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Carlson v. Reliance Standard Life Insurance Co.

United States District Court, M.D. Tennessee, Nashville Division

October 19, 2017




         Currently pending are cross motions for judgment on the record filed, respectively, by Defendant Reliance Standard Life Insurance Company (“Defendant” or “Reliance”) and Plaintiff Christine A. Carlson (“Plaintiff” or “Claimant”). (Docket Entry, hereinafter “DE” Nos. 42 and 44). Plaintiff has filed a response in opposition to Defendant's motion (DE 49), to which Defendant has filed a subsequent reply. (DE 50). Defendant has also filed a response in opposition to Plaintiff's motion. (DE 47). Both motions have been referred to Magistrate Judge Lanny King for report and recommendation. (June 22, 2017, Docket Annotation).

         For the reasons that follow, the undersigned Magistrate Judge respectfully recommends that Defendant's motion (DE 42) be DENIED and that Plaintiff's motion (DE 44) be GRANTED IN PART, to the extent that the claim is remanded to the Plan Administrator to perform a review of the entire Administrative Record including the Supplemental Information.

         I. BACKGROUND

         This matter involves Plaintiff's claim, as the widow of Barak J. Carlson (the “Decedent”), who was a participant within the meaning of 29 U.S.C. §1002(7), of a group life insurance plan (the “Plan”) that was issued by the Defendant.

         On December 28, 2010, Decedent applied for a life insurance policy listing the Plaintiff as the sole beneficiary. (Administrative Record, hereinafter “AR” 79). The Decedent had a double-indemnity policy to which Plaintiff was the sole beneficiary through the Plan. The life insurance was effective on December 28, 2010, in the principal amount of $250, 000.00 (the “Life Provision”) and an accidental death policy (the “Accidental Death Provision”) (together the “Policy”) provided an additional $250, 000.000 in the event of an accidental death. (AR 79-80). The Life Provision contains a limitation precluding the payment of benefits if the insured dies by suicide within two years of the effective date of insurance coverage. (AR 484). The Accidental Death Provision also excluded coverage when a loss is “caused by suicide, or intentionally self-inflicted injuries.” (AR 103).

         On October 20, 2012, the Decedent, armed with a shotgun, was turkey hunting with his brother-in-law, Timothy Cox (“Mr. Cox”). (AR 29). The two men were hunting separately but in close proximity to each other; the Decedent in a small tent-blind alone and Mr. Cox hunting nearby. (AR 112). Shortly after 5:00 p.m. Mr. Cox heard a gunshot and attempted to text the Decedent to determine if he had shot a turkey. (AR 112). A short time later, Mr. Cox having received no response from Decedent, went to the blind and discovered the body of the Decedent with a gunshot wound on the left side of his neck. (AR 112).

         On the initial investigative report of the Police Department (the “Incident Report”) and the subsequent report of the Office of the Medical Examiner (“OME”) (the “Initial OME Report”), the Decedent's cause of death was listed as suicide. (AR 114-15).

         On August 8, 2013, in a letter to Plaintiff, Defendant denied Plaintiff's claims under the Policies based on the findings that the OME listed suicide as the cause of Decedent's death on the death certificate (the “Claim Denial Letter”). (AR 105).

         On October 1, 2013, Plaintiff timely filed an appeal of the denial of benefits (the “Appeal”). (AR 109). In her Appeal Plaintiff supplied Defendant with a copy of the police report and investigative report pertaining to the Incident and a copy of the medical examiner's report including a toxicology report. Id. Plaintiff also notified Defendant that she was in the process of undertaking an investigation of the Incident and believed that the Incident was not the result of suicide, but an accident. Id.

         On October 8, 2013, Defendant notified Plaintiff via letter that it was in receipt of her Appeal (the “Initial Review Notice”) and that Defendant would be conducting a review (the “Appeal Review”) of the claim file. (AR 46). The Initial Review Notice also informed Plaintiff that Defendant would notify Plaintiff if Defendant required additional information to make its appeal determination. Id. The Initial Review Notice also stated that Defendant would “toll the relevant time frames for reaching an appeal determination from the time of [its] request for additional information until such time as [it] receive[d] the requested information [from Plaintiff]” (the “Tolling Notice”). Id.

         On October 23, 2013, Defendant sent a letter notifying Plaintiff that Defendant was granting Plaintiff until November 22, 2013 to supply Defendant with “any additional information” that Plaintiff wished to be considered in the Appeal Review of the file. (AR 48). In the October 23, 2013 letter, Defendant granted itself a tolling of the initial 60-day review period by stating: “the statutory [sic] time frames for reaching an appeal determination will be tolled until such time as we receive the requested information from you.” Id. The letter, however, did not request any specific information from Plaintiff. Id.

         On November 21, 2013, Plaintiff sent a letter to Defendant requesting additional time to supply Defendant with the following information: witness statements and a crime scene expert's report. (AR 141). On November 22, 2013, Defendant sent another letter stating it was in receipt of Plaintiff's November 21, 2013 letter and was granting Plaintiff through December 13, 2013 to supply any information Plaintiff wished to be considered by Defendant in its Appeal Review. (AR 49). Defendant again repeated the same tolling language used in its October 23, 2013 letter and stated that the 21 day additional time for submission was required because “statutory and internal guidelines set strict deadlines for completion of an appeal review.” (AR 49). Again, Defendant's November 22, 2013 letter did not request any specific information from Plaintiff. Id.

         On December 13, 2013 counsel for Plaintiff wrote to Defendant and attached a copy of Detective Johnny Lawrence's investigation report. (AR 541-42). The December 13, 2013 letter also notified Defendant that Dr. Zimmerman, the medical examiner from Davidson County who performed the initial medical evaluation of the Decedent, was reopening the case and reviewing his findings based on the information contained in Jonny Lawrence's investigation report. Id. In addition to the notification that Dr. Zimmerman was in the process of performing a file review after having reopened the case, Plaintiff listed “additional facts” that Plaintiff wished to be considered by Defendant in its Appeal Review, indicated that Plaintiff was still investigating the claim, and that Plaintiff expected her investigation to be complete by mid-January 2014. Id.

         On January 14, 2014 Defendant wrote to counsel for Plaintiff providing Plaintiff an “update regarding your client's claim” and formally notifying Plaintiff that “this letter serves as notice of our intention to take beyond 60 days to make a final decision on the appeal.” (AR 0050). Defendant's letter stated that “[w]e are required to make a decision within 60 days of the date of the appeal but are allowed an additional 60 days if circumstances do not permit us to make a decision within the initial 60 day time frame” (the “Extension Notice”). Id. Defendant's Extension Notice did not request any additional information from Plaintiff nor did it indicate a time when it anticipated a decision would be rendered, instead stating “we will be contacting you in the near future with an update or to inform you if additional information will be required.” Id. The Extension Notice letter also did not repeat the Tolling Notice language that was found in its prior notices nor did it otherwise inform Plaintiff that it was properly able to toll the Extension Period while waiting for Plaintiff to submit any additional documentation.

         On January 16, 2014 Defendant notified Plaintiff that it would be submitting the claim for review by an independent examiner. (AR 0155). On January 25, 2014, Defendant wrote to counsel for Plaintiff reminding Plaintiff of the “strict deadlines for completion of an appeal review, ” and requested that Plaintiff provide: incident photographs, autopsy photographs, and any information regarding the testing of the gun. (AR 0159). The January 25, 2014 letter also notified Plaintiff that it was tolling “the statutory time frames for reaching an appeal determination” until receipt of the requested information. Id.

         On January 27, 2014, Plaintiff provided some of the information requested in the January 25, 2014 letter and provided the autopsy photographs on February 24, 2014. (AR 651-74).

         On March 11, 2014, the OME of Davidson County completed his review and amended his report (the “Amended OME Report”) to change the manner of death from “suicide” to a finding that “the manner of death in this case could not be determined.” (DE 29, ex. 1).

         On March 21, 2014, Defendant notified Plaintiff that its review was complete and the denial of benefits was being upheld (the “Appeal Denial”). (AR 0775). It is uncontested that Defendant did not consider the Amended OME Report prior to issuing its Appeal Denial. Id.

         On March 31, 2014, the OME certified its Amended OME Report. (DE 29, ex. 1). Also on March 31, 2014, counsel for Plaintiff was notified of the certification of the Amended OME Report and obtained a certified copy. (Id. at 3).

         Plaintiff timely filed suit against Defendant in the Circuit Court for Davidson County, Tennessee, which was later removed to this Court on or about February 3, 2015, claiming (among other claims) that Defendant breached its contract by failing to pay benefits under the Policy. (DE #1).

         On November 3, 2015, Plaintiff filed a Motion to Supplement the Administrative Record (DE #29) requesting that Plaintiff be allowed to supplement the administrative record to include the Amended OME Report and to allow Plaintiff additional time to provide relevant witness statements “necessary to complete a proper investigation and review of this matter.” (DE #29 at 3). Plaintiff's Motion to Supplement was granted, and Plaintiff supplemented the Administrative Record with the Amended OME Report and a Final Investigation Report of Agente, LLC (the “Final Investigation Report”), which included witness statements (DE Nos. 38-1 and 38-2) (together the “Supplemental Information”).

         On November 1, 2016, a Magistrate Judge issued a Memorandum of Opinion allowing Plaintiff to Supplement the Administrative Record with the Supplemental Information, which was upheld by the District Court. (DE 39).

         II. ANALYSIS

         The core issue in this action is whether Defendant conducted a full and fair review of Plaintiff's claim regarding the death of Decedent without considering the Supplemental Information submitted by Plaintiff. (DE 39 at 2). Pursuant to the Court's prior order, if the Defendant violated ERISA procedures when making its Appeal Determination without considering the Supplemental Information, then the claim should be remanded to the administrator to consider the supplemental evidence. (Id.)

         A. Standard of Review

         A participant or beneficiary of an ERISA plan may bring suit in federal district court to recover benefits allegedly due under the terms of the plan. Univ. Hosps. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 845 (6th Cir. 2000) (referencing 29 U.S.C. § 1132(a)(1)(B)). A plan fiduciary's denial of a claim for ERISA benefits is reviewed de novo "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); see also Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 380 (6th Cir. 1996). If the plan gives discretion to the administrator or fiduciary, then the benefit denial is reviewed under an "arbitrary and capricious" standard. Id. Here, Plaintiff conceded the administrator has discretion in this case and agreed with the Defendant that the arbitrary and capricious standard of review applies to the instant matter. (DE 45 at 5).

         The issue in this case, however, is not whether the language in Defendant's plan gives it discretionary authority, but whether Defendant loses any discretion that it may have had because of its alleged procedural failure to exercise its discretion in accordance with the ERISA statute and regulations. See Id. (arguing that Defendant procedurally failed to conduct a full and fair evaluation of the claim); (DE #39 at 2-3) (ordering the undersigned Magistrate Judge to make a determination as to whether Defendant procedurally failed to provide Plaintiff with a full and fair review as required under ERISA). As such, this Court must apply the standard of review used by the courts when determining if the procedure employed by the fiduciary in denying the claim meets ERISA's procedural regulations.

         ERISA was enacted by Congress to establish procedural safeguards to ensure that fiduciaries such as Defendant administer benefit plans “solely in the interest of the participants and beneficiaries.” 29 U.S.C. §§ 1104(a)(1) and 1001(b). Under ERISA, the Secretary of Labor is given authority by Congress to enact regulations and set deadlines for the administration of employee benefit claims. 29 U.S.C. §§ 1133 and 1135. Those rules and regulations are codified in 29 C.F.R. § 2560.503-1, titled “Claims procedure” (the “Procedural Regulations”) stating that every employee benefit plan shall “afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.” 29 U.S.C. §§ 1133 and 1135.

         A benefits determination on appeal must be made within a certain time. 29 C.F.R. § 2560.503-1(i)(4). Failure to follow these procedures is governed by 29 ...

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