Rosile v. Aetna Life Ins. Co.

• Decision Date: 02 October 1991
• Docket Number: No. 89-1560-C.,89-1560-C.
• Citation: 777 F. Supp. 862
• Parties: Carolyn ROSILE, Plaintiff, v. AETNA LIFE INSURANCE CO., a Connecticut corporation; the Boeing Company, a Delaware corporation; the Boeing Employee Welfare Benefit Plan, otherwise known as Group Life Policy 707, a legal entity; and the Welfare Benefit Plans Committee, the plan administrator for Group Life Policy 707, Defendants.
• Court: U.S. District Court — District of Kansas

777 F. Supp. 862

Carolyn ROSILE, Plaintiff, v. AETNA LIFE INSURANCE CO., a Connecticut corporation; the Boeing Company, a Delaware corporation; the Boeing Employee Welfare Benefit Plan, otherwise known as Group Life Policy 707, a legal entity; and the Welfare Benefit Plans Committee, the plan administrator for Group Life Policy 707, Defendants.

No. 89-1560-C.

United States District Court, D. Kansas.

October 2, 1991.

Terry J. Torline, William Robert Martin, Martin, Pringle, Oliver, Wallace & Swartz, Wichita, Kan., for plaintiff.

Charles P. Efflandt, John J. Murphy, Susan L. Smith, Foulston & Siefkin, Wichita, Kan., for defendants.

MEMORANDUM AND ORDER

CROW, District Judge.

On February 27, 1987, Frank Rosile, a Boeing employee, died. This case arises out of Carolyn Rosile, Frank Rosile's wife's, action to recover life insurance benefits under a group plan life insurance policy issued by Aetna Life Insurance Company (Aetna) to The Boeing Company (Boeing). Rosile's claim for benefits arises out of the Employee Retirement Income Security Act of 1974 (ERISA). Rosile also claims that certain defendants have breached fiduciary duties imposed by ERISA. Rosile further contends that one or more of the defendants is liable for statutory penalties under ERISA for failure to timely provide plan information. Rosile also seeks attorneys fees. The defendants deny each of Rosile's claims.

This case comes before the court upon the defendants' motion for summary judgment and upon the plaintiff's motion for partial summary judgment. The court, having considered the briefs of the parties, facts and applicable law is now prepared to rule. The court, where possible, has condensed and considered the parties' arguments from the defendants' motion for summary judgment and the plaintiff's motion for partial summary judgment at the same time.

The court has thoroughly reviewed the "uncontroverted facts," the deposition testimony, affidavits or exhibits supporting those facts, and the plaintiff's responses. While some of the defendants' uncontroverted facts are truly uncontroverted, on several occasions the plaintiff inserted the phrase "controverted in part" and included an explanation. Often this phrase was unsupported by any evidence to the contrary. The plaintiff has also controverted several statements which the defendants had taken almost directly from Carolyn Rosile's deposition. The court understands the temptation to minimize the damage of admissions by the plaintiff, but controverting the defendants' uncontroverted facts which are supported by virtually verbatim quotes of the plaintiff only serves to hamper the court's disposition of the motion.

In regard to the affidavits of Laura Topazio, the court has carefully reviewed her affidavit, her supplemental affidavit and the discovery materials referenced by the parties in deciding these motions.

Facts

The parties agree that jurisdiction and venue are properly laid in this district. The parties also stipulate that Carolyn Rosile is a resident of Wichita, Kansas. Aetna is a corporation organized and existing under the laws of the State of Connecticut. Aetna is licensed and doing business in the State of Kansas as an insurance company. Boeing is a corporation organized and existing under the laws of the State of Delaware. Boeing is authorized to transact business in Kansas. The parties also stipulate that the law governing this case is ERISA.

In 1953, Frank J. Rosile began his employment as an engineer with Boeing. Carolyn Rosile was his wife.

Effective March 1, 1972, Aetna issued to Boeing an insurance policy, identified as Group Policy No. GL707 (the "Group Plan"). This policy provided disability and life insurance coverage to Boeing employees. The Group plan consists of six major parts or "Articles." Article I contains the general insuring provisions, including definitions, identification of the employers whose employees are covered, and general provisions regarding employee eligibility. Article II describes the nature of the benefits that are provided. Article III explains the circumstances under which the insurance coverage will be terminated as to any individual employee. Article IV concerns the amount of the premiums payable and the method of payment. Article V describes the way in which the insurer and the participating employers may discontinue the policy. Article VI consists of "Miscellaneous Provision," including provisions relating to the right of individuals leaving Boeing's employment to convert their group life insurance coverage to individual life policies under specified circumstances.

The Group Plan provides both life insurance benefits and disability benefits in the event of a "total and permanent disability." The Group Plan provides that, in most circumstances, the life insurance benefit will be equal to 225% of the employee's "annual rate of basic earnings," subject to exceptions not applicable here. At the time he retired from Boeing, Frank J. Rosile was earning $53,000 per year, which would calculate to a death benefit of $119,250 ($53,000 × 225%).

Under the terms of the Group Plan, all employees of a participant employer are eligible for coverage. This general provision is, however, subject to an express exception: "An employee shall not be an eligible employee in any calendar month if he is not on the active payroll of a Participant Employer on the first day of the month." An employee may however, under certain circumstances, still be covered under the Group Plan.¹

Under the defendants' original interpretation of the Group Plan (and the manner in which they interpreted the plan in their motion for summary judgment), the defendants suggest that the only means by which an individual who is no longer employed by a participant employer may be covered under the Group Plan is if there is a determination that the individual is "totally and permanently disabled." Article I, Section 5, II, B, 2; p. 5-F, defines the phrase "totally and permanently disabled:"

The term "totally and permanently disabled" means the following tests must be met:

(a)(i) With respect to an employee who is covered under LTD-707 (which is another contract between the Policyholder and the Insurance Company), such employee ceases active work because an illness or injury is preventing such employee from performing the duties of his own occupation, or other appropriate work made available by his Participant Employer, during the first twenty-four months of such total and permanent disability and thereafter prevents the employee from working in any reasonable occupation (for the purposes of this section, "reasonable occupation" means as to any employee, any occupation or employment for which the employee is fitted by education, training or experience), or

(ii) With respect to an employee who is not covered under LTD-707 (which is another contract between the Policyholder and the Insurance Company), such employee ceases active work because an illness or injury is preventing such employee, for life, from engaging in employment or occupation for compensation or profit; and

(b) The employee has continuously met the requirements in (a) above for a period of at least six months.

The Group Plan provides that an individual who does not meet the eligibility requirements upon cessation of work may be reinstated under the Group Plan under certain conditions:

If a Participant Employer terminates an employee's insurance due to cessation of active work, and the Insurance Company subsequently determines that such individual would otherwise have met the definition of being totally and permanently disabled, then, notwithstanding any contrary provision in Article VI, Section 7, Conversion Privilege, provided any individual policy or policies issued to such individual pursuant to Article VI, Section 7 of this policy as a result of such termination are surrendered without any claim other than for return of any premium paid therefor, such individual shall again be deemed to be an employee in accordance with rules specified above for continuation due to being totally and permanently disabled.

(Article I, Section 5, II, B, p. 5-G.)

The Group Plan also contains a provision which allows individuals who cease to be employed by a participant employer (and thus would potentially lose coverage under the Group Plan) to obtain an equal amount of life insurance coverage if they choose to convert to an individual policy. Issuance of an individual conversion policy is conditioned, however, on the surrender of life insurance under the Group Plan:

When any insurance becomes effective under an individual policy issued under the conversion privilege, it shall be in exchange for all privileges and benefits under the group policy.

(Article VI, Section 7, p. 14. (Rev.))

As indicated above, an individual who is no longer employed by a participant employer may, under certain circumstances, be reinstated under the Group Plan. Reinstatement under the Group Plan is conditioned upon an individual's surrender of "any individual policy ... issued to such individual pursuant to Article VI, Section 7 ... without any claim other than for return of any premium paid therefor ..." (Article I, Section 5, II, B, p. 5-G.)

In contrast to the defendants' interpretation of these provisions of the Group Plan, the plaintiff suggests that an individual who is granted an approved leave of absence and is thereafter unable to return to work due to a total and permanent disability lasting an additional five months is entitled to continued coverage, at no charge, under the Group Plan. Therefore, under certain circumstances an individual may be covered under the Group Plan without incurring the cost of converting to an individual plan.²

In April 1986, Frank Rosile was diagnosed as having cancer of the lung and brain. Frank Rosile underwent surgery for that condition in May 1986. Frank Rosile continued to work at Boeing until he had surgery in...