Shields v. United of Omaha Life Ins. Co.

• Decision Date: 16 March 2021
• Docket Number: Docket no. 2:19-cv-00448-GZS
• Citation: 527 F.Supp.3d 22
• Parties: Lorna SHIELDS, Plaintiff, v. UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Maine

527 F.Supp.3d 22

Lorna SHIELDS, Plaintiff,

v.UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant.

Docket no. 2:19-cv-00448-GZS

United States District Court, D. Maine.

Signed March 16, 2021

Christopher C. Taintor, Trevor D. Savage, Norman, Hanson & Detroy, Portland, ME, for Plaintiff.

Brooks R. Magratten, Pro Hac Vice, Pierce Atwood LLP, Providence, RI, Cameron R. Goodwin, Lucus A. Ritchie, Pierce Atwood LLP, Portland, ME, for Defendant.

ORDER ON PENDING CROSS-MOTIONS

George Z. Singal, United States District Judge

Before the Court are two Cross-Motions: (1) the Motion for Judgment on the Administrative Record by Defendant United of Omaha Life Insurance Company (ECF No. 56); and (2) the Motion for Judgment on the Record by Plaintiff Lorna Shields (ECF No. 58). Having reviewed these Cross-Motions and the related memoranda filed by the parties (ECF Nos. 62 & 64), the Court GRANTS Defendant's Motion (ECF No. 56) and DENIES Plaintiff's Motion (ECF No. 58).

I. STANDARD OF REVIEW

The Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 – 1461, allows a participant or beneficiary to bring an action "to recover benefits" under a plan governed by the statute. See 29 U.S.C. § 1132(a)(1)(B). "In th[is] ERISA context, summary judgment [or, as titled here, a motion for judgment on the record] is merely a vehicle for deciding the case; the factual determination of eligibility for benefits is decided solely on the administrative record, and ‘the non-moving party is not entitled to the usual inferences in its favor.’ " Bard v. Boston Shipping Ass'n, 471 F.3d 229, 235 (1st Cir. 2006) (quoting Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510, 517 (1st Cir. 2005) ). As a first step, "an inquiring court must peruse the plan documents in order to determine the standard of judicial review applicable to a claims administrator's denial of benefits."¹ McDonough v. Aetna Life Ins. Co., 783 F.3d 374, 379 (1st Cir. 2015).

A challenge to a denial of benefits is reviewed de novo "unless the benefit plan gives the administrator ... discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Stephanie C. v. Blue Cross Blue Shield of Mass. HMO Blue, Inc., 813 F.3d 420, 427 (1st Cir. 2016) (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) ). "Where the delegation of discretionary authority is sufficiently clear and notice of it has been appropriately provided, the claims administrator's decision will be upheld unless it is arbitrary, capricious, or an abuse of discretion." Id. Under this standard, "a reviewing court asks whether a[n] ... administrator's determination is plausible in light of the record as a whole, or, put another way, whether the decision is supported by substantial evidence in the record." Niebauer v. Crane & Co., 783 F.3d 914, 923 (1st Cir. 2015) (internal quotation marks omitted). An administrator's decision "must be upheld if there is any reasonable basis for it." Madera v. Marsh USA, Inc., 426 F.3d 56, 64 (1st Cir. 2005).

Separate and apart from a claim to recover plan benefits, ERISA allows for a plan participant or beneficiary to "obtain other appropriate equitable relief" to "redress ... violations" or "enforce any provisions" of the plan or ERISA. See 29 U.S.C. § 1132(a)(3) ; see also Varity Corp. v. Howe, 516 U.S. 489, 512, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996) (describing § 1132(a)(3) as a "catchall" provision "offering appropriate equitable relief for injuries caused by violations that [ § 1132 ] does not elsewhere adequately remedy"). Because such claims are addressed in the first instance in the district court, they "requir[e] no deference to any administrator's action or decision." Moore v. Lafayette Life Ins. Co., 458 F.3d 416, 427 (6th Cir. 2006) ; see also Mercier v. Boilermakers Apprenticeship & Training Fund, No. 1:07-cv-11307-DPW, 2009 WL 458556, at *17, 2009 U.S. Dist. LEXIS 14263, at *53–54 (D. Mass. Feb. 10, 2009) ("As a general rule, claims for breaches of fiduciary duty [under § 1132(a)(3) ], unlike denial of benefits claims, are addressed in the first instance by a district court and require no deference to any administrator's action or decision.").

II. FACTUAL BACKGROUND²

A. The Parties

Defendant United of Omaha Life Insurance Company (hereinafter, "United") is licensed to conduct the business of insurance in the State of Maine. Prior to 2008, United issued a basic Group Term Life policy³ as well as a voluntary Group Term Life policy⁴ to Duramax Marine LLC ("Duramax"), a Maine employer.

Plaintiff Lorna Shields is the widow and beneficiary of Myron Shields. In 2008, Myron Shields was hired by Duramax and offered life insurance coverage under Duramax's plans. Myron elected coverage under both the basic and voluntary life insurance plans offered by his new employer. In August 2017, while still employed at Duramax, Myron was diagnosed with cancer. On June 5, 2018, Myron, then sixty years old, passed away. (See AR, PageID # 400.) Following his passing, Lorna sought life insurance benefits from United under both plans. United ultimately paid Ms. Shields a total of $236,000 in life insurance benefits in July 2018.⁵ Believing that United had improperly capped the benefits available to her under the Voluntary Life policy, she appealed United's determination and then filed the pending case.

B. The Plans

At Duramax, the United Basic Life plan provided coverage in an amount up to twice the employee's salary, not to exceed $300,000. (AR, PageID # 255–56.) This benefit could then be supplemented by the United Voluntary Life plan, which provided additional coverage in an amount equal to 1x, 2x, or 3x the employee's salary, not to exceed $200,000. (AR, PageID # 330.)

The record contains two versions of the Voluntary Life plan, Group Policy No. GVTL250H. The two versions are similar in many but not all respects. When Myron Shields enrolled in the Voluntary Life plan, it was governed by a version that is dated 2007.⁶ (AR, PageID #s 317–66 (hereinafter, "2007 Voluntary Life" or "VL2007").) Under this 2007 version, in order to receive coverage above $100,000 (the "Guarantee Issue" or "GI" limit), the applicant was required to provide "Evidence of Good Health" (also referred to herein as "Evidence of Insurability" or "EOI"). (Id. ) Coverage above the GI limit began when United "approve[d] the statement of physical condition or other evidence of good health," provided that the employee was "Actively Working on that day."⁷ (AR, PageID # 334.) Regarding inquiries, the policy instructed the insured: "If You have any questions about Your Plan, You should contact the Plan Administrator." (AR, PageID # 361.) As noted in this version of the plan documents, Duramax served as policyholder and plan administrator (AR, PageID #s 329, 359) while United acted as both the claims administrator and payer of claims (AR, PageID #s 347–48, 354–57).

As of January 1, 2017, the Duramax Voluntary Life plan was updated. (AR, PageID #s 189–237 (hereinafter, "2017 Voluntary Life" or "VL2017").) The 2017 version contains the same $100,000 GI limit but no longer refers to "good health." Instead, it refers to "Evidence of Insurability," (also referred to herein as "Evidence of Insurability" or "EOI") which it defines as follows:

Evidence of Insurability means proof of good health acceptable to Us. This proof may be obtained through questionnaires, physical exams or written documentation, as required by Us.

(Id., PageID # 229.) Additionally, the 2017 Voluntary Life policy also contains the following language concerning the effect of premium payments:

PAYMENT OF PREMIUMS THROUGH PAYROLL DEDUCTION

You are responsible for the payment of premiums for insurance for You and/or Your Dependent(s) under the Policy. The premium owed by You equals the total premium for all Insured Person(s).

Premiums will be automatically deducted from Your paychecks by the Policyholder, then remitted to Us, as authorized by You during the enrollment process. Please contact the Policyholder for information regarding Your paycheck deductions.

Payment of premium does not guarantee eligibility for coverage.

(AR, PageID # 217) (emphasis added). Finally, this more recent version of the Voluntary Life plan attaches a group policy between Duramax and United. (AR, PageID #s 189–95.) This agreement contains the following provision regarding Duramax's responsibilities as the policyholder:

The Policyholder is responsible for enrolling eligible persons for coverage under this Policy and performing other administrative duties agreed to by Us. The Policyholder will perform its responsibilities in accordance with the terms of this Policy and Our policies and procedures. The Policyholder may delegate some of its responsibilities to a third party. The Policyholder agrees to indemnify and hold Us harmless from and against any and all claims, actions, damages, liability and expenses, including, without limitation, reasonable attorneys’ fees, arising from or related to the failure of the Policyholder, or a third party to whom the Policyholder has delegated its responsibilities, to perform its responsibilities in accordance with the terms of this Policy or Our policies and procedures.

(Id., PageID # 191.)

The respective roles of Duramax and United do not appear to have changed in 2017. Duramax acknowledges that, dating back to 2008, United had provided it with a form entitled "Evidence of Good Health" ("EOI form") "with the expectation that Duramax would have the form completed by any employee who elected [coverage above the GI limit]." (See AR, PageID # 256.) The expectation appears to have been that Duramax would then forward the completed EOI form to United.

C. The Enrollment & Coverage

Upon his hiring in 2008, Duramax provided Myron with "a variety of paperwork, including, but not limited to, election forms for employment-related benefits ...." (AR, PageID # 256.) He signed two separate "Salaried Election...