Vogel v. Independence Federal Sav. Bank
Decision Date | 03 January 1990 |
Docket Number | Civ. A. No. R-87-1207. |
Citation | 728 F. Supp. 1210 |
Parties | Leonard VOGEL, et al., Plaintiffs, v. INDEPENDENCE FEDERAL SAVINGS BANK, et al., Defendants. |
Court | U.S. District Court — District of Maryland |
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Thomas Hoxie and Francis J. Gorman, Semmes, Bowen & Semmes, Baltimore, Md., for plaintiffs.
Michael McGowan, McCarthy, Bacon, Costello & Stephens, Landover, Md., for defendants Independent Federal Sav. Bank and Independence Financial Corp.
Bryan D. Bolton and Charles S. Fax, Shapiro & Olander, Baltimore, Md., for defendant Guardian Life Ins. Co.
William F. Ryan, Jr., Katherine L. Taylor, Whiteford, Taylor & Preston, Baltimore, Md., for defendant Arkin, Youngentob, Mitzner, DiPietro & Kopp, Inc.
Pending before the Court in the above-captioned case are two sets of motions for summary judgment. First, each of the defendants— Independence Federal Savings Bank1 and Independence Financial Corporation2 ("Independence" or "the Bank"), the Guardian Life Insurance Company of America ("Guardian"), and Arkin, Youngentob, Mitzner, DiPietro & Kopp, Inc. ("the Arkin Agency" or "the Agency")3 — have moved for summary judgment on all counts in the Third Amended Complaint. Second, the plaintiffs and Guardian have submitted cross-motions for summary judgment on Guardian's counterclaim. All motions have been fully briefed; the Court now rules without need for a hearing pursuant to Local Rule 105.6 (D.Md.1989). For the reasons set forth below, this Court will, with one exception, deny defendants' motions for summary judgment; plaintiffs' motion for summary judgment on the counterclaim will be granted and Guardian's motion will be denied.
In the late 1960s, three friends — Leonard Vogel, Rudolph Arkin and William Fitzgerald —joined with others to establish Independence Federal Savings and Loan. Fitzgerald became the president and chief executive officer of Independence; Arkin and Vogel, along with Fitzgerald, served on the Bank's Board of Directors of which Arkin was Chairman. For many years, Vogel served as chairman of the Bank's Loan Committee, as vice president of the Bank, and as an appraiser for Independence Financial Corporation, a subsidiary of Independence Federal Savings Bank. Sometime in late 1974 or early 1975, Vogel asked Arkin, who also was an insurance agent,4 whether he could enroll on the Bank's life and health insurance plan. Although there was some question whether Vogel met the literal criteria for coverage under the policy, Vogel was enrolled in the Plan.5 Over the ensuing years, the Bank listed Vogel as an employee eligible to receive benefits and paid premiums on his behalf.
In early 1980, Independence changed its insurance carrier from New England Life to Guardian. Despite the change, Vogel continued to receive coverage under the Bank's employee benefits plan. While the policy with Guardian was, in general, a fairly standard group insurance plan, two provisions in the policy take on particular importance in this litigation. First, the policy contained no ceiling on the liability of the insurer for major medical expenses incurred by a participant. For as long as an insured incurred expenses, Guardian was obligated to pay. Second, the policy contained a provision permitting an employee, in some circumstances, to convert the group policy to an individual policy.6
On June 29, 1982, Leonard Vogel suffered a stroke that left him totally disabled, unable to work, and in need of constant medical attention. A little over a month later, Independence removed him from the payroll7 and stopped paying his Director's fees. Nevertheless, the Bank continued to pay premiums on his behalf to Guardian, and Guardian, for its part, continued to pay for the medical bills incurred by Vogel. Over the next two years, Guardian paid Vogel's medical bills while, in an effort to recoup some of these expenditures, Guardian imposed substantial increases on premiums charged to Independence. By late 1984, Independence's premiums for its insurance plan with Guardian were causing some hardship to the Bank, which was under pressure from Federal regulators to improve its financial condition. At about the same time, it became apparent that Leonard Vogel could live for many years in his incapacitated condition, never recovering and in need of continued close medical attention.8 Thereafter, the Arkin insurance agency, at the Bank's behest, began looking into a means to stem the ever increasing premiums being paid to Guardian.9 Eugene Youngentob, who at the time was both a member of the Arkin Agency and an employee of Guardian,10 and his partner Joseph DiPietro, sought quotations from several insurance companies to replace the Guardian policy. In June 1985, while this review was underway, Vogel was removed from the Board of Directors of Independence, yet the Bank continued to pay premiums on his behalf to Guardian. At a meeting held September 18, 1985, the Board, relying on the recommendation of Board Chairman Rudolph Arkin and his insurance agency, decided to change insurance carriers effective November 1, 1985. The new policy, issued by Union Mutual, covered all previously covered employees of Independence with the exception of Leonard Vogel. Since Vogel was "totally disabled" at the time the Guardian policy was terminated, he was entitled under that policy to receive an additional year of coverage.11 Thus, he was covered until November 1, 1986.
A few weeks after the Independence Board of Directors decided to adopt a new insurance plan that excluded coverage for Vogel, Rudolph Arkin called Mrs. Irene Vogel to inform her that her husband's coverage would cease. The Vogel family had not been informed prior to this phone call that Independence had been considering changing insurance carriers and, in the process of such a change, dropping coverage for Leonard Vogel. In the hope of extending coverage for their father, the Vogel family then sought to determine whether any right to convert the group policy to an individual policy existed. Twice in January 1986, Leonard Vogel's son Kenneth wrote to Aradyne Ardister, the Independence employee who served as the liaison with Guardian, seeking a copy of the insurance plan or the booklet provided to Independence employees that outlined plan benefits. Independence never provided a copy of the policy, although Brenda Dix of Guardian did eventually forward a copy of a benefits booklet to Kenneth Vogel.12 Attempts to exercise a right of conversion on Leonard Vogel's behalf were rejected by Guardian.
On November 1, 1986, when the Guardian policy's coverage expired, Leonard Vogel was left without any insurance. Because of his condition, he was not able to obtain any other insurance. As a result, Vogel could no longer afford the continuous medical attention he had been receiving and, although his family spent considerable sums to provide for his care, the quality of Vogel's medical care declined. On May 1, 1987, again at the suggestion of the Arkin Agency, Independence dropped its insurance policy with Union Mutual and re-enrolled with Guardian. This new Guardian policy, like the Union Mutual policy it replaced, did not provide coverage for Leonard Vogel. On May 12, 1987, Leonard Vogel died.
Plaintiffs filed a complaint in the Circuit Court for Montgomery County. Defendants removed the action to this Court on May 13, 1987, claiming that the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., preempted all of plaintiffs' state law claims and gave jurisdiction to the Federal District Court for the District of Maryland. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) ( ). As it now stands, plaintiffs'13 Third Amended Complaint sets out ten counts, as follows:
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