VanderKlok v. Provident Life and Acc. Ins. Co., Inc.

• Decision Date: 13 February 1992
• Docket Number: Nos. 91-1466,91-1558,s. 91-1466
• Citation: 956 F.2d 610
• Parties: Herbert VANDERKLOK, Plaintiff-Appellant, Cross-Appellee, v. PROVIDENT LIFE AND ACCIDENT INSURANCE CO., INC., Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 610

956 F.2d 610

Herbert VANDERKLOK, Plaintiff-Appellant, Cross-Appellee, v. PROVIDENT LIFE AND ACCIDENT INSURANCE CO., INC.,

Defendant-Appellee, Cross-Appellant.

Nos. 91-1466, 91-1558.

United States Court of Appeals, Sixth Circuit.

Submitted Nov. 12, 1991.

Decided Feb. 13, 1992.

David W. Swets (briefed), Anderson & Swets, Grand Rapids, Mich., for plaintiff-appellant, cross-appellee.

Duane J. Beach (briefed) and Gary A. Maximiuk (briefed), Wheeler, Upham Bryant & Uhl, Grand Rapids, Mich., for defendant-appellee, cross-appellant.

Before KENNEDY and JONES, Circuit Judges, and CONTIE, Senior Circuit Judge.

CONTIE, Senior Circuit Judge.

Plaintiff-appellant, Herbert VanderKlok, appeals, and defendant-appellee, Provident Life and Accident Insurance Co., Inc., cross appeals from the district court's order dismissing count one of plaintiff's complaint, alleging violation of 29 U.S.C. § 1132(c), pursuant to Fed.R.Civ.P. 12(b)(6), and granting summary judgment to defendant on counts two and three, which alleged that defendant's denial of disability benefits violated the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq. [hereinafter, "ERISA" or "the Act"]. For the following reasons, we affirm in part and reverse in part.

I.

Plaintiff, Herbert VanderKlok, a man with a sixth grade education, worked as a laborer for Grand Rapids Manufacturing ¹ for approximately 24 years from October 10, 1963 until March 19, 1987, when he was injured when the weight of his truck fell on him as he was replacing a wheel. During his employment, he had performed numerous duties as a laborer, including loading appliances, driving trucks, and filling in for other employees on the manufacturing line.

After he was injured, plaintiff was diagnosed as having a fractured clavicle. Although his left shoulder healed properly, his treating physician, Dr. Thomas G. Schwaderer, diagnosed him as having adhesive capsulitis to the right shoulder, a painful inflammation which limits the range of motion of the shoulder. Plaintiff has not returned to any form of work since the accident.

On December 28, 1987, plaintiff filed a claim with Provident, the defendant insurance carrier, claiming that he was entitled to disability benefits under an employer-sponsored life insurance plan. Plaintiff was covered under his employer's employee benefit plan by a group insurance policy, number I-610-G, which was issued by defendant. The insurance policy provided for up to $12,500 in life insurance for covered employees. The policy also provided that a covered employee, who became totally and permanently disabled, could elect to receive forty-eight equal monthly payments of $21.85 for each $1000 of life insurance in lieu of a lump sum payment upon death.

In response to defendant's inquiry about the severity of plaintiff's injury, Dr. Schwaderer wrote:

Mr. VanderKlok has remained under my care and treatment since his injury on 3/19/87 when he sustained a fracture of the clavicle. The fracture has healed well, but subsequently he has developed significant adhesive capsulitis of his right shoulder that has required a manipulation, as well as a great deal of physiotherapy. Although this increased his motion somewhat, he is markedly limited in shoulder motion....

He continues to show some progress in physical therapy following the manipulation, but has not yet made a full recovery. I also anticipate he will never regain the full use of his shoulder. Although he is able to perform light activities at the present time, he is not capable of returning to his regular job, nor will he ever be able to.

If he has to be prevented from engaging in any business or occupation and performing any work for compensation or profit to be considered totally and permanently disabled, then he does not qualify under those definitions. However, it is my feeling that he is not able to perform his regular job at the present time, nor will he be able to in the future.

Upon receipt of Dr. Schwaderer's report, defendant had an independent referral agency, Professional Appointment Services, refer plaintiff to another doctor for evaluation. Dr. Roy Waddell was retained, and his report stated:

At the present time I would certainly consider Mr. VanderKlok totally disabled for his usual occupation, although I certainly cannot say at this time that this disability will be permanent. I would not object to the patient returning to work that does not require heavy pushing, pulling, repetitive lifting, or work out at arm reaches or over chest level. If the patient does indeed have an adhesive capsulitis of his shoulder, I would expect that condition to improve considerably since that condition is almost always selflimiting and usually resolves to normal or near normal function. Based on the physical findings noted previously, I would question the patient's motivation returning to full-time employment and in that regard his prognosis for returning to full-time employment of any type is probably poor.

On December 1, 1988, defendant denied plaintiff's claim for disability benefits because it determined that the medical evidence established that plaintiff was not totally and permanently disabled. Defendant sent notification of the denial of benefits to White Consolidated Industries, the parent company of plaintiff's employer, G.R. Manufacturing, but this letter was not forwarded to plaintiff. Plaintiff alleges that he made several telephone calls to defendant to find out the status of his claim, but the calls were not answered. In 1990, he retained an attorney, who made a written request for information to defendant on August 20, 1990. On September 24, 1990, defendant sent a copy of its original December 1, 1988 letter denying disability benefits to plaintiff.

Plaintiff initially filed a claim contesting the denial of disability benefits under the life insurance policy in Michigan state court. On October 10, 1990, defendant removed the case to federal court based on federal question jurisdiction arising out of an ERISA action. In the United States District Court for the Western District of Michigan, plaintiff amended his complaint under ERISA and defendant answered.

On January 8, 1991, defendant filed a motion for summary judgment pursuant to Fed.R.Civ.P. 56 and a motion to dismiss for failure to state a claim upon which relief could be granted pursuant to Fed.R.Civ.P. 12(b)(6). On April 1, 1991, plaintiff filed his motion for summary judgment and brief in opposition to defendant's January 8, 1991 motions. On this date, the district court granted defendant's 12(b)(6) motion on count one and motion for summary judgment on counts two and three.

On April 11, 1991, plaintiff timely filed an appeal. On April 17, 1991, defendant filed its notice for cross appeal.

II.

In his complaint, plaintiff requested that the court determine as a matter of law that a literal reading of the disability clause contained in life insurance policy No. I-610-G was contrary to public policy and violated ERISA. The clause at issue in the life insurance policy, which was part of G.R. Manufacturing's employee benefit plan, defines the extent of disability required in order for the insured to qualify for accelerated benefits in the form of disability benefits in lieu of a lump sum payment at death. The clause provides:

If any Employee shall, while insured for life insurance under this policy, furnish the Insurance Company with notice and due proof that such Employee while insured for life insurance under this policy and prior to his sixtieth birthday, has become totally disabled as a result of bodily injury or disease so as to be wholly prevented thereby from engaging in every business or occupation and from performing any work for compensation or profit, and that such total disability will be permanent and continuous for the remainder of his life, the Insurance Company will pay to the Employee, in lieu of the life insurance payable at death of the Employee, the amount of insurance in force on the life of the Employee at the commencement of such continuous total disability in 48 equal installments of $21.85 for each $1,000.00 of life insurance in force.

G.R. Manufacturing Group Insurance Plan, Policy No. 1-610-G, Section III, Appendix p. 92.

Plaintiff asserts that this clause must be read to mean that for an employee to qualify for disability benefits, all that he must show is that he is disabled to such an extent that he cannot return to his prior position with the employer. Defendant, on the other hand, contends that the clause must be read literally. An employee must be disabled to such an extent that he is unable to perform any work for compensation and profit and that the extent of the disability must be permanent and continuous.

We do not believe that plaintiff's argument that ERISA mandates that the clause at issue must be construed to mean that plaintiff need only be disabled from his regular or prior occupation in order to receive disability benefits has any merit. Congress passed ERISA in order to assure that those who participate in employee benefit plans actually receive the benefits they are entitled to and "do not lose their benefits as a result of unduly restrictive ... provisions." H.R.Rep. No. 93-807, 93rd Cong., 2d Sess. 3, reprinted in 1974 U.S.Code Cong. & Admin.News 4639, 4670, 4676-77. Because the policy at issue is a life insurance policy, not a disability insurance policy, those who participate in the plan can expect to receive the benefits they are entitled to at death. As stated clearly in the terms of the policy, it is only upon the occasion that one becomes totally and permanently disabled in general that one is entitled to accelerated payments on the life insurance policy in the form of disability benefits. There is no authority for plaintiff's argument that such a clause must be construed to mean that a claimant need be disabled only from his prior occupation. As the court...