).

At a later date, Plaintiff began receiving Social Security Disability benefits of approximately $1,600 per month. (Id. at ¶¶ 20-21). Thereafter, pursuant to the LTD plan "other income" provisions, each Defendant reduced Plaintiff's LTD benefits by the full amount of his monthly Social Security award. (Id. ¶¶ 21-23). Plaintiff's Unum benefits were reduced to approximately $400 per month, and his Minnesota Life benefits were reduced to approximately $1,400 per month. This process, known as "integration" of benefits, caused a net reduction in Plaintiff's LTD benefits of $3,200, representing twice the amount of Social Security benefits he actually received. (Id. ¶¶ 24-25). Plaintiff contends this "double-offset" is impermissible under ERISA as a matter of law, as well as under the language and intent of the respective policies. (Id.).

B. The Minnesota Life Policy

The Minnesota Life Certificate of Insurance¹ (Dkt. 25, Ex. B) includes the following relevant provisions:

SECTION III—BENEFITS

* * *

C. MONTHLY BENEFIT

To figure the amount of your monthly benefit ...:

1. Multiply your basic monthly earnings by the benefit percentage 60% indicated in box 3A of the schedule of benefits.

2. Take the lesser of the amount:

a. determined in step (1) above; or

b. of the maximum monthly benefit $4,000 indicated in box 3A of the schedule of benefits, and

3. Deduct other income benefits, listed in this certificate, from this amount. (emphasis added)

* * *

D. MINIMUM MONTHLY BENEFIT

The benefit payable will never be less than $100.00 or 10% of the gross monthly benefit, whichever is greater.

E. OTHER INCOME BENEFITS

Other income benefits mean those benefits as follows:

* * *

5. The amount of disability or retirement benefits under the United States Social Security Act ... as follows:

a. disability benefits for which you are eligible (emphasis added).

* * *

SECTION V—SOME GENERAL INFORMATION TO KNOW

* * *

I. DISCRETIONARY AUTHORITY

In making any benefits determination under the policy, we shall have the discretionary authority both to determine your eligibility for benefits and to construe the terms of the policy.

C. The Unum Policy

The Unum Policy (Dkt. 24, Ex. A) includes the following relevant provisions:

BENEFITS AT A GLANCE

Long Term Disability Plan

* * *

MONTHLY BENEFIT:

60% of monthly earnings to a maximum benefit of $10,000 per month.

Your payment may be reduced by deductible sources of income and disability earnings .... (emphasis added)

* * *

CERTIFICATE SECTION

* * *

When making a benefit determination under the policy, Unum has discretionary authority² to determine your eligibility for benefits and to interpret the terms and provisions of the policy.

* * *

LONG TERM DISABILITY

Benefit Information

* * *

How Much will Unum Pay if You Are Disabled?

We will follow this process to figure your payment:

1. Multiply your monthly earnings by 60%.

2. The maximum monthly benefit is $10,000.

3. Compare the answer from Item 1 with the maximum monthly benefit. The lesser of these two amounts is your gross disability payment.

4. Subtract from your gross disability payment any deductible sources of income.

The amount figured in Item 4 is your monthly payment. (emphasis in original)

* * *

What are Deductible Sources of Income?

Unum will subtract from your gross disability payment the following deductible sources of income:

* * *

3. The amount that you, your spouse and your children receive or are entitled to receive as disability payments because of your disability under:

— the United States Social Security Act

* * *

What are Not Deductible Sources of Income?

Unum will not subtract from your gross disability payment income you receive from, but not limited to, the following:

* * *

— individual disability income plans

* * *

What if Subtracting Deductible Sources of Income Results in a Zero Benefit?

The minimum monthly payment is the greater of:

— $100; or

— 10% of your gross disability payment.

II. STANDARD OF REVIEW

The filing of timely objections requires the Court to "make a de novo determination of those portions of the report or specified findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). See United States v. Raddatz, 447 U.S. 667, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980); United States v. Walters, 638 F.2d 947 (6th Cir.1981). This de novo review, in turn, requires this Court to re-examine all the relevant evidence previously reviewed by the magistrate to determine whether the recommendation should be accepted, rejected, or modified in whole or in part. 28 U.S.C. § 636(b)(1).

"A general objection, or one that merely restates the arguments previously presented is not sufficient to alert the Court to alleged errors on the part of the magistrate judge." Aldrich v. Bock, 327 F.Supp.2d 743, 747 (E.D.Mich.2004). As Judge Cleland further explained in Aldrich:

An `objection' that does nothing more than state a disagreement with a magistrate's suggested resolution, or simply summarizes what has been presented before, is not an `objection' as that term is used in this context.

* * *

A general objection to the magistrate's report has the same effect as a failure to object. The district court's attention is not focused on any specific issues for review, thereby making the initial reference to the magistrate useless. The functions of the district court are effectively duplicated as both the magistrate and the district court perform identical tasks. The duplication of time and effort wastes judicial resources rather than saving them, and runs contrary to the purposes of the Magistrates Act. Howard v. Secretary of Health and Human Servs., 932 F.2d 505, 509 (6th Cir. 1991).

Id. at 747-48.

III. DISCUSSION

The Report accurately explains that "the basic question raised by Plaintiff in this case is whether ERISA permits a double-offset, by two separate disability plans, of a single Social Security Disability payment." Report at 5-6. This specific question appears to be an issue of first impression for any federal court. After a thorough analysis, the Report concludes that nothing in ERISA, or in the plans, precludes the "double-offset" of Plaintiff's Social Security Benefits. Therefore, the Report recommends granting Defendants' Motions to Dismiss. For the reasons explained below, I agree and will adopt the recommendations in the Report.

A. Count I

In support of Count I, for damages pursuant to 29 U.S.C. § 1132(a)(1)(B), Plaintiff advances three theories, each of which conveniently forms the basis for one of his objections.

1) Objection #1, The Double-Offset Violates ERISA's Intent

Plaintiff argues that Congress speaks through its purpose, as well as its statutory language. He claims that Congress's intent in enacting ERISA was to "protect participants and beneficiaries." Plaintiff contends that the double-offset violates this intent, and therefore, violates ERISA. Moreover, Plaintiff claims that, although ERISA generally permits integration of benefits, any such integration must be "reasonable."

Defendants counter that ERISA permits integration of benefits, and its fundamental purpose—ensuring that employee benefit plans provide their participants and beneficiaries with the benefits their written terms promise—is served by enforcing the plain language of the plans. Moreover, Defendants note that the case upon which Plaintiff relies for the purported "reasonableness" requirement (Dameron) requires integration of pension benefits with estimated Social Security benefits to be reasonable (in that case, the estimated benefits were calculated so as to always exceed the actual amounts). They further argue that Dameron interprets ERISA's non-forfeiture provision, which restricts certain reductions of vested...