Nelson v. Chartis, Inc. et al
MEMORANDUM OPINION AND ORDER directing that, for the foregoing reasons, it is ORDERED that National Union's motion for summary judgment (Doc. # 25 ) is GRANTED and that the claim in Count One against National Union is DISMISSED with prejudice. Signed by Chief Judge William Keith Watkins on 11/19/13. (Attachments: # 1 Civil Appeals Checklist)(scn, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
LINDA CARTER NELSON,
individually and as Administratrix
of the Estate of Frank G. Nelson,
GROUP ACCIDENT INSURANCE
PLAN, EMPLOYEE BENEFITS
PLAN FOR SOUTHERN
COMPANY SERVICES, INC., &
ASSOCIATED OR AFFILIATED
COMPANIES, et al.,
) CASE NO. 3:13-CV-234-WKW
MEMORANDUM OPINION AND ORDER
This is an action to recover benefits under a plan governed by the Employment
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001–1191.
National Union Fire Insurance Company of Pittsburgh (“National Union”) filed a
motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) on grounds
that it is not the plan administrator. (Doc. # 25.) Plaintiff filed a response in
opposition (Doc. # 27) to which National Union filed a reply (Doc. # 33). Because
the parties submit evidence in support of their opposing positions, the court treats
National Union’s Rule 12(b)(6) motion as a motion for summary judgment under
Federal Rule of Civil Procedure 56. For the reasons to follow, the motion for
summary judgment is due to be granted.
I. JURISDICTION AND VENUE
The court exercises subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331
and 1441(a). The parties do not contest personal jurisdiction or venue.
II. STANDARD OF REVIEW
“If, on a motion under Rule 12(b)(6) . . . , matters outside the pleadings are
presented to and not excluded by the court, the motion must be treated as one for
summary judgment under Rule 56.” Fed. R. Civ. P. 12(d). To succeed on summary
judgment, the movant must demonstrate “that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a). On a Rule 56 motion, the court views the evidence and the inferences from
that evidence in the light most favorable to the nonmovant. Jean-Baptiste v.
Gutierrez, 627 F.3d 816, 820 (11th Cir. 2010).
The party moving for summary judgment “always bears the initial responsibility
of informing the district court of the basis for its motion.” Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). This responsibility includes identifying the portions of the
record illustrating the absence of a genuine dispute of material fact. Id. If the movant
meets its evidentiary burden, the burden shifts to the nonmoving party to establish –
with evidence beyond the pleadings – that a genuine dispute material to each of its
claims for relief exists. Id. at 324.
Plaintiff Linda Nelson is the widow of Frank G. Nelson, who died while
employed by Southern Company Services, Inc. (“SCS”).
Mrs. Nelson, as
administratrix of Mr. Nelson’s estate, brings this lawsuit for payment of benefits that
she contends were wrongfully withheld in violation of ERISA. Defendants are
(1) Group Accident Insurance Plan, Employee Benefit Plan for SCS and Associated
or Affiliated Companies, (2) American General Life Insurance Company of Delaware
(“American General”),1 (3) Chartis Claims, Inc. (“Chartis”), and (4) National Union.
American General issued a Group Accident Insurance Policy, Number PAI
8063708 (“Policy”), to SCS to insure the accidental death and dismemberment portion
of SCS’s employment welfare plan (“the Plan”). The Policy provided coverage to
SCS employees participating in the Plan. Mr. Nelson was a participant in the Plan and
paid all required premiums.
Mr. Nelson died on February 6, 2011, and Mrs. Nelson is his surviving spouse.
As the designated beneficiary under the Policy, Mrs. Nelson submitted a claim on
May 9, 2011, asserting that Mr. Nelson died from an injury as defined by the terms
American General formerly was AIG Life Insurance Company.
of the Policy.
She submitted her claim to Chartis, which had “express[ ]
authoriz[ation]” from American General “to administer” Mrs. Nelson’s claim. (Am.
Compl. ¶ 16 (Doc. # 10); see also American General & Chartis’s Answer ¶ 16 (Doc.
# 23) (admitting the allegations in ¶ 16 of the Amended Complaint).)
The Policy contains a provision requiring timely payment of benefits for
covered losses. Specifically, the Policy provides that the insurer will pay benefits for
a loss immediately upon written proof; however, if the insurer requires additional
documentation to process the claim, it will notify the insured within fifteen days.
After the insured has provided all the necessary documentation relevant to the claim,
the insurer will have fifteen working days to “process and either pay the claim or deny
it.” (Policy 7.)
As permitted under the Policy, Chartis requested additional information from
Mrs. Nelson regarding her claim under the Policy. Mrs. Nelson complied, and Chartis
acknowledged receipt of all necessary information with respect to Mrs. Nelson’s claim
in a letter dated August 30, 2011. Contrary to the terms of the Policy, however, Mrs.
Nelson’s claim remained pending for nine months. In a letter dated May 3, 2012,
Chartis denied Mrs. Nelson’s claim. Mrs. Nelson appealed the denial of the claim on
June 22, 2012, and Chartis acknowledged receipt of the appeal in a letter dated June
Both the May 3 letter documenting the initial denial of Mrs. Nelson’s claim and
the June 25 letter acknowledging Mrs. Nelson’s appeal of that denial were, according
to the letterhead, from “Chartis, on behalf of National Union Fire Insurance Company
of Pittsburgh, PA.” (Clark’s Aff. ¶¶ 3–5 & Exs. (Doc. # 2-1).) Additionally, the May
3 letter instructed that any appeal from the denial of the claim should be forwarded to:
Chartis “[o]n behalf of National Union Fire Insurance Company of Pittsburgh, P.A.,”
and also provided that National Union “reserves all rights and defenses concerning
this claim for plan benefits.”
(Clark’s Aff. ¶¶ 2–5 & Exs.)
administrative appeal also was unsuccessful.
Alleging a wrongful denial of benefits under the Policy/Plan, Mrs. Nelson
brought this lawsuit in state court. After removal of this action on the basis of federal
question jurisdiction, Mrs. Nelson filed an Amended Complaint raising claims under
In Count One, Mrs. Nelson proceeds on the claim that Defendants
wrongfully denied her benefits under the Policy pursuant to ERISA § 502(a)(1)(B).2
She seeks the “benefits due under the Policy” and “any other equitable relief to which
[she] may be entitled,” as well as prejudgment interest and attorney’s fees. (Am.
Compl. ¶ 7 (prayer for relief).) Mrs. Nelson alleges that National Union and/or
American General directed Chartis “regarding the processing, administration, review,
Section 502 of ERISA is codified at 29 U.S.C. § 1132.
investigation and/or denial of claims generally and/or specifically in relation to the
Claim submitted by” Mrs. Nelson. (Am. Compl. ¶ 24; see also Am. Compl. ¶ 29.)
National Union moves for summary judgment on Count One on the ground that
it is not a plan administrator.3 In support of its motion, National Union submits a
declaration from John Dituri, who works in its underwriting department. Mr. Dituri
represents that National Union is a corporate entity separate from American General
and Chartis. According to Mr. Dituri, National Union issued the policy for the
accidental death and dismemberment portion of the Plan, which was effective from
January 1, 2011, through July 13, 2011, but that both before and after this seven-anda-half month time frame, the American General policy was in effect. Mr. Dituri
further represents that when the American General policy replaced the National Union
policy on July 13, 2011, the American General policy’s effective date “was extended
for continuous coverage from January 1, 2004, through December 31, 2011.”
(Dituri’s Decl. ¶ 5 (Doc. # 25-1).) Mr. Dituri asserts that American General is
responsible for the claims denial in this litigation and that “National Union has no
discretion, responsibility, or control over the administration of the Plan and no role or
insurable interest in the [SCS] Plan or the coverages thereunder.” (Dituri’s Decl. ¶ 6.)
Although the Amended Complaint contains two counts, the court dismissed Count Two
upon a defense motion and Mrs. Nelson’s consent. (Order (Doc. # 36).)
National Union contends that it is not subject to suit on Mrs. Nelson’s
§ 502(a)(1)(B) claim because, as set out in Mr. Dituri’s declaration, it does not have
discretion, responsibility, or control over the Plan’s administration. Mrs. Nelson
argues that, based upon the correspondence received from Chartis indicating that
Chartis was acting on behalf of National Union, there is a genuine dispute of material
fact whether National Union exercised discretion, responsibility, or control over the
Plan’s administration during the time when her claim was under review. National
Union’s evidence focuses on National Union’s present involvement under the Plan,
while Mrs. Nelson’s evidence focuses on National Union’s past involvement under
the Plan. The past-present dichotomy is significant, and here is why.
In Hunt v. Hawthorne Associates, Inc., 119 F.3d 888 (11th Cir. 1997), the
Eleventh Circuit explained that an action to recover benefits under § 502(a)(1)(B) is
“equitable in nature,” id. at 907, and that an injunctive order to pay benefits “from an
ERISA plan must issue against a party capable of providing the relief requested,” id.
at 908. In the Eleventh Circuit, a plan administrator is a proper defendant under
ERISA for the recovery of benefits. See Hamilton v. Allen-Bradley Co., 244 F.3d 819,
824 (11th Cir. 2001). However, only a “current plan administrator can pay out
benefits” under an ERISA plan. Hall v. Lhaco, Inc., 140 F.3d 1190, 1196 (8th Cir.
1998); see also Colin v. Marconi Commerce Sys. Emps. Ret. Plan, 335 F. Supp. 2d
590, 597 (M.D.N.C. 2004) (“[A] party which does not have any control or discretion
over a plan is not a proper party to an action for ERISA benefits.” (collecting cases));
see generally Garren v. John Hancock Mut. Life Ins. Co., 114 F.3d 186, 187 (11th Cir.
1997) (“The proper party defendant in an action concerning ERISA benefits is the
party that controls administration of the plan.” (emphasis added)).
In Colin, a former plan administrator argued that because it had contractually
released all control and discretion of the ERISA plan to another entity, it had no
authority to pay out benefits under the plan pursuant to § 502(a)(1). See 335 F. Supp.
2d at 596–97. The plaintiffs asserted, like Mrs. Nelson does, that the former plan
administrator was a “proper party . . . because it once exercised control over the plan
and acted as plan administrator when [their] claims for benefits were denied.” Id.
at 597. Rejecting the plaintiffs’ position, the court specifically relied upon the Eighth
Circuit’s decision in Hall:
In Hall, the Eighth Circuit held that a former employer, which had also
formerly provided administrative services to the ERISA plan in question,
could not provide redress on a claim for benefits since it no longer had
any control over the plan. Although this case involves a former plan
administrator, rather than a former employer that provided some
administrative services, the same reasoning applies. Here, even if
Plaintiffs are rightfully owed benefits, [the former plan administrator]
lacks any authority to provide them.
Colin, 335 F. Supp. 2d at 598 (citing Hall, 140 F.3d at 1196). The Colin court
concluded, “Since [the former plan administrator] currently has no control or
discretion regarding Plaintiffs’ benefits, it cannot provide redress of Plaintiffs’ claims
under § 502(a)(1).” Id.
Based upon these decisions and the absence of cited authority to the contrary,
a former plan administrator with no present control or discretion over a plan is
incapable of providing a plaintiff relief under the plan and, thus, is not a proper
defendant on a § 502(a)(1)(B) claim. Here, the evidence establishes, without dispute,
that National Union is no longer associated with the Plan and “has no discretion,
responsibility, or control over the administration of the Plan.” (Dituri’s Decl. ¶ 6.)
Mrs. Nelson’s evidence (i.e., the Chartis letters) establishes, at best, that National
Union was a plan administrator at one time and exercised decision-making authority
with respect to her claim. That evidence, taken as true, speaks only to National
Union’s former role under the Plan. It is National Union’s present role, however, that
is determinative of whether it is a proper defendant on the § 502(a)(1)(B) claim. Since
National Union is not currently a plan administrator and has no discretionary authority
with respect to the Plan, National Union is not in a position to pay benefits under the
Plan should Mrs. Nelson prevail on her claim.4 Summary judgment is due to be
National Union says that “[t]his is not a situation in which the proper party is attempting
to shirk a purported coverage obligation.” (Nat’l Union’s Reply ¶ 7 (Doc. # 33).) Rather, it
entered in National Union’s favor on Count One because the undisputed evidence
establishes that National Union presently exercises no discretion or control over the
For the foregoing reasons, it is ORDERED that National Union’s motion for
summary judgment (Doc. # 25) is GRANTED and that the claim in Count One against
National Union is DISMISSED with prejudice.
DONE this 19th day of November, 2013.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE
points out that “American General and Chartis voluntarily appeared in this action in recognition
of the fact that they served as the insurer and claims administrator, respectively, of the Policy.”
(Nat’l Union’s Reply ¶ 7.) These two Defendants also have filed a joint Answer, and although
denying that Mrs. Nelson is entitled to benefits, they admit many of the salient facts. It does not
appear, therefore, that National Union’s dismissal will impact adversely Mrs. Nelson’s ability to
obtain the relief she seeks if she prevails on Count One.
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