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Rizzo v. First Reliance Standard Life Insurance Co.

United States District Court, D. New Jersey

October 23, 2019

JODY RIZZO, Plaintiff,
v.
FIRST RELIANCE STANDARD LIFE INSURANCE COMPANY, et al. Defendants.

          MEMORANDUM AND ORDER

          PETER G. SHERIDAN, U.S.D.J.

         This matter is before the Court on Defendant First Reliance Standard Life Insurance Company's ("Defendant" or "Standard Life") Motion for Summary Judgement (ECF No. 27) and Plaintiff Jody Rizzo's ("Plaintiff or "Mrs. Rizzo") Cross Motion for Summary Judgment (ECF No. 30). In this action, Plaintiff alleges that Defendant wrongfully denied her request for life insurance benefits under her deceased husband's group life insurance policy in violation of the Employee Retirement Income Security Act ("ERISA"). In the instant motions, the parties dispute: (1) whether Plaintiff was required but failed to exhaust administrative remedies prior to bringing this ERISA action; and (2) whether Defendant wrongfully denied Plaintiff's request for benefits.

         Background

         On January 10, 2017, Plaintiff initiated this lawsuit against Defendant and Barnes and Noble, Inc. in the Superior Court of New Jersey, Ocean County. On February 3, 2017, Defendant removed the matter to this Court based upon allegations concerning ERISA violations. (ECF No. 1). Plaintiff's seven-count complaint included five claims under New Jersey law (Counts I-V) and two claims under ERISA (Counts VI-VII).

         On February 8, 2017, Defendants moved to dismiss the complaint for failure to state a claim upon which relief can be granted. (ECF No. 4). On December 28, 2017, the Court granted in part and denied in part Defendant's motion to dismiss. (ECF No. 11). Specifically, the Court dismissed all of Plaintiff's state law claims (Counts I-V) on ERISA preemption grounds, as well as dismissed Plaintiff's "catchall" ERISA claim under 29 U.S.C. § 1132(a)(3) (Count VII). (See id.). But, the Court did not dismiss Count VI, or Plaintiff's claims for the wrongful denial of benefits brought under 29 U.S.C. § 1132(a)(1)(b), finding that "when reviewing the record in the light most favorable to Plaintiff, the Court [was] satisfied for purposes of [the] motion to dismiss that Plaintiff exhausted administrative remedies." (ECF No. 11 at 11). After engaging in discovery, the issue of whether Plaintiff exhausted administrative remedies is once again in contention. The parties also disagree as to whether Defendant's denial of benefits was wrongful.

         Facts

         On October 9, 2009, Angelo Rizzo, Plaintiff's late husband, was diagnosed by Dr. Riss, his family doctor, with carotid disease, diabetes, hypertension.[1] (Plaintiff, Jody Rizzo's, Statement of Facts ("Plaintiff's Undisputed Facts") ¶ 1, ECF No. 30-2). On or about November 7, 2012, Mr. Rizzo began experiencing shortness of breath and dizziness while shoveling snow, which he reported to Dr. Riss. (Id. ¶ 3). Dr. Riss referred Mr. Rizzo to his cardiologist. (Id.). Upon referral, on or about November 12, 2012, Mr. Rizzo was diagnosed with chest pain, shortness of breath, palpitations, dizziness, edema, diabetes type II, cardiomyopathy, hypertension, obesity, and lymphedema. (Id. ¶ 4). At or around this time, Mr. Rizzo's poor health prompted him to cease working for Barnes & Noble, where he was employed as an Assistant Store Manager. (See Defendant, First Reliance Standard Life Insurance Company's Local Rule 56.1 Statement in Support of its Motion for Summary Judgment Under ERISA ("Defendant's Undisputed Facts") ¶ 7, ECF No. 27-6). Fifteen months later, on February 24, 2014, Mr. Rizzo passed away at the age of 42. (Plaintiffs Undisputed Facts ¶ 6).

         Defendant issued Barnes & Noble, Mr. Rizzo's once-employer, two separate group insurance policies, including: (1) a long term disability policy; and (2) a group life insurance policy. (Defendant's Undisputed Facts ¶¶ 1, 2, 4). This lawsuit involves only Plaintiff's claim for benefits under the group life insurance policy (the "Policy"). (Id. ¶ 9).

         The Policy included a waiver of premium provision ("WOP") in the event of "total disability." (Id. ¶ 4). The WOP benefit pays for a plan participant's life insurance premium if that person becomes "totally disabled." Important to this lawsuit, the Policy defined total disability as a "complete inability to engage in any type of work for wage or profit for which he/she is suited by education, training or experience." (Id. ¶ 6).

         By letter dated March 1, 2013, Defendant wrote to Mr. Rizzo informing him that he might be eligible for WOP benefits under the Policy. (Id. ¶ 10). Defendant provided Mr. Rizzo with instructions on how to apply for WOP benefits, as well as explained that Mr. Rizzo's employer could only maintain his life insurance coverage by paying premiums for seven additional months. (Id. ¶¶ 11, 12). Because Mr. Rizzo was no longer working at this point, Defendant explained that coverage would then end unless his WOP application was approved or if he converted the group life insurance policy into an individual policy within thirty-one days of any denial of his WOP application. (Id. ¶ 13).

         On or about March 18, 2013, Mr. Rizzo applied for WOP benefits, which was received by . Defendant on March 27, 2013. (Plaintiff's Undisputed Facts ¶¶ 8, 11). On October 9, 2013, Mr. Rizzo's WOP application was denied. (Defendant's Undisputed Facts ¶ 15). A letter dated October 9, 2013 (the "October 9th Letter") presented the basis for denial, which was Defendant's conclusion that Mr. Rizzo was not "totally disabled" pursuant to definition of the term as provided above. Specifically, the letter stated that Mr. Rizzo was not totally disabled because he could perform sedentary occupations; as such, he was not entitled to WOP benefits:

We have found that as of November 8, 2012 through November 1, 2013 you are capable of sedentary work exertion. Since you are capable of sedentary work exertion, we referred your file to our vocational department to review for viable occupations that would be commensurate with your work history. Our vocational staff found the following viable sedentary occupations that you would be eligible for: Representative Supervisor; Personal Scheduler; Customer-Complaint Clerk; Information Clerk.

(See LTD 432-34, ECF No. 27-5). The October 9th Letter also explained that Mr. Rizzo was entitled to request a review of this denial by submitting an appeal within 180 days of the receipt of the October 9th Letter, or by April 7, 2014, and provided instructions on how to submit such a review:

You may request a review of this determination by submitting your request in writing to:
First Reliance Standard Life Insurance Company Quality Review Unit P.O. Box 7698 Philadelphia, PA 19101-7698
This written request for review must be submitted within 180 days of your receipt of this letter. Your request should state any reasons why you feel this determination is incorrect, and should include any written comments, documents, records, or other information relating to your claim for benefits. Only one review will be allowed, and your request must be submitted within 180 days of your receipt of this letter to be considered.
Under normal circumstances, you will be notified in writing of the final determination within 45 days of the date we receive your request for review. If we determine that special circumstances require an extension of time for processing, you will ordinarily be notified of the decision no later than 90 days of the date we receive your request for review.

(LTD433). Mr. Rizzo, nor Plaintiff, appealed this denial within 180 days of the October 9th Letter. Rather, Plaintiff did not attempt to appeal from this decision until July 25, 2016. (Defendant's Undisputed Facts ¶ 25). .

         The parties dispute whether Defendant mailed the October 9th Letter to Plaintiff on October 9, 2013. While Defendant contends that the October 9th Letter was indeed mailed to Plaintiff on or around October 9, 2013, Plaintiff alleges that she only found out about the denial of WOP benefits, as provided in the October 9th Letter, upon contacting Defendant on the day of Mr. Rizzo's passing, or on February 24, 2014. Plaintiff further contends that she did not receive the October 9th Letter until March 6, 2014 and only then upon her request.

         The foregoing facts bring about a critical dispute in the instant motions, that is, whether Plaintiff exhausted administrative remedies in light of the undisputed fact that she, nor her husband, appealed Defendant's decision to deny her WOP application within 180 days of the October 9th Letter. As discussed more comprehensively below, Defendant's position is that Plaintiffs failure to appeal the denial of benefits within 180 days is dispositive and warrants dismissal of this action. Plaintiff rebuts Defendant's contention by setting forth several reasons as to why Plaintiff was not required to exhaust administrative remedies prior to bringing this lawsuit, including, inter alia, because Defendant allegedly violated ERISA's 90-day adverse benefit notification requirement. (Pl. Br. at 21, ECF No. 30-3).

         Separately, the parties also dispute whether Defendant's adjudication and denial of Mr. Rizzo's WOP application was wrongful, as analyzed under either a de novo or arbitrary and capricious standard of review. In particular, Plaintiff argues that Defendant's failure to review all of the medical records and internal files prior to making a decision to deny Mr. Rizzo's WOP application renders it wrongful under either standard. Defendant rebuts that the decision to deny Mr. Rizzo's application was appropriately based on written submissions from Dr. Riss, Mr. Rizzo's family doctor, indicating that Mr. Rizzo can still perform sedentary work. (See Defendant's Br. at 12-13, ECF No. 27-7).

         Legal Standard Summary judgment is appropriate under Federal Rule of Civil Procedure 56(c) when the moving party demonstrates that there is no genuine issue of material fact and the evidence establishes the moving party's entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). A factual dispute is genuine if a reasonable jury could return a verdict for the non-movant, and it is material if, under the substantive law, it would affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party's evidence "is to be believed and all justifiable inferences are to be drawn in his favor." Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255).

         Once the moving party has satisfied its initial burden, the party opposing the motion must establish that a genuine issue as to a material fact exists. Jersey Cent. Power & Light Co. v. Lacey Twp.,772 F.2d 1103, 1109 (3d Cir. 1985). The party opposing the motion for summary judgment cannot rest on mere allegations and instead must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248; Siegel Transfer, Inc. v. Carrier Express, Inc.,54 F.3d 1125, 1130-31 (3d Cir. 1995). "[Unsupported allegations ... and pleadings are insufficient to repel summary judgment." Schoch v. First Fid. Bancorp., 912 F.2d 654, 657 ...


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