Williamson v. Aetna Life Ins. Co.

Decision Date22 March 2007
Docket NumberNo. 05-6911.,05-6911.
Citation481 F.3d 369
PartiesPeggy Welshans WILLIAMSON, and Vanessa Welshans, Plaintiffs-Appellants, v. AETNA LIFE INSURANCE COMPANY, Defendant-Appellee.
CourtU.S. Court of Appeals — Sixth Circuit

Kathleen G. Morris, Kathleen G. Morris, Attorney at Law, Nashville, Tennessee, for Appellants. Herbert E. Gerson, Ford & Harrison, Memphis, Tennessee, for Appellee.

ON BRIEF:

Kathleen G. Morris, Kathleen G. Morris, Attorney at Law, Nashville, Tennessee, Kent J. Rubens, Rieves, Rubens & Mayton, West Memphis, Arkansas, for Appellants. Herbert E. Gerson, Thomas J. Walsh, Jr., P. Daniel Riederer, Ford & Harrison, Memphis, Tennessee, for Appellee.

Before SILER, GILMAN, and GRIFFIN, Circuit Judges.

OPINION

GRIFFIN, Circuit Judge.

Plaintiffs Peggy Welshans Williamson and Vanessa Welshans appeal the district court's grant of summary judgment in favor of defendant Aetna Life Insurance Company ("Aetna"). Plaintiffs initially brought suit in Tennessee state court alleging violations of common law breach of contract, violations of the Tennessee Consumer Protection Act ("TCPA"), TENN. CODE ANN. § 47-18-104, and the Tennessee "bad faith" statute, TENN.CODE ANN. § 56-7-105. Specifically, plaintiffs alleged that Aetna wrongfully denied health insurance benefits for Williamson's daughter, Welshans, pursuant to an employee health plan administered by Aetna. In October 2004, Aetna removed the matter to federal district court, and, in November 2005, the district court granted Aetna's summary judgment motion with respect to all of plaintiffs' claims. Plaintiffs now urge this court to reverse both the jurisdictional determination of the district court and its subsequent grant of summary judgment in favor of Aetna.

For the reasons that follow, we affirm.

I.

Williamson was employed by General Agencies of the United Methodist Church ("General Agencies") from 1977 until she retired in 1995. General Agencies provided group health insurance (the "plan") to its employees, and, as part of Williamson's retirement, she continued to be eligible for the plan. Williamson was a member of the task force at General Agencies that designed the employer's insurance plan and recommended that Aetna be selected as the plan administrator. Based on that recommendation, General Agencies contracted with Aetna to administer its group health plan from January 1, 1990, through December 31, 2000.

Welshans is Williamson's daughter. In May 1983, when Welshans was twenty-two years old, she was severely injured in an automobile accident in which she sustained broken legs, a broken pelvis, and a broken back. According to plaintiffs, her left knee was severely injured as a result of the accident, and she has subsequently undergone seven surgeries. Her ability to sit, stand, walk, climb stairs, or do any bending or squatting for a sustained period of time is impaired. Until 1986, when Welshans reached the maximum age for coverage as a dependent child, she was eligible for coverage under Williamson's plan through General Agencies. After 1986, Welshans was provided continued coverage by Cigna, the prior administrator of General Agencies' health plan, as a "fully handicapped dependent" because of the injuries she sustained in the accident. Welshans received coverage as a "handicapped dependent" from 1986 to 1995 pursuant to the terms of the plan with Cigna.

Welshans has not been employed since the accident, but she has been a full-time student since 1994. In 1994, she attended East Arkansas Community College in Wynne, Arkansas. In 1995, she transferred to Lambuth University in Jackson, Tennessee. Following her graduation from Lambuth, she earned a masters degree in American history from the University of Memphis in 2000 and has since enrolled in the doctoral program. At the time of her deposition, she expected to complete a doctorate in American History and Modern Europe in 2004. According to Aetna's brief, she has since completed the doctorate. Welshans is physically and mentally able to care for herself, and she lived independently in Wynne, Arkansas, while attending community college. She occasionally lived with her mother while attending Lambuth University from 1995-1998, and, since 1998, has lived alone in the Memphis and Collierville, Tennessee area. Welshans has received Social Security Disability income since 1984 and has no other source of disposable income. Welshans transfers money from Williamson's bank account into her own account each month as needed to meet her living expenses, including rent, bills, and food.

Welshans and Williamson both participated in the indemnity provisions of General Agencies' group health plan during the time in which Aetna served as the administrator. The indemnity provisions provided that the insured was responsible for the submission of claims to Aetna. The plan further identified procedures and other health care services that were excluded from the plan.

In January 1995, when Aetna began administering the plan, Welshans was thirty-four years of age. Because of her age, Welshans was ineligible for coverage as a dependent child of Williamson. The plan provided, however, that "Health Insurance Coverage for [the insured's] fully handicapped dependent may be continued past the maximum age for a dependent child, if he or she has not been issued a personal medical conversion policy." The plan defined a "fully handicapped dependent" as a person:

not able to earn his or her own living because of mental retardation or physical handicap which started prior to the date he or she reaches the maximum age for dependents; and

he or she chiefly depends on [the insured] or another care provider for support.

"Dependent on another care provider" is defined as requiring a "Community Integrated Living Arrangement, group home supervised apartment or other residential services licensed or certified by the Department of Mental Health and Developmental Disabilities, the Department of Public Health or the Department of Public Aid."

According to the plan, once coverage has been established, it will continue until any one of the following occurrences: (1) "cessation of the handicap and dependency"; (2) "[t]he end of a 60 day period from the date Aetna requests proof of the continuation of the handicap and dependency, if proof is not provided within a 60 day period"; or (3) "Termination of Dependent Coverage as to [the insured's] dependent for any reason other than reaching the maximum age." The plan specifically confers upon Aetna the right to "request proof of the continuation of the handicap as often as it may reasonably require, but not before 2 months prior to the dependent reaching the maximum age."

When Aetna took over the administration of the General Agencies health plan in 1995, it initially rejected medical claims submitted by Welshans and other children of insured employees, whom Cigna had previously provided coverage for as handicapped dependents, because of a computer error. In response to the error, Aetna instituted a policy by which it would "cover all incapacitated dependents [including Welshans] without question" for the calendar year 1995. Aetna further stated that it expected to return to normal procedures to determine eligibility by January 1, 1996, at which time dependents could be terminated if they did not meet the plan's eligibility criteria.

On July 26, 1996, Aetna first denied Welshans' coverage as a handicapped dependent. According to Williamson and Aetna's internal notes, Aetna determined that she was "not handicapped as described in the plan because the physical limitations described do not seem to be of a severity to preclude full time employment." Williamson sent a second request for continuation of coverage in August 1996, along with a statement from Welshans' doctor, Dr. Thomas Limbird, describing her injuries in detail and opining that she was unable to maintain employment. Aetna requested additional information regarding Welshans' dependent and marital status in a letter dated September 14, 1996.

It is unclear whether further determinations were made as to Welshans' eligibility in 1996, 1997, or 1998. Some form of litigation between the two parties has been ongoing since 1996. Welshans originally filed suit against Aetna in federal district court in 1996, alleging diversity jurisdiction and seeking payment of medical benefit claims. This matter was resolved by settlement in June 1998, and Aetna states that "it is undisputed that Aetna extended coverage to Welshans as a handicapped dependent from 1995-1999."1

On October 8, 1999, and November 8, 1999, Aetna again requested verification of Welshans' status as a handicapped dependent. It is unclear whether plaintiffs responded to these requests. Aetna claims that plaintiffs did not respond, citing both the deposition testimony of Aetna's employee and internal notes recording the non-receipt of this requested information. Williamson did not produce any documentary evidence or recall a specific date, but generally alleged that she responded to all requests for information.

Although the district court states that "It [was] undisputed that Aetna terminated Welshans' coverage in 1999," the termination date is unclear from the record. It is clear that Aetna denied many of Welshans' claims in 1999. Aetna's internal notes, dated November 16, 1999, state that "no incapacitated child info received[;] will close out the contact." Further, Aetna's list of claims states, for the first time, on February 26, 2000, that a claim was denied because coverage was terminated. Around the same time, however, Aetna mailed Williamson a "Certification of Prior Group Health Coverage," prepared on May 19, 2000, which provided "evidence of prior health coverage" for Welshans from January 1, 1995, to January 2, 2000. Neither the district court opinion nor Aetna addresses this document.

On January 22, 1999, plaintiffs...

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