Jones v. U.S. Life Ins. Co.

• Decision Date: 30 June 1998
• Docket Number: No. Civ. 97-1745(WHW).,Civ. 97-1745(WHW).
• Parties: Adrienne JONES, Plaintiff, v. The UNITED STATES LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of New Jersey

12 F.Supp.2d 383

Adrienne JONES, Plaintiff, v. The UNITED STATES LIFE INSURANCE COMPANY, Defendant.

No. Civ. 97-1745(WHW).

United States District Court, D. New Jersey.

June 30, 1998.

Ronald Washington, Washington & Garrick Washington, Montclair, NJ, for plaintiff.

Steven Del Mauro, Robert Lesko, Del Mauro & Associates, Morristown, NJ, for defendant.

AMENDED OPINION

WALLS, District Judge.

Plaintiff Adrienne Jones ("Jones" or "plaintiff"), the administratrix of decedent Arlene Jones' estate, has brought suit to recover payment on a life insurance policy. Defendant United States Life Insurance Company ("U.S. Life" or "defendant") now moves for summary judgment by contending that plaintiff's recovery is barred because of certain material misrepresentations in the application for coverage. Under Fed. R.Civ.P. 78, this motion is decided without oral argument. For the following reasons, the Court grants summary judgment to the defendant.

Factual and Procedural Background

The Court initially notes that plaintiff has not submitted any evidentiary material in opposition to this motion. Consequently, the pertinent facts arise solely from the affidavits and documents submitted by the defendant.

Arlene Jones was insured under an employee welfare benefit plan (the "plan") established and maintained by the American Postal Workers' Union and funded in whole or in part by a group term life insurance policy issued by defendant U.S. Life. Defendant serves as the claims administrator under the plan and determines coverage eligibility. The policy contains a standard "incontestability" clause:

United States Life will not use a person's statements relating to his insurability to contest life insurance after it has been in force for 2 years during his life. United States Life will also not use such statement to contest an increase or benefit addition to such insurance after the increase or benefit has been in force for 2 years during his life.

Hyland Aff. Exh. A.

Arlene Jones originally was covered by a certificate of insurance which provided death benefits of $100,000. On or about December 22, 1993, she completed an application to increase her death benefits to $200,000. She responded in the negative to the following two questions on the application:

A. Have you or your spouse ever had chest pains, heart trouble, liver trouble, high blood pressure, albumin or sugar in your urine, tuberculosis, diabetes, cancer, tumors or ulcers?

B. Have you or your spouse, during the past 5 years, consulted any physician or other practitioner or been enrolled or treated in any hospital or similar institution?

Hyland Aff. Exh. B.

If the answer to either of the above questions was "yes," the application requests details. Below these responses, Arlene Jones signed the application and certified:

To the best of my knowledge and belief, all the statements made above are true and complete. I understand that my application for group insurance will be accepted or declined on the basis of these statements. Insurance shall take effect only if a certificate is issued based on the application and the first premium is paid in full (a) during the lifetime of all proposed insureds and (b) while there is no change in insurability and health of all such persons from that stated in this application.

Id. U.S. Life approved the application and issued a certificate of insurance that increased her death benefits to $200,000 effective February 25, 1994.¹

Arlene Jones died intestate on February 6, 1996. The discharge summary issued by the hospital after her death reveals that she had "a history of hypertension" and was admitted the day before her death when she complained of "the worst headache of her life." Hyland Aff. Exh. J. A ruptured cerebral aneurysm resulted in her death. See Hyland Aff. Exhs. D, I. Plaintiff, in her capacity as administratrix of the decedent's estate, filed a claim for death benefits. U.S. Life promptly issued a check in the amount of $100,000 which represented payment for the benefits due before the increase.

Because the death occurred within two years of the effective date of the increase, the defendant conducted a routine claim investigation. The investigation found medical records that were inconsistent with Arlene Jones' representations concerning her past medical history. Specifically, U.S. Life discovered that the decedent had received care at East Orange Hospital Family Health Care Center ("FHCC") on March 12, 1990, less than five years before she completed her application. According to those FHCC records, Arlene Jones had complained to an employee health nurse that day about a headache. See Hyland Exh. H. The nurse had taken her blood pressure and informed her that it was so high that she "might have a stroke." Id. The records also indicate that Arlene Jones admitted that she had been told two years ago that she had "borderline" blood pressure. Id. The FHCC staff took additional blood pressure readings of 150/140 and 130/100 while she was at the center. See id. The attending physician's impressions of her condition were that she suffered form cephalgia, hypertension, and possible hypertensive vascular disease. See id. The physician ordered blood screening and profiles. See id. U.S. Life's claim investigation revealed no records to indicate that Arlene Jones had sought further treatment for her condition between May 12, 1990 and the date she executed the application. Records from the hospital where she was admitted before her death, though, reflect that she was hospitalized in 1994 because of her high blood pressure. See id.

By letter dated July 17, 1996, U.S. Life informed plaintiff that her claim for the additional $100,000 in death benefits would be denied because the decedent had not disclosed in the application her medical history as reflected by the FHCC records. The defendant maintained that had it known these facts, it would have declined additional coverage. U.S. Life promptly refunded all premiums paid during the period from February 25, 1994 until her death. Plaintiff sought administrative review of this decision. In support of her appeal, plaintiff provided no further evidence or information regarding the FHCC visit or Arlene Jones' medical condition before December 22, 1993. Her appeal was denied.

On March 5, 1997, Jones brought suit against U.S. Life in the Superior Court of New Jersey, Essex County, asserting various state law claims. Defendant removed the case to this Court. U.S. Life then moved to dismiss on the basis that all claims were preempted by ERISA. Although the Court found that all counts arose under § 502(a)(1)(B) of ERISA because they sought to recover payment under an employee benefit plan, the Court invoked the principle of judicial economy and declined to compel plaintiff to replead the claims. See Letter Order dated July 29, 1997. The Court denied the motion to dismiss but granted defendant's motion to strike plaintiff's claim for punitive and extracontractual damages and her demand for a jury trial on the ground that ERISA did not provide for such relief. See id. Defendant now moves for summary judgement on the ground of equitable fraud.

Legal Standard for Summary Judgment

It is well established that summary judgment is appropriate where the moving party demonstrates that "there is no genuine issue of material fact and that [it] is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, such would be insufficient to permit the non-moving party to carry its burden of proof. See Celotex v. Catrett, 477 U.S. 317, 318, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Once the moving party has carried its burden under Rule 56, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts in question." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The opposing party must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. See Sound Ship Building Corp. v. Bethlehem Steel Co., 533 F.2d 96, 99 (3d Cir.1976), cert. denied, 429 U.S. 860, 97 S.Ct. 161, 50 L.Ed.2d 137 (1976). Memoranda of law unsupported by evidentiary proof will not establish a genuine issue of material fact for trial. See Schoch v. First Fidelity Bancorporation, 912 F.2d 654, 657 (3d Cir.1990). Here the plaintiff has submitted no evidentiary materials and relies solely on its memorandum of law which seeks to attack defendant's evidence.

At the summary judgment stage the court's function is not to weigh the evidence and determine the truth of the matter, but rather to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In doing so, the court must construe the facts and inferences in the light most favorable to the non-moving party.

Analysis

I. APPROPRIATE STANDARD OF REVIEW

The Supreme Court has instructed that "a denial of benefits challenged under [29 U.S.C.] § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit 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, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). Where the plan accords the administrator the authority to interpret the plan or evaluate an employee's eligibility for benefits, the administrator's decision to deny coverage will be overturned only if it is arbitrary and capricious. See Abnathya v. Hoffmann-La Roche, Inc., 2 F.3d 40, 45 (3d Cir.1993); Nazay v. Miller, 949 F.2d 1323, 1335 (3d Cir.1991). Under this deferential standard, "the district court may overturn a decision of the Plan administrator only if it is ...