Wilcox v. Standard Ins. Co.

• Decision Date: 28 September 2004
• Docket Number: No. CV03-HGD-0722-M.,CV03-HGD-0722-M.
• Citation: 340 F.Supp.2d 1266
• Parties: Robert WILCOX, Plaintiff, v. THE STANDARD INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Alabama

340 F.Supp.2d 1266

Robert WILCOX, Plaintiff, v. THE STANDARD INSURANCE COMPANY, Defendant.

No. CV03-HGD-0722-M.

United States District Court, N.D. Alabama, Middle Division.

September 28, 2004.

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Myron K. Allenstein, Rose Marie Allenstein, Allenstein & Allenstein, Gadsden, AL, for Plaintiff.

James S. Christie, Jr., Anne Marie Seibel, Bradley, Arant, Rose & White LLP, Birmingham, AL, for Defendant.

MEMORANDUM OPINION

DAVIS, United States Magistrate Judge.

The above-entitled civil action is before the court on the Motion for Summary Judgment filed by plaintiff [Doc. # 10], the Motion for Summary Judgment filed by defendant [Doc. # 12], the Motion to Strike Exhibits B, C, and D as Attached to the Affidavit of Lisa Gates filed by plaintiff [Doc. # 15], the Motion to Continue Cross Motions for Summary Judgment filed by plaintiff [Doc. # 22], the Motion to Remand filed by plaintiff [Doc. # 23], the Motion to Allow Additional Evidence filed by plaintiff [Doc. # 31], and the Motion to Allow Additional Submission filed by plaintiff [Doc. # 33].

In his complaint, plaintiff, Robert Wilcox, alleges that he was insured under a long term disability (LTD) benefits policy issued by defendant, The Standard Insurance Company (Standard). Prior to his alleged disability, plaintiff states that he worked full time at Turner Industries. Plaintiff claims that defendant never provided a copy of the LTD policy to plaintiff. On February 12, 2001, plaintiff filed a claim for LTD benefits, and defendant granted the claim. Plaintiff avers he had two herniated discs and was in severe pain. By letter dated November 19, 2002, Standard notified plaintiff it was discontinuing his LTD benefits as of December 1, 2002. The benefits were terminated based on a policy amendment effective January 1, 2000, limiting LTD benefits to a period of 12 months for any musculoskeletal and connective tissue disorders. Wilcox asserts state law causes of action for breach of contract, bad faith, and failure to disclose and seeks a declaratory judgment. Plaintiff contends that his state law claims are not preempted by the Employee Retirement Income Security Act (ERISA) because he paid the premiums through a payroll deduction, and the insurance was voluntary. Plaintiff contends he is owed $13,180 for benefits for the period of December 1, 2002, to the time of the filing of the complaint on March 31, 2003, and benefits for the time thereafter at a rate of $3,295 per month. Defendant asserts in its answer that plaintiff's claims are preempted by ERISA and that he has not exhausted his administrative remedies with respect to some of his claims.

Plaintiff filed a Motion for Summary Judgment, seeking judgment for seven months of long term disability benefits for the period of December 2002 to June 30, 2003, in the amount of $23,065, with interest thereon, as well as reinstatement of future LTD benefits. [Doc. # 10]. Defendant filed a cross Motion for Summary Judgment, asking for a ruling that plaintiff's benefits were properly terminated and that he is not entitled to future benefits. [Doc. # 12].

The submissions of the parties establish the following facts. Turner Industries, Ltd., has a Group Long Term Disability Insurance Policy through Standard Insurance Company. [Plaintiff's Exh. 2]. The original policy provided that the Maximum Benefit period was "the longest period for which LTD Benefits are payable for any one period of continuous Disability." [Id. at 18]. The Maximum Benefit Period is determined by the age when the disability begins; for a person age 61 or younger, the Maximum Benefit Period is to age 65 (or three years and six months, if longer). [Id. at 2]. Under the original policy provisions, there was no limitation on the benefit period for musculoskeletal or connective tissue disorders.

The policy states that, "If you become Disabled while insured under the Group Policy, we will pay LTD benefits according to the terms of the Group Policy after we receive satisfactory Proof of Loss." [Id. at 4]. The policy also provides that Standard has "full and exclusive authority to control and manage the Group Policy, to administer claims, and to interpret the Group Policy and resolve all questions arising in the administration, interpretation, and application of the Group policy." [Id. at 13].¹ The policy further states that Standard's authority includes, but is not limited to:

1. The right to resolve all matters when a review has been requested;

2. The right to establish and enforce rules and procedures for the administration of the Group Policy and any claim under it;

3. The right to determine:

a. Eligibility for insurance;

b. Entitlement to benefits;

c. Amount of benefits payable;

d. Sufficiency and the amount of information we may reasonably require to determine a., b., or c., above.

Subject to the review procedures of the Group Policy, any decision we make in the exercise of our authority is conclusive and binding.

[Id. at 13-14]. The policy states that "[b]enefits under the Group Policy are limited to its terms, including any valid amendment" and that "[n]o change or amendment will be valid unless it is approved in writing by one of our executive officers and given to the Policyowner [Turner Industries] for attachment to the Group Policy." [Id. at 17].

Along with the Group Long Term Disability Insurance Policy, there was issued a Certificate and Summary Plan Description. [Plaintiff's Exh. 4]. The identical language allocating authority to Standard appears in the Summary Plan Description. [Id. at 16-17]. The Group Policy and Summary Plan Description together make up the ERISA plan, for purposes of 29 U.S.C. § 1102(a)(1). See Shaw v. Connecticut General Life Ins. Co., 353 F.3d 1276 (11th Cir.2003); Alday v. Container Corp. Of America, 906 F.2d 660, 666 (11th Cir.1990).

Group Policy Amendment No. 3, effective January 1, 2000, amends the Exclusions and Limitations portion of the policy to add, inter alia, a 12-month limitation period for musculoskeletal and connective tissue disorders. [Plaintiff's Exh. 3]. The amendment further provides in pertinent part:

Payment of LTD Benefits is limited to the Musculoskeletal And Connective Tissue Disorder Limitation Period shown in Coverage Features during your entire lifetime for a Disability caused or contributed to by musculoskeletal or connective tissue disorders including, but not limited to:

1. Any disease or disorder of the cervical, thoracic or lumbosacral back and its surrounding soft tissue.

* * * * * *

This limitation will not apply to:

a. Herniated disks with neurological abnormalities that are documented by electromyogram, and computerized tomography or magnetic resonance imaging.

* * * * * *

d. Radiculopathies that are documented by electromyogram.

[Id.]. That amendment is signed by Standard's president and corporate secretary and is contained in the revised Certificate and Summary Plan Description: Group Long Term Disability Insurance, shown as "Printed and Revised 04/2000." [Plaintiff's Exhibits 3, 4]. The revised plan contains the same wording as set out above. [See id.].

Plaintiff, Robert Wilcox, was born on April 17, 1944. He was the maintenance supervisor for Turner Industries from 1997 to 2000. While at Turner Industries, he purchased LTD insurance and paid the premiums. [Plaintiff's Exh. 1]. During November 2000, Wilcox injured his back while moving a tree at his home. He submitted a claim for short term disability (STD) benefits due to pain. He received 13 weeks of STD benefits. [Id.; Plaintiff's Exh. 9].

Plaintiff received an MRI on January 5, 2001. The test findings were:

The L2-3 levels shows a questionable tiny central subligamentous herniation on the sagittal scans which is not well visualized on the axial scans and only minimally effaces the anterior thecal sac.... The L3-4 level shows minimal degeneration and bulging of the disc, slightly effacing the anterior thecal sac.... The L4-5 level also shows minimal bulging of the disc, slightly effacing the anterior thecal sac.... The L5-S1 level shows a tiny central disc protrusion consistent with a herniation which minimally abuts the anterior thecal sac.

[Plaintiff's Exh. 8]. The impression from the MRI was:

1. Minimal degenerative spondylosis and ventral extra-dural defects at T11-12, T12-L1, and L1-2.

2. Questionable tiny central subligamentous herniation of the L2-3 disc, only well seen on the sagittal scans and of doubtful significance.

3. Minimal bulging of the L3-4 and L4-5 discs.

4. Small central herniation of the L5-S1 disc, minimally abutting the anterior thecal sac.

[Id.]. Standard approved STD benefits on January 30, 2001. [Plaintiff's Exh. 9]. Wilcox began receiving LTD benefits from Standard on February 12, 2001. He continued to receive LTD benefits through November 19, 2002, because his file was under review until that time. [Plaintiff's Exh. 21]. His benefits were $3,295 per month or 50% of his gross income. [Plaintiff's Exh. 1].

On June 11, 2001, plaintiff's treating physician, Dr. Michael Brown, completed a Long Term Disability Physician's Statement on a form provided by Standard. He listed the primary diagnosis as herniated lumbar disc and stated the planned course of treatment was continued injections, Vioxx and occasional Norco, and referral to a neurosurgeon. [Plaintiff's Exh. 10].

Plaintiff received another MRI on July 11, 2002. The test showed:

There is decreased signal intensity involving all of the lumbar disc spaces but most marked at L5-S1 and L2-3.... At the L5-S1 disc level, there is a moderate sized posterior central disc protrusion producing mild ventral thecal sac indentation but no definite impingement upon the proximal S1 nerve roots. At the L4-5 disc level, there is a minimal focal posterior central disc protrusion producing no thecal sac indentation. At the L2-3 disc level, there is mild diffuse annular bulge.

CONCLUSION...