Thomason v. Aetna Life Ins. Co., 93-1128

• Citation: 9 F.3d 645
• Decision Date: 09 November 1993
• Docket Number: No. 93-1128,93-1128
• Parties: 17 Employee Benefits Cas. 1791 Mary Ellen THOMASON, Plaintiff-Appellant, v. AETNA LIFE INSURANCE COMPANY, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 645

9 F.3d 645

17 Employee Benefits Cas. 1791

Mary Ellen THOMASON, Plaintiff-Appellant, v. AETNA LIFE INSURANCE COMPANY, Defendant-Appellee.

No. 93-1128.

United States Court of Appeals,

Seventh Circuit.

Argued Sept. 9, 1993.

Decided Nov. 9, 1993.

Sheryl A. Bautch (argued), Daniel P. Wurl, Webber & Thies, Urbana, IL, for plaintiff-appellant.

William P. Hardy (argued), Richard Chapin, Hinshaw & Culbertson, Springfield, IL, for defendant-appellee.

Before CUMMINGS, COFFEY and ROVNER, Circuit Judges.

CUMMINGS, Circuit Judge.

This is an appeal from summary judgment granted in favor of the defendant Aetna Life Insurance Company ("Aetna") in an action governed by the Employee Retirement Income Security Act, 29 U.S.C. Sec. 1001 et seq. ("ERISA"). The Court has jurisdiction over the appeal pursuant to 28 U.S.C. Sec. 1291.

A grant of summary judgment is reviewed de novo, Russo v. Health, Welfare & Pension Fund, 984 F.2d 762, 765 (7th Cir.1993), to be affirmed "only if there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law," Edwards v. Massachusetts Mutual Life Ins. Co., 936 F.2d 289, 291 (7th Cir.1991), after viewing the record in the light most favorable to the nonmoving party, Russo, 984 F.2d at 765.

Summary judgment is appropriate in this case, but not for the reasons advanced by the district court in its unpublished order. Because this Court reaches the same conclusion as the court below, although by a different route, the decision is affirmed.

Background

Plaintiff's late husband, G.B. Thomason, was insured under a group policy issued by defendant Aetna to his employer, Burkhart Foam, Inc. The policy included life insurance and disability coverage. Under the written terms of the policy, an employee would be entitled to "extended insurance" (that is, to life insurance coverage that would continue "without payment of further premiums") if, among other things, "before attaining the age of sixty years ... [the employee] became totally and permanently disabled." The parties agree that the group policy is an employee benefit plan governed by ERISA.

On or about November 11, 1985, less than two months after his sixtieth birthday, Mr. Thomason suffered a stroke. In June 1986 he thereby became entitled to and subsequently received long-term disability benefits from Aetna. Because the stroke occurred after Mr. Thomason had turned sixty, however, he did not qualify under the written terms of the plan for extended life insurance free of premium payments. He did have the option of continuing his coverage by converting the group life insurance policy to an individual policy, but he did not do so.

On September 27, 1988, Aetna sent Mr. Thomason a letter ¹ that opened with the words, "Your Group Life Insurance Policy has been extended during your total disability without cost to you." Another such letter was sent on September 26, 1989. ² Mr. Thomason died on January 9, 1990. Mrs. Thomason, a named beneficiary under the group policy, then filed a claim for $46,500 in life insurance benefits. Aetna denied the claim and this litigation ensued.

Plaintiff originally brought her suit in Illinois state court, alleging breach of contract and violation of the Illinois Insurance Code. Aetna thereafter removed the action to the federal system, on the ground that plaintiff's cause of action was preempted by ERISA and hence it involved a federal question. 28 U.S.C. Secs. 1331, 1441(b). This was quite correct. With few exceptions not relevant here, ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan...." 29 U.S.C. Sec. 1144(a). See also Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1075 (7th Cir.1992) ("[A] complaint reciting that the claim depends on the common law of contracts is really based on [ERISA] if the contract in question is a pension plan.... [A] complaint about pensions rests on federal law no matter what label its author attaches.").

"[Federal preemption] knocks out any effort to use state law, including state common law, to obtain benefits under such a plan." Pohl v. National Benefits Consultants, Inc., 956 F.2d 126, 127 (7th Cir.1992). Plaintiff therefore filed an amended complaint in federal court that was purportedly based on federal common law: She would like this Court to hold that by sending Mr. Thomason letters apparently referring to continuing life insurance coverage, Aetna waived its right to rely on the express terms of its "extended coverage" provision. This requires the Court to determine whether such common law principles of waiver are applicable in the ERISA context.

Analysis

That ERISA preempts state law, including state common law, does not mean that all common law concepts are automatically inapplicable in the ERISA context. On the contrary, Congress in passing the statute expected that "a federal common law of rights and obligations under ERISA-regulated plans would develop." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56, 107 S.Ct. 1549, 1557, 95 L.Ed.2d 39; accord Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110, 109 S.Ct. 948, 954, 103 L.Ed.2d 80; Fox Valley & Vicinity Construction Workers Pension Fund v. Brown, 897 F.2d 275, 281 (7th Cir.1990) (en banc), certiorari denied, 498 U.S. 820, 111 S.Ct. 67, 112 L.Ed.2d 41. Courts may develop such a federal common law only where ERISA itself "does not expressly address the issue before the court." Nachwalter v. Christie, 805 F.2d 956, 959 (11th Cir.1986). Where the statute is silent, courts must construct a common law that effectuates the policies underlying ERISA. Black v. TIC Investment Corp., 900 F.2d 112, 114 (7th Cir.1990). In so doing, they may use state common law as a basis for new federal common law, but only to the extent that state law is not inconsistent with congressional policy concerns. Nachwalter, 805 F.2d at 960. "The ultimate objective is not to fulfill policy objectives of state law but to fulfill the congressional command embodied in the language and structure of the federal statute." Fox Valley, 897 F.2d at 284 (Ripple, J., dissenting).

The emerging ERISA common law will not always provide a substitute federal remedy for the preempted state law claim. Pohl, 956 F.2d at 128; Lister v. Stark, 890 F.2d 941, 946 (7th Cir.1989) ("the availability of a federal remedy is not a prerequisite for federal preemption"), certiorari denied, 498 U.S. 1011, 111 S.Ct. 579, 112 L.Ed.2d 584. In this case, if waiver is inapplicable in the ERISA context Mrs. Thomason will be without a remedy for her alleged harms, since her state law claims have been preempted. However, "[t]he policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA." Pilot Life Ins., 481 U.S. at 54, 107 S.Ct. at 1556.

In arguing for the application of waiver principles in the ERISA context, plaintiff relies on this Circuit's holding in Black that equitable estoppel will sometimes apply to ERISA claims. 900 F.2d at 115. Plaintiff argues either that "estoppel" is a broad concept that embraces waiver principles, or, alternatively, that our holding in Black should be extended to recognize waiver in the ERISA context. Waiver is a broad concept. The particular principles upon which plaintiff relies in this case, however, are fairly narrow. While leaving open the question of whether some waiver principles might apply in the ERISA context, this Court declines to apply the waiver principles upon which plaintiff relies to ERISA claims; therefore, Mrs. Thomason's suit must fail.

Plaintiff first argues that Black, having applied estoppel principles to certain ERISA actions, thereby stands for the proposition that waiver principles are likewise applicable to those actions. While it is true that the same facts that give rise to a claim of waiver may also support a claim of estoppel, Mitchell v. Aetna Cas. and Surety Co., 579 F.2d 342, 348 (5th Cir.1978); Central States, Southeast and Southwest Areas Pension Fund v. Ekco Products, Inc., 581 F.Supp. 374, 378-379 (N.D.Ill.1984), this is not enough to support plaintiff's argument. Waiver and estoppel are distinct, although related, concepts. Waiver is the "voluntary and intentional relinquishment or abandonment of a known existing right or privilege, which, except for such waiver, would have been enjoyed." Buffum v. Chase National Bank, 192 F.2d 58, 60-61 (7th Cir.1951), certiorari denied, 342 U.S. 944, 72 S.Ct. 558, 96 L.Ed. 702; accord Loyola University of Chicago v. Humana Ins. Co., 996 F.2d 895, 901 (7th Cir.1993). An estoppel, on the other hand, "arises when one party has made a misleading representation to another party and the other has reasonably relied to his detriment on that representation." Black, 900 F.2d at 115; accord Central States, 581 F.Supp. at 378. Facts that give rise to an estoppel need not support a finding of waiver, and vice versa. See, e.g., Saverslak v. Davis-Cleaver Produce Co., 606 F.2d 208, 213 (7th Cir.1979), certiorari denied, 444 U.S. 1078, 100 S.Ct. 1029, 62 L.Ed.2d 762; Mitchell, 579 F.2d at 348. Because the two concepts are not identical, plaintiff cannot simply rely on the holding in Black to establish the applicability of waiver to ERISA claims.

Plaintiff argues in the alternative that Black ought to be extended to embrace waiver principles. She suggests that the same policy reasons that militate in favor of the application of estoppel principles to some ERISA actions also militate in favor of the application of waiver principles to those actions. In some cases this might be true. The requisites to finding a valid waiver of a known right are not as well established as the requisites to finding an equitable estoppel. To find a valid expressed waiver, some courts...