Jacobs v. Reliance Standard Life Ins. Co.

• Decision Date: 06 June 2022
• Docket Number: Civil Action 21-cv-323 (TSC/GMH)
• Parties: AUSTIN JACOBS, Plaintiff, v. RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Columbia

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AUSTIN JACOBS, Plaintiff, v. RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendant.

Civil Action No. 21-cv-323 (TSC/GMH)

United States District Court, District of Columbia

June 6, 2022

MAGISTRATE JUDGE'S RECOMMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW

G. MICHAEL HARVEY UNITED STATES MAGISTRATE JUDGE

Before the undersigned are the dueling motions of Plaintiff Austin Jacobs (“Dr. Jacobs” or “Plaintiff”) and Defendant Reliance Standard Life Insurance Company (“Reliance” or “Defendant”). The key question in this case is whether Reliance properly applied a pre-existing condition limitation in its contract of insurance to deny Dr. Jacobs' claim for long-term disability benefits. Finding that it did, the undersigned accordingly recommends that judgment be entered in Reliance's favor.

Dr Jacobs became totally disabled in September 2018, only a few months into his new job as an Internal Medicine physician at Georgetown Physicians Group, a subsidiary of MedStar Health (“MedStar”). That much is not in dispute. What happened next, however, spawned this case. When Dr. Jacobs applied for long-term disability benefits from Reliance-MedStar's insurer-his application was rejected. Reliance, citing the Pre-existing Conditions Limitation provision in its policy (the “Reliance Policy” or the “Policy”), denied Plaintiff's claim because he had sought treatment for the conditions he claimed were disabling in the three months prior to the effective date of his coverage under the Reliance Policy. Plaintiff appealed the initial denial, but Reliance rejected the appeal, as well. After his bid for reconsideration was rebuffed, Dr. Jacobs filed this case claiming that Reliance's denials of his disability claims were erroneous and violated his rights guaranteed by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq.

Now before the Court are the parties' competing motions seeking judgment in their favor. Dr. Jacobs seeks judgment under Federal Rule of Civil Procedure 52 and essentially asks the Court to conduct a trial on the papers. See generally ECF No. 17. He asserts that Reliance erroneously applied the pre-existing condition limitation to his claim and requests that Reliance's decision be reversed and that he be awarded benefits. For its part Reliance moves for summary judgment under Federal Rule of Civil Procedure 56 and resists Dr. Jacobs' bid to use the Rule 52 framework. See generally ECF No. 16. While Reliance does not dispute that Dr. Jacobs is totally disabled, it nevertheless maintains that denial of his claim was proper under its policy's Pre-existing Condition Limitation and that it is therefore entitled to judgment. The key issues here, then, are twofold- one procedural and one substantive. Procedurally, the Court must determine whether the parties' motions should be adjudicated under Rule 52 or Rule 56. Because the Court is to review Reliance's decision denying Dr. Jacobs' claim for benefits de novo, the undersigned finds that Rule 52 provides the proper framework. As to substance, the ultimate issue is whether Dr. Jacobs' claim for long-term disability benefits was rightly denied under the Reliance Policy's Pre-existing Conditions Limitation. The undersigned finds that it was, and therefore recommends that judgment be entered for Reliance.^[1]

I. LEGAL STANDARD

A. ERISA and the Standard of Review

ERISA's goal is to safeguard “the interests of participants in employee benefit plans and their beneficiaries.” 29 U.S.C. § 1001(b). Under section 502(a) of the Act, “[i]f a participant or beneficiary believes that benefits promised to him under the terms of the plan are not provided, he can bring suit seeking provision of those benefits . . . [or] to ‘enforce his rights' under the plan, or to clarify any of his rights to future benefits.” Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004) (quoting 29 U.S.C. § 1132(a)(1)(B)).

Where, as in this case, “a denial of benefits [is] challenged under [29 U.S.C.] § 1132(a)(1)(B),” the denial must “be reviewed under a de novo standard unless the plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); see also Moore v. Blue Cross & Blue Shield of Nat'l Cap. Area, 70 F.Supp.2d 9, 20 (D.D.C. 1999) (“Courts clearly have the authority to construe the language of the contract de novo where the denial of benefits does not involve any discretionary authority on the part of the plan administrator.”). “However, when a fiduciary exercises discretionary powers to deny benefits or construe the terms of a plan, a deferential standard of review must be employed.” Moore, 70 F.Supp.2d at 20. Here, Reliance concedes that the Policy vests in it no discretionary authority, at least with respect to the denial of claims under its Pre-existing Conditions Limitation. ECF No. 16-1 at 14. Thus, Reliance's denial of Dr. Jacobs' insurance claim is subject to de novo review. See, e.g., Mathews v. Nw. Mut. Life Ins. Co., No. 18-cv-46, 2019 WL 5578333, at *8 (W.D. Wis. Oct. 29, 2019) (“[Defendant insurer] concedes that there is no language in the plan giving it discretionary authority to determine eligibility. Thus, the de novo standard applies in this case.” (internal citation omitted)). Dr. Jacobs agrees. ECF No. 17-1 at 7.

B. The Parties' Motions Should be Adjudicated Under Rule 52

The parties' initial disagreement concerns which Federal Rule of Civil Procedure should supply the framework for resolution of their motions. They are not alone in that disagreement. Indeed, “[t]here is a divide among the circuit courts of appeal . . . as to whether Fed.R.Civ.P. 56 is necessarily the appropriate mechanism to resolve a § 1132(a)(1)(B) ERISA claim for denial of benefits.” Horton v. Life Ins. Co. of N. Am., 2015 WL 1469196, at *12 (D. Md. Mar. 30, 2015); see also Koch v. Metro. Life Ins. Co., 425 F.Supp.3d 741, 746-47 (N.D. Tex. 2019) (outlining four distinct approaches amongst the appellate courts). The principal dispute is whether appeals from claim denials should be adjudicated on a motion for summary judgment under Federal Rule of Civil Procedure 56-as Reliance contends-or a motion for judgment on the administrative record under Federal Rule of Civil Procedure 52-as Dr. Jacobs argues. See Katherine P. v. Humana Health Plan, Inc., 939 F.3d 206, 208 (5th Cir. 2020) (“There is an open question whether it is appropriate to resolve ERISA claims subject to de novo review on summary judgment, or whether the district court should conduct a bench trial.”).

Dr. Jacobs urges the Court to adjudicate the motions under Rule 52, which permits courts to make findings of fact and conclusions of law following a bench trial. ECF No. 17-1 at 7-9; Fed.R.Civ.P. 52(a) (“In an action tried on the facts without a jury or with an advisory jury, the court must find the facts specially and state its conclusions of law separately.”). Courts have also found that Rule 52 allows for a “trial on the papers” process, the vehicle for which is a motion for judgment on the administrative record (or some similarly-styled pleading). Crespo v. Unum Life Insurance Co. of America, 294 F.Supp.2d 980, 991 (N.D. Ill. 2003) (discussing the “problem of reviewing ERISA benefit claims on cross-motions for summary judgment” and strongly suggesting “parties consider proceeding by means of a trial on the papers under” Rule 52(a)); see also McDowell v. Standard Ins. Co., No. 07-cv-1103, 2008 WL 11320066, at *3 (N.D.Ga. Nov. 24, 2008) (“The Court concludes that judgment on the administrative record in ERISA cases involving de novo review is authorized under Rule 52.”); Adair v. El Pueblo Boys' & Girls' Ranch, Inc. Long Term Disability Plan, No. 06-cv-1343, 2007 WL 2788614, at *1 (D. Colo. Sept. 21, 2007) (“[C]ourts routinely decide ERISA cases on motions for judgment on the administrative record.”). That is what Dr. Jacobs proposes. He argues that applying the Rule 52 standard would allow the Court to “determine issues of credibility in the administrative record as it sees fit, and the parties . . . to argue the appropriate weight that should be afforded the evidence.” ECF No. 171 at 8-9.

Reliance, on the other hand, contends that adjudication under Rule 56-not Rule 52-is proper, and identifies several courts in this Circuit that have applied the Rule 56 standard in assessing benefit denial claims. ECF No. 18-1 at 9-10. The D.C. Circuit has not yet addressed this issue, see Foster v. Sedgwick Claims Mgmt. Servs., Inc., 125 F.Supp.3d 200, 204 (D.D.C. 2015) (acknowledging no on-point D.C. Circuit precedent), aff'd, 842 F.3d 721 (D.C. Cir. 2016), and courts in this district have utilized both the Rule 52 and Rule 56 frameworks. Compare, e.g., Foster, 125 F.Supp.3d at 204 (applying Rule 56), Pettaway v. Tchrs. Ins. & Annuity Ass'n of Am., 699 F.Supp.2d 185, 198 (D.D.C. 2010) (same), aff'd, 644 F.3d 427 (D.C. Cir. 2011), and Becker v. Weinberg Grp., Inc. Pension Tr., 473 F.Supp.2d 48, 58 (D.D.C. 2007) (same), with Mobley v. Cont'l Cas. Co., 405 F.Supp.2d 42, 47 (D.D.C. 2005) (applying Rule 52). In the absence of any controlling precedent, the undersigned is persuaded that, at least in this case, the best way to resolve the parties' motions is under Rule 52.

To begin, there are clear shortcomings if the Rule 56 summary judgment standard were applied in this case. The parties agree that the Court must review Reliance's denial of Dr Jacobs' long-term disability benefits claim de novo. ECF No. 16-1 at 14; ECF No. 17-1 at 7. Yet “[t]he de novo standard requires the court to make findings of fact and weigh the evidence.” Anderson v. Liberty Mut. Long Term Disability Plan, 116...