Talasek v. Unum Life Ins. Co. of Am.

• Decision Date: 15 December 2020
• Docket Number: CIVIL ACTION NO. 4:18-cv-3306
• Parties: ERICA TALASEK, Plaintiff, v. UNUM LIFE INSURANCE COMPANY OF AMERICA, ET AL., Defendants.
• Court: U.S. District Court — Southern District of Texas

ERICA TALASEK, Plaintiff, v. UNUM LIFE INSURANCE COMPANY OF AMERICA, ET AL., Defendants.

CIVIL ACTION NO. 4:18-cv-3306

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

December 15, 2020

MEMORANDUM AND RECOMMENDATION

This case is governed by the Employment Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. (ERISA). The parties dispute whether Plaintiff Erika Talasek is entitled to supplemental life insurance benefits of $300,000 under a group policy sponsored by her deceased husband's employer National Oilwell Varco LP (NOV) and issued by Defendant Unum Life Insurance Company of America (Unum). Both Unum and NOV have moved for summary judgment. ECF 83, 85. Having considered the parties' written submissions, the administrative record, and the law, the Court RECOMMENDS that Unum's and NOV's motions be GRANTED.

I. Factual and Procedural Background

The facts in this section are undisputed and supported by the Administrative Record.¹ Plaintiff's husband, Ben Talasek, began working for NOV in 2001. NOV offered its employees basic and supplemental life insurance as part of an ERISA Plan. Unum issued the basic and supplemental life insurance group policies offered by the Plan. NOV was the Plan sponsor and administrator and delegated authority and discretion to Unum to handle all claims and make benefits decisions.

Beginning in 2008, Ben Talasek was covered by the basic life insurance group policy which offered a benefit in the amount of two times his annual earnings. During the November 2013open enrollment period, Ben elected for the first time the supplemental, also called voluntary, life insurance coverage. Unlike the basic life insurance, which did not require medical underwriting, the supplemental life insurance required an employee to submit evidence of insurability and obtain approval for coverage by Unum. On January 2, 2014, Ben submitted an "Evidence of Insurability Form." On January 18, 2014, Unum sent Ben a letter informing him of an error in his application and the need for additional information. Around this time, Ben was diagnosed with pancreatic cancer. Ben called Unum on January 21, 2014 to check on the status of his application and was told about the January 18 letter. Ben corrected the error on the Evidence of Insurability Form and supplied additional information. Ben called Unum again on February 12, 2014 to check on the status of the application and was told that the standard turnaround time for a coverage decision was 4-6 weeks. On March 3, 2014, several weeks after receiving his cancer diagnosis, Ben provided blood and urine samples and basic health history as part of Unum's requirement that he prove insurability prior to approval of coverage. He did not mention the cancer diagnosis.

The Administrative Record includes a March 6, 2014 letter addressed to Ben (at the same address as the January 18, 2014 letter Ben received) stating that Unum could not approve Ben's application due to abnormal blood test results. The Administrative Record does not contain any letter approving Ben's application for supplemental life insurance benefits. NOV received notice that Unum did not approve Ben's application for supplemental benefits. Despite the notice and the statements in the Plan that supplemental life insurance coverage is contingent on approval by Unum, NOV began deducting the increased premiums for supplemental coverage from Ben's paycheck in April 2014 and continued to do so through 2017. NOV also sent annual benefit confirmation statements to Ben for the years 2014 through 2017 which identified supplemental life insurance coverage as part of his benefits. Ben passed away from pancreatic cancer on December 24, 2017.

In January 2018, Plaintiff submitted a claim for both basic and supplemental life insurancebenefits under the Plan's group life insurance policy. Unum approved her claim for basic life insurance benefits in the amount of $135,000 but denied the $300,000 claim for supplemental life insurance benefits. Unum advised Plaintiff it was denying the claim because it had rejected Ben's application for supplemental life insurance on March 6, 2014 due to the abnormal test results from his required insurability medical examination. Plaintiff appealed Unum's unfavorable decision on grounds that NOV deducted premiums for supplemental life insurance and sent Ben confirmation statements reflecting the supplemental life insurance coverage was part of his benefits and that Ben never received notice that his application for supplemental coverage was rejected. Unum did not change its original claim decision.

Plaintiff filed this suit in September 2018 and on April 10, 2019 filed a Second Amended Complaint asserting claims for (1) benefits under ERISA § 502(a)(1)(B); (2) ERISA estoppel; (3) breach of fiduciary duty under ERISA § 502(a)(3)(B); and (4) negligence against NOV. ECF 16. The Court previously dismissed Plaintiff's breach of fiduciary duty and negligence claims. ECF 69, 73. Unum and NOV now move for summary judgment on Plaintiff's ERISA estoppel and §502(a)(1)(B) claims for benefits.

II. Procedure for deciding ERISA Claims

The Fifth Circuit recently acknowledged "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." Katherine P. v. Humana Health Plan, Inc., 959 F.3d 206, 208 (5^th Cir. 2020) (citing Koch v. Metro. Life Ins. Co., 425 F. Supp. 3d 741, 746-47 (N.D. Tex. 2019) (surveying authorities). The Fifth Circuit declined to answer the question because the parties had not raised it but reversed the summary judgment in favor of the defendant and remanded the case for further proceedings due to a genuine issue of material fact precluding summary judgment. Some Courts have concluded the appropriate procedure for resolving this type of ERISA dispute is to make findings of fact and conclusions of law, consistent with Rule 52,based on the administrative record and the parties' briefing. See Ingerson v. Principal Life Ins. Co., Civil Action No. 2:18-cv-227-Z-BR, 2020 WL 3163074, *1 n.3 (N.D. Tex. May 13, 2020) (making recommended findings of fact and conclusions of law pursuant to Rule 52 where parties requested trial on the administrative record and briefing); O'Hara v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 642 F.3d 110, 116 (2d Cir. 2011) (noting a trial on the papers followed by express findings of fact and conclusions of law under Rule 52 is appropriate where it is clear that the parties consent to a bench trial on the parties' submissions); Hill v. Hartford Life & Accident Ins. Co., 1:08-CV-0754-CC, 2009 WL 10664970, at *1 (N.D. Ga. Sept. 16, 2009) (treating plaintiff's summary judgment motion on his ERISA claims as trial on the papers pursuant to Rule 52).

As in Katherine P., the parties here do not object to having this case decided on motions for summary judgment, and no party has suggested that Rule 52 is the appropriate procedural mechanism for deciding this case. The parties have submitted this matter to the Court on motions for summary judgment, so the Court has considered the motions under the summary judgment standards of Rule 56. See Woods v. Riverbend County Club Inc., 320 F. Supp. 3d 901, 909-10 (S.D. Tex. 2019) (granting defendant's motion for summary judgment after de novo review of the administrative record because the fact issues raised by plaintiff were not dispositive); see also Bunner, 2020 WL 3493760, at *12-13 (denying summary judgment due to fact issues on Plaintiff's estoppel claim).

Summary judgment is appropriate when the "movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. PRO. 56. In ruling on a motion for summary judgment, the Court construes the evidence in the light most favorable to the nonmoving party and must draw all reasonable inferences in that party's favor. R.L. Inv. Prop., LLC v. Hamm, 715 F.3d 145, 149 (5^th Cir. 2013).

III. Motions to Strike Evidence

Next, the Court addresses the parties' Motions to Strike in light of two principles specific to ERISA benefit claims. First, with only narrow exceptions, the evidence a court may review to decide an ERISA benefits claim is limited to the Administrative Record. Estate of Bratton v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 215 F.3d 516, 521 (5^th Cir. 2000) ("The plan administrator has the obligation to identify the evidence in the administrative record and the claimant must be afforded a reasonable opportunity to contest whether that record is complete. Once the administrative record has been determined, the district court may not stray from it but for certain limited exceptions"); see also Soileau & Assocs., LLC v. Louisiana Health Serv. & Indem. Co., No. CV 18-710-WBV-JCW, 2020 WL 1969984, at *4 (E.D. La. Apr. 23, 2020) (identifying 5 types of evidence outside the Administrative Record the Fifth Circuit has recognized as exceptions: "(1) evidence related to how an administrator has interpreted terms of the plan in the past; (2) evidence, including expert opinion, that assists the district court in understanding the medical terminology or practice related to a benefits claim; (3) evidence regarding the completeness of the administrative record; (4) evidence regarding whether the plan administrator complied with ERISA's procedural regulations; and (5) evidence regarding the existence and extent of a conflict of interest created by a plan administrator's dual role in making benefits determinations and funding the plan."). None of the recognized exceptions apply here. Second, the Federal Rules of Evidence, including the hearsay rule, do not govern the admissibility of, or preclude the court's consideration of, evidence in the Administrative Record. Harmon v. Bayer Bus., No. CV H-14-1732, 2016 WL 397684, at *10 (S.D. Tex. Jan. 29, 2016) ("[H]earsay...