United States District Court, D. New Jersey
Thomas Joseph Hagner, Hagner & Zohlman, LLC, Cherry Hill, NJ, for plaintiff.
Edward P. Lynch, Heather Weine Brochin, Day Pitney LLP, Parsippany, NJ, for defendants.
HILLMAN, District Judge.
Plaintiff, Frank Molinaro, seeks reimbursement of benefits due to him under his long term disability policy with defendant, The UPS Health & Welfare Package, which is administered by defendant Aetna Life Insurance Company. The long term disability plan at issue is an employee welfare benefit plan governed by the Employee Retirement Income Security Act (hereinafter " ERISA" ), 29 U.S.C. § 1001 et seq. The Court is called upon to determine whether the termination of plaintiff's long term disability benefits was arbitrary and capricious, and, therefore, unlawful pursuant to 29 U.S.C. § 1132(a)(1)(B). Both plaintiff and defendants have moved for summary judgment in their favor. For the reasons expressed below, the Court will grant plaintiff's motion, deny defendants' motion, and order the submission of supplemental materials on damages and fees.
Plaintiff brought his claims pursuant to ERISA and this Court has jurisdiction over his claims under 28 U.S.C. § 1331 and 29 U.S.C. § 1132(d)(e) & (f).
On April 30, 2008, plaintiff, an airplane mechanic at UPS, began disability leave due to a workplace injury. Initially, Plaintiff received short-term disability (" STD" ) coverage under the UPS Health & Welfare Plan. On October 10, 2008 he was informed that his STD benefits would expire on November 12, 2008. Plaintiff then filed a claim for long-term disability (" LTD" ) benefits in order to continue his disability leave after November 12, 2008.
Under the terms of the Plan, plaintiff was responsible for paying monthly LTD premiums, which were automatically deducted from his paycheck prior to his injury. When he began STD, however, plaintiff was then required to write a check and mail his LTD premium payments to UPS directly in order to maintain eligibility for LTD benefits.
According to plaintiff, while he was on STD he had difficulty obtaining his LTD billing notices from UPS in order to pay his LTD premiums, and he contacted customer service about this issue. UPS disputes this. Whatever the reason, it is undisputed that plaintiff was late in making his LTD premium payments. The July 10, 2008 statement informed plaintiff that his coverage would be terminated unless he satisfied an unpaid balance. The bill stated, " Coverage will be terminated effective 4-29-2008 unless your unpaid previous balance of $195.59 is received. Once terminated, coverage cannot be reinstated. THIS IS YOUR FINAL NOTICE FOR THE UNPAID PREVIOUS BALANCE." The July statement also notified plaintiff that his premium for August in the amount of $64.48 was due. The statement did not provide a specific date that the unpaid balance or August premium was due. Plaintiff submitted a check for the entire $260.07 balance by a check dated July 15, 2008, which was received by UPS on July 28, 2008.
The August 10, 2008 billing notice noted plaintiff's $260.07 payment, and billed for September's $64.48 LTD premium. This statement stated, " Full payment is due on 9-01-2008." It is unclear whether plaintiff received the August statement, but plaintiff did not make this payment, as reflected by the next month's billing notice.
The September 10, 2008 statement showed an outstanding unpaid balance of $64.48 for the September premium, and billed $64.48 for the October premium. It stated, " Coverage will be terminated effective 8-31-2008 unless your unpaid previous balance of $64.48 is received by 9-30-2008. Once terminated, coverage cannot be reinstated. THIS IS YOUR FINAL NOTICE FOR THE UNPAID PREVIOUS BALANCE. Your current balance is due on 10-01-2008."
Plaintiff claims that he did not receive the September 10, 2008 billing notice until around September 23, 2008. He mailed a $128.96 check to UPS dated October 1, 2008, which was received and deposited on October 9, 2008. Crossing in the mail, UPS sent plaintiff an October 7, 2008 letter informing him that his LTD benefits were terminated because of nonpayment of premiums. Plaintiff's last payment was returned to him, and he filed two appeals regarding the termination of his benefits. Unsuccessful in his appeals, plaintiff filed the instant suit against UPS and its claims administrator, Aetna Life Insurance Company, to recover LTD benefits he claims are due under the Plan. The parties have each moved for summary judgment in their favor.
A. Standard for Summary Judgment
Summary judgment is appropriate where the Court is satisfied that the materials in the record, including depositions, documents, electronically stored information,
affidavits or declarations, stipulations, admissions, or interrogatory answers, demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Fed.R.Civ.P. 56(a).
B. Standard of Review for Plaintiff's Claim
ERISA provides that a plan participant or beneficiary may bring a suit " to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). The statute, however, does not specify a standard of review for an action brought pursuant to § 1132(a)(1)(B). Mitchell v. Eastman Kodak Co., 113 F.3d 433, 437 (3d Cir.1997). The Supreme Court addressed this issue and opined that " a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard 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, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). When the plan affords the administrator with discretionary authority, courts must review the benefit decision for an abuse of discretion. Firestone Tire & Rubber Co., 489 U.S. at 115, 109 S.Ct. 948; see also Howley v. Mellon Fin. Corp., 625 F.3d 788, 793 n. 6 (3d Cir.2010) (explaining that courts in this Circuit have referred to this standard of review as " abuse of discretion" or " arbitrary and capricious" — these standards of review are essentially identical and the terms are interchangeable).
The parties agree that the abuse of discretion/arbitrary and capricious standard applies to this case because the Plan gives the plan administrator discretionary authority to decide eligibility benefits or interpret terms of the Plan.
C. Abuse of Discretion Analysis
Under the abuse of discretion standard of review, " the Court's role is not to interpret ambiguous provisions de novo, but rather to ‘ analyze whether the plan administrator's interpretation of the document is reasonable.’ " Connor v. Sedgwick Claims Management Services, Inc., 796 F.Supp.2d 568, 580 (D.N.J.2011) (quoting Bill Gray Enters., Inc. Employee and Health Welfare Plan v. Gourley, 248 F.3d 206, 218 (3d Cir.2001)) (other citation omitted). A decision is considered arbitrary and capricious " if it is without reason, unsupported by substantial evidence or erroneous as a matter of law." Abnathya v. Hoffmann-La Roche, Inc., 2 F.3d 40, 45 (3d Cir.1993).
To determine whether a plan administrator abused its discretion, the Court must focus " on how the administrator treated the particular claimant." Miller v. Am. Airlines, Inc., 632 F.3d 837, 845 (3d Cir.2011) (quoting Post v. Hartford Ins. Co., 501 F.3d 154, 162 (3d Cir.2007)). " Specifically, in considering the process that the administrator used in denying benefits, we have considered numerous irregularities to determine whether ... the administrator has given the court reason to doubt its fiduciary neutrality." Id. (internal quotations omitted). This is accomplished " by taking account of several different, often case-specific, ...