Steigleman v. Symetra Life Ins. Co.
| Decision Date | 01 March 2021 |
| Docket Number | No. CV-19-08060-PCT-ROS,CV-19-08060-PCT-ROS |
| Citation | 522 F.Supp.3d 514 |
| Parties | Jill M STEIGLEMAN, Plaintiff, v. SYMETRA LIFE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Arizona |
Aaron Michael Dawson, Anita Rosenthal, Sander Ruggill Dawson, Steven C. Dawson, Dawson & Rosenthal PC, Sedona, AZ, Scott Edward Davis, Scott E Davis PC, Scottsdale, AZ, for Plaintiff.
Stephen M. Bressler, Todd Daniel Erb, Nicole Marie True, Lewis Roca Rothgerber Christie LLP, Phoenix, AZ, for Defendant.
Plaintiff Jill Steigleman, through the business she owned and operated, purchased long-term disability coverage from Defendant Symetra Life Insurance Company. In 2017, Steigleman filed a disability claim, stating she was unable to work due to neck pain. Symetra eventually approved the claim and began paying benefits but Steigleman believes the way her claim was handled constituted a breach of contract and the tort of bad faith. After Steigleman filed this suit asserting those state-law claims, Symetra repeatedly admitted Steigleman's state-law claims were proper. That is, Symetra admitted Steigleman's claims were "not governed by the Employee Retirement Income Security Act of 1974." (Doc. 8 at 2). But not long after making those representations, Symetra changed positions and argued Steigleman's claims are subject to ERISA. (Doc. 27). The Court did not resolve the applicability of ERISA at the outset and the parties proceeded with discovery.
Symetra now seeks summary judgment on two bases. First, Symetra argues ERISA applies, Steigleman's state-law claims are preempted, and she must pursue the remedies available under ERISA. Second, if ERISA does not apply, Symetra believes Steigleman lacks sufficient evidence to support her state-law claims. Steigleman opposes both arguments but spends most of her time arguing there is sufficient evidence supporting her state-law claims.
The facts viewed in the light most favorable to Steigleman establish ERISA applies to her claims. Steigleman, perhaps inadvertently, established one or more ERISA-governed plans when her company offered and paid for various forms of insurance to its employees. Regarding the disability coverage, Steigleman and her employees had coverage from the same company and Steigleman's company paid the disability premiums for Steigleman and the other employees. Therefore, there was an ERISA-governed plan regarding disability coverage and Symetra's motion for summary judgment will be granted on that basis.
But even if Steigleman's company did not create an ERISA-governed plan regarding disability coverage, there is no genuine dispute of material fact regarding her state-law claims and those claims fail as a matter of law. The initial denial of Steigleman's claim was due to inaccurate information received from Steigleman's treating physician. Once that information was corrected, Symetra approved the claim. In approving the claim, Symetra informed Steigleman that benefits may be limited to twelve months but Symetra never relied on that limitation to deny benefits. Symetra also suspended benefits when it learned Steigleman started a new job. It is undisputed, however, that Symetra's information was accurate. When Steigleman later informed Symetra she had rejected the new position, Symetra continued to pay benefits. These actions do not meet the objective and subjective requirements for a bad faith claim under Arizona law.
The following is a simplified version of events, presented in the light most favorable to Steigleman.
In 2008, Steigleman established Steigleman Insurance Agency, LLC, which she owned and operated. Under that LLC, Steigleman worked as an agent selling Farm Bureau Financial Services insurance. (Doc. 140 at 3). As an agent for Farm Bureau, Steigleman was eligible to join "The Agents Association" ("TAA"). As described by Steigleman, TAA is "a complex entity in that it is a nonprofit organization created solely for the purpose of [Farm Bureau] agents to be able to communicate with [Farm Bureau] management anything they feel could potentially make our policies and/or ... members ... better off." (Doc. 131-12 at 53). In other words, TAA is an organization that individual agents voluntarily join and TAA then advocates on behalf of its members with Farm Bureau management. (Doc. 131-12 at 110).
While the parties do not make it entirely clear, they appear to agree that at all times relevant to this case, TAA had a contract with an insurance broker known as "mgc group." (Doc. 131-12 at 115). Pursuant to that contract, mgc "created a world-class benefits packaged designed specifically for [TAA]." (Doc. 131-12 at 151). That package allowed agents who were members of TAA to purchase, among other benefits, long-term disability insurance. (Doc. 131-12 at 151). The long-term disability insurance was offered pursuant to a group disability policy obtained from Symetra. Enrollment and premium collection were handled by mgc.
Steigleman first purchased long-term disability coverage with Symetra in June 2009. (Doc. 131-7 at 2). At the times relevant to this case, the premiums were paid by Steigleman Insurance Agency.1 Under the terms of Steigleman's policy, she would be "disabled" if she could not perform the "material and substantial duties of [her] regular occupation" and her income fell to "less than or equal to 99% of [her] pre-disability earnings." (Doc. 131-2 at 22). In the event she was disabled, Steigleman would receive "60% of her basic monthly pre-disability earnings to a maximum monthly benefit of $15,000." (Doc. 131-9 at 21; Doc. 131-2 at 6).
As of 2016, Steigleman Insurance Agency employed two other individuals. Those employees were offered a variety of benefits including health insurance and long-term disability coverage through the same arrangement involving TAA and mgc. The record does not indicate when the disability coverage was first offered or accepted by the employees. But as of December 2016, both employees had long-term disability coverage. (Doc. 131-8 at 2, 3). The employees’ coverage was through Symetra but differed slightly from the coverage applicable to Steigleman. For the employees, they would be "disabled" if they experienced a 20% decrease in pre-disability earnings and, unlike Steigleman's maximum benefit of $15,000 per month, the maximum monthly benefit for the employees was $7,500. (Doc. 142-9 at 6). The employees did not pay the premiums themselves. (Doc. 131-12 at 50). Instead, Steigleman Insurance Agency paid the entire premiums on the employees’ behalf.
As of early 2017, Steigleman was experiencing serious neck problems. On May 30, 2017, Steigleman's orthopedic surgeon, John Ehteshami, operated on her neck. Steigleman had a follow-up appointment with Dr. Ehteshami on June 14, 2017. (Doc. 131-6 at 2). As explained later, there are two versions of Dr. Ehteshami's notes from that follow-up appointment. The original version of the notes indicated Steigleman had no difficulty swallowing or speaking. The notes also indicated Steigleman's "[g]rip strength, wrist extensor and flexors, biceps and triceps [were] 5/5." Under the section labeled "assessment," the notes recounted Steigleman was "doing well" and the "plan" was for her to "continue her activities as she [had] been doing." (Doc. 131-6 at 2). The original version of the notes did not indicate Steigleman had any restrictions regarding activities or working.
In July 2017, Steigleman applied for long-term disability benefits from Symetra. (Doc. 131-4 at 2). In the application, Steigleman stated she was "unable to work due to ... disc stenosis." Steigleman claimed she had experienced "pain [for] many years," she had "5 herniated discs
in neck," and those discs had required surgery. In one portion of the application Steigleman indicated she was "still attempting [to work] each day as possible" and she was working part time, but elsewhere in the application she indicated she stopped working May 30, 2017, and had not returned to work. (Doc. 131-4 at 2, 3). Steigleman identified her previous salary as $27,430 per month.
The application form included a section completed by one of Steigleman's medical providers, Nurse Practitioner Christina Trujillo. That section stated Steigleman had "chronic neck pain" and had been "advised ... to stop working" on July 7, 2017. (Doc. 131-4 at 6). The form also stated Steigleman was not able to return to work.
On August 3, 2017, Symetra called Steigleman and left a voicemail asking for a return call. That same day, Symetra reviewed the information they had received from Steigleman. (Doc. 131-3 at 19). After a few missed calls between the parties, Steigleman eventually spoke with a Symetra representative regarding the claim. (Doc. 131-3 at 19, Doc. 131-11 at 7). Steigleman explained she had been out of work since May 30, 2017 but she planned to resume physical therapy on September 1, 2017, and she hoped to return to work on January 1, 2018. Symetra informed Steigleman she would need to submit information regarding her earnings so, if she were found disabled, Symetra could "calculate salary and benefit percentage." (Doc. 131-3 at 19).
Steigleman did not immediately submit her earnings information. On August 29, 2017, Steigleman called Symetra and was told she needed to submit her earnings "for May until now." (Doc. 131-3). Steigleman was also told of the "90-day elimination period." That period meant Steigleman's long-term disability benefits would only begin "90 days after the date disability begins." (Doc. 131-2 at 6). Thus, assuming Steigleman had become disabled as of May 30, 2017, the elimination period would be through August 27, 2017, and benefits would be payable only if she remained disabled after that date. (Doc. 131-3 at 19). On September 6, 2017, Symetra faxed a request for medical records to Dr. Ehteshami's office. (Doc....
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