William Kennedy v. Life Ins Co of North America

Filing

OPINION filed : AFFIRMED. Decision not for publication. Karen Nelson Moore, Amul R. Thapar (AUTHORING), and John K. Bush, Circuit Judges.

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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 18a0196n.06
Case No. 17-5901
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

FILED
WILLIAM KENNEDY,
Plaintiff-Appellant,
v.
LIFE INSURANCE COMPANY OF NORTH
AMERICA,
Defendant-Appellee.

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Apr 13, 2018
DEBORAH S. HUNT, Clerk
ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF
KENTUCKY

BEFORE: MOORE, THAPAR, and BUSH, Circuit Judges.
THAPAR, Circuit Judge. William Kennedy seeks long-term disability benefits from Life
Insurance Company of North America (LINA), his former employer’s benefits-plan
administrator. But he did not ask LINA for long-term benefits in a manner consistent with its
policies. So the district court correctly denied him relief.
Kennedy suffers from peripheral neuropathy and lung problems.

Based on these

conditions, he applied for short-term disability benefits. But LINA was unable to obtain records
adequately documenting his conditions from his primary-care physician. Accordingly, LINA
denied his claim. LINA’s denial letter told Kennedy that he could appeal within 180 days. On
the 180th day, LINA received an illegible letter. Unable to decipher it, LINA attempted to
contact the sender—evidently “Jennifer,” which LINA’s records describe as a “daughter,”

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presumably Kennedy’s—but no one answered. LINA left a message requesting a call back. It
does not appear from the record that anyone returned the call.
Over two years later, LINA received two letters from Kennedy’s attorney. The letters
sought a decision on Kennedy’s claim for long-term benefits. LINA was no doubt surprised—
Kennedy had never applied for long-term benefits, and his application for short-term benefits had
failed years ago—but it reviewed its records anyway. This revealed that Kennedy no longer
worked for his employer and was therefore ineligible for benefits. LINA therefore closed the
matter without replying to the attorney’s letters.
Kennedy then sued, claiming that LINA had violated his employer’s disability plan, and
thus the Employee Retirement Income Security Act, by failing to grant him long-term benefits.
See 29 U.S.C. § 1132(a)(1)(B). The district court granted LINA summary judgment, holding
that Kennedy failed to exhaust his administrative remedies. We review the district court’s
exhaustion ruling for abuse of discretion. Fallick v. Nationwide Mut. Ins. Co., 162 F.3d 410, 418
(6th Cir. 1998).
The district court was right: Kennedy never applied for long-term benefits. The first
time he even mentioned long-term benefits was in his attorney’s letters—both of which came
long after any such claim was due under the plan’s terms. Kennedy therefore failed to exhaust
LINA’s administrative process. Garst v. Wal-Mart Stores, Inc., 30 F. App’x 585, 593 (6th Cir.
2002) (observing that exhaustion requires “compl[iance] with a reasonable time constraint
imposed by the plan for administrative review of denial of [a] claim”).
Kennedy nevertheless contends that LINA should have automatically treated his
application for short-term benefits as one for long-term benefits too. He points to an internal
policy under which LINA transitions claims for short-term benefits into claims for long-term

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benefits when short-term benefits “are expected to reach maximum duration” under the plan’s
terms. R. 18-1, Pg. ID 831. But LINA did not expect that Kennedy’s short-term benefits would
reach maximum duration, since it did not grant him short-term benefits in the first place. So the
internal policy is inapplicable. Kennedy nonetheless insists that LINA should have expected his
short-term benefits to reach maximum duration. But Kennedy did not challenge LINA’s denial
of short-term benefits in this litigation, and in any event it is not at all clear why LINA should
have reasonably expected Kennedy’s short-term benefits to reach maximum duration when it had
not received sufficient documentation to grant any such benefits at all.
Kennedy further argues that LINA’s denial of short-term benefits should not have
prevented transition because LINA should have applied an exception under the internal policy.
The exception applies when LINA denies short-term benefits because of an “exclusion”—such
as worker’s compensation—in which case long-term benefits might still be available. Id., Pg. ID
832. In the next paragraph, the policy explains that, even though LINA denies short-term
benefits, “the claimant may still be eligible for [long-term] benefits,” and instructs that “[t]he
claim should still be investigated for [long-term] benefits in a timely manner.” Id. In context,
this exception makes sense.

Many disability plans prevent double recovery for the same

disability under both the plan and worker’s compensation. See, e.g., Ciaramitaro v. Unum Life
Ins. Co. of Am., 521 F. App’x 430, 435 (6th Cir. 2013). But worker’s compensation payments
may run out, in which case LINA will still consider an applicant’s eligibility for long-term
benefits despite having denied short-term benefits under the exclusion.
Kennedy attempts to swallow the rule with the exception, arguing that any time LINA
denies an application for short-term benefits it must transition the claim to one for long-term
benefits. But his reading fails to account for the remainder of the text of LINA’s policy, which

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limits the exception to exclusions and requires transition otherwise only where LINA expects
short-term benefits to “reach maximum duration.” R. 18-1, Pg. ID 831–32. Not only that, but
under Kennedy’s position, LINA would also have to transition every unsuccessful claim for
short-term benefits—even when, for example, the applicant is perfectly healthy. That cannot be
what the text of LINA’s internal policy envisions. Since LINA did not deny Kennedy benefits
because of an exclusion, the internal policy is inapplicable. Kennedy’s argument on this front
therefore fails.1
Finally, Kennedy asserts that LINA did in fact transition his short-term claim to a longterm one, notwithstanding the inapplicability of its internal policy. He points to one cryptic line
in the nearly 700-page administrative record, which reads, “Ltd 11/15/2012 Open.” Kennedy
takes this line to mean that LINA opened an application for long-term disability benefits on
Kennedy’s behalf on that date, even though Kennedy never asked for LINA to do so, and even
though LINA denied him short-term benefits. But Kennedy fails to identify any support for this
interpretation in the record. Notably, he points to nothing documenting the various actions that
LINA’s policy would require LINA to take if it had transitioned his nonexistent short-term
benefits, nor a decision on the purportedly transitioned claim. This absence is all the more
telling given that the record does contain email confirmation following LINA’s receipt of the
letters that Kennedy’s attorney later sent asking about Kennedy’s long-term benefits. One would
expect some type of similar confirmation in the record if LINA had in fact transitioned a long1

Kennedy also claims that LINA breached its fiduciary duty under ERISA by failing to advise him of this
portion of its internal policy. See 29 U.S.C. § 1132(a)(3). But LINA was under no obligation to apprise
him of an inapplicable, and therefore immaterial, internal policy. Cf. Krohn v. Huron Mem’l Hosp.,
173 F.3d 542, 547 (6th Cir. 1999) (“[A] fiduciary breaches its duties by materially misleading plan
participants . . . .” (emphasis added)). To the extent he argues that this portion of the policy establishes a
broader right to apply for long-term benefits despite the short-term benefit denial, and that LINA failed to
inform him of this right, that portion is exclusion-specific and does not establish the right he claims. And
Kennedy identifies nothing else in support of any such argument.

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term benefit claim on Kennedy’s behalf on November 15, 2012. But the record contains no such
confirmation. And so in light of the record as a whole, this one line does not demonstrate that
LINA transitioned his short-term claim. Thus, the district court did not abuse its discretion in
holding that Kennedy failed to exhaust his administrative remedies.2
The district court’s decision is AFFIRMED.

2

Kennedy also contends that the district court erred by considering a declaration outside the
administrative record in ruling for LINA. Since the district court’s decision was correct irrespective of
the declaration, we need not reach this issue.   

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