Edward Sanford v. Life Insurance Company of Nor
OPINION filed : the judgment of the district court is AFFIRMED, decision not for publication. Alan E. Norris, Circuit Judge; John M. Rogers, Authoring Circuit Judge and Helene N. White, Circuit Judge.
NOT RECOMMENDED FOR PUBLICATION
File Name: 15a0131n.06
UNITED STATES COURTS OF APPEALS
FOR THE SIXTH CIRCUIT
LIFE INSURANCE COMPANY OF NORTH
Feb 13, 2015
DEBORAH S. HUNT, Clerk
ON APPEAL FROM THE
UNITED STATES DISTRICT
COURT FOR THE MIDDLE
DISTRICT OF TENNESSEE
NORRIS, ROGERS, and WHITE, Circuit Judges.
ROGERS, Circuit Judge. On November 3, 2010, Edward Sanford retired from his job
as an executive at LifePoint Hospitals, Inc. Five days later he injured his back while deplaning
from his private aircraft.
Sanford sought short- and long-term disability coverage from
LifePoint’s insurer, Life Insurance Company of North America, which denied coverage on the
ground that Sanford’s alleged disability began after his employment at LifePoint had ended. The
district court affirmed the denial of benefits, concluding that, because Sanford was not in “Active
Service” when the injury occurred, he was not eligible for benefits.
Sanford appeals that
decision. Because he was not in “Active Service” at the time of his injury, however, and because
“Active Service” is a prerequisite for coverage under the relevant plans, Sanford was not entitled
Sanford v. LINA
Sanford was the CEO/Administrator for LifePoint. On October 4, 2010, he notified
LifePoint in writing that he was resigning from the company effective November 3, 2010.
Sanford v. LINA, Case No. 2:12-cv-56, doc. # 19-2, PageID 86. On the date of his retirement, he
had accrued four weeks of paid time off (“PTO”), which LifePoint continued to pay through
November 27, 2010.
On November 8, 2010, Sanford flew his private plane to Louisiana. While deplaning, he
fractured his back. He was subsequently diagnosed with multiple myeloma.
In April 2011, Sanford applied to LifePoint’s insurer, Life Insurance Company of North
America (“LINA”), for short- and long-term disability benefits. LINA denied both claims on the
ground that Sanford was not a LifePoint employee at the onset of his alleged disability, so that he
was ineligible for coverage under the relevant policies (“the Plans”). A.R. 240-42, 246.
Sanford used LINA’s internal appeals process to challenge the denials.
investigated Sanford’s claims by contacting LifePoint to confirm that Sanford’s last day of
employment had been November 3, 2010. LifePoint confirmed as much, even double-checking
with the current CEO of the facility where Sanford had worked. Id. at 159. After receiving
confirmation from LifePoint that Sanford was retired at the time of his injury, LINA affirmed its
denials on the ground that Sanford was not in “Active Service” at the time of his injury,
meaning, under the Plans, that he was not eligible for benefits. Id. at 230-32, 254.
Several months later, Sanford filed this action for wrongful denial of short- and long-term
disability benefits. Both parties moved for judgment on the pleadings and the district court
ultimately granted LINA’s motion for judgment on the administrative record. Sanford v. Life Ins.
Co. of N. Am., 1 F. Supp. 3d 829 (M.D. Tenn. 2014). The district court concluded that LINA had
not acted arbitrarily or capriciously in concluding that Sanford was ineligible for benefits
Sanford v. LINA
because Sanford was retired when the injury occurred. The Plans provided that a participant’s
coverage would terminate in the event that the participant: (1) ceased to be in “Active Service”;
or (2) was no longer a member of an “eligible class.” A.R. 275. The district court held that
LINA’s decision was rational because, at the time of the injury, Sanford was neither a member of
an “eligible class,” nor in “Active Service,” and was also not entitled to invoke the Continuation
of Insurance Provision in the Plans. Sanford, 1 F. Supp. 3d at 835. Sanford appeals that
To prevail on appeal, Sanford must demonstrate that LINA’s conclusion—that he was not
“in Active Service” at the onset of his alleged disability—was arbitrary or capricious. See
Firestone Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). According to the Plans:
An employee is in Active Service on a day which is one of the Employer’s scheduled
work days if either of the following conditions are [sic] met.
1. The Employee is performing his or her regular occupation for the Employer
on a full-time basis. He or she must be working at one of the Employer’s usual
places of business or at some location to which the employer’s business
requires an Employee to travel.
2. The day is a scheduled holiday or vacation day and the Employee was
performing his or her regular occupation on the preceding scheduled work
An Employee is in Active Service on a day which is not one of the Employer’s
scheduled work days only if he or she was in Active Service on the preceding
scheduled work day.
A.R. 286. Sanford does not meet the first condition because he was not “performing his . . .
regular occupation for [LifePoint] on a full time basis” at the onset of his alleged disability. Id.
Thus, he is only eligible for coverage under the Plans if he met the second condition.
LINA’s conclusion that Sanford did not meet the second condition was neither arbitrary
nor capricious because LINA could reasonably have determined that Sanford was not on a
“vacation day” when he injured himself, but rather retired. The Plans do not define “vacation,”
Sanford v. LINA
so LINA was required by law to interpret that term according to its ordinary meaning. Morgan
v. SKF USA, Inc., 385 F.3d 989, 992 (6th Cir. 2004). A “vacation,” LINA could reason, must be
from something—be it inclement weather, the monotony of one’s daily routine, or, as is
frequently the case, job responsibilities. See, e.g., WEBSTER’S II NEW COLLEGE DICTIONARY
1217 (2001) (defining “vacation”). Particularly in the context of an employer’s disability plan, it
is reasonable—and not arbitrary or capricious—to read “vacation” to mean “vacation from the
Plan participant’s job responsibilities.” On this reading, Sanford could not “vacation” from his
job responsibilities because, having retired, he had no job responsibilities whatsoever. Thus,
LINA could reasonably conclude that Sanford was not on “vacation” when the injury occurred,
meaning he would not have been “in Active Service” for purposes of receiving benefits under the
Sanford argues that LINA’s interpretation of “vacation” is artificially narrow, but
language in the Plans suggests otherwise. Specifically, the Continuation of Insurance provision
in the Plans states that, “if an Employee’s Active Service ends due to layoff, termination of
employment, or any other termination of the employment relationship, insurance will terminate
and Continuation of Insurance under this provision will not apply.” A.R. 307. The clear
implication is that “an Employee’s Active Service ends” upon “any  termination of the
employment relationship.” LINA’s conclusion—that Sanford was not “in Active Service” at the
onset of his disability—is in keeping with the Continuation of Insurance provision, whereas
Sanford’s proffered interpretation of “Active Service” is not. That, too, undermines Sanford’s
argument that LINA’s decision in this matter was arbitrary or capricious.
Sanford makes a few other arguments, none of which is compelling. First, he points out
that, at the time of the injury, his former employer was still deducting insurance premiums from
Sanford v. LINA
his payouts. But an otherwise ineligible employee does not somehow become eligible for
coverage simply because he continued to pay premiums. Moss v. Unum Life Ins. Co., 495 F.
App’x 583, 594 (6th Cir. 2012). Sanford also cites a number of cases for the proposition “that
unused vacation time at the end of the employment relationship may extend the period of
employment for purposes of benefit eligibility and/or calculation.” He did the same thing at the
district court and the district court persuasively explained why each case cited by Sanford was
inapposite. Sanford, 1 F. Supp. 3d at 836–37.
The judgment of the district court is AFFIRMED.
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