Crews v. Standard Insurance Company

Filing 26

ORDER granting 13 Standard's Motion for Summary Judgment. Signed by Judge Kristi K. DuBose on 6/22/2016. (cmj)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
KAY C. CREWS,
Plaintiff,
v.
STANDARD INSURANCE COMPANY,
Defendant.

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CIVIL ACTION NO. 15-00606-KD-B

ORDER
This action is before the Court on Defendant Standard Insurance Company’s motion for
summary judgment and the response filed by Plaintiff Kay C. Crews (doc. 13, 24). Upon
consideration, and for the reasons set forth herein, the motion for summary judgment is GRANTED.
I. Procedural Background
Kay C. Crews brought this action against Standard Insurance Company in the Circuit Court
of Perry County, Alabama. Crews is the beneficiary of a group life insurance policy in force when
the insured Dale Johnson died in Mobile County, Alabama. Johnson had group life insurance
coverage as a benefit of his employment with Crescent Hotels and Resorts, LLC. Crews alleged
that Standard unlawfully refused to pay the benefits. Standard removed the action to this Court on
basis that employee benefits are preempted under federal law; specifically, the Employee
Retirement Income Security Act of 1974, 29 U.S.C. § 1001 (ERISA).
II. Factual Background1
Standard issued a policy of group life insurance to Crescent. (Doc. 20-1, p. 6) (Group Policy
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Crews did not controvert Standard’s statement of undisputed facts. Therefore, the “Court
will deem uncontroverted material facts to be admitted solely for the purpose of deciding the motion
for summary judgment.” S.D. Ala. CivLR 56(d). Accordingly, Standard’s statement of undisputed
facts forms the basis for the Court’s factual findings.

No. 649738-A, effective June 1, 2014 (the “Plan”)). Johnson was employed by Crescent and
participated in the Plan. He died in a pedestrian accident on February 15, 2015. (Id., p. 124-128) At
his death, Johnson had group life insurance totaling $31,000, plus double indemnity for accidental
death, equaling total benefits of $62,000. (Id., p. 23-6) The $31,000 life insurance amount consisted
of $21,000 in basic coverage (equaling Johnson’s salary), and an additional $10,000 in voluntary
life coverage paid through Johnson’s payroll withholding. (Id., p. 12, 14, 76, 87, 196)
Crews, the beneficiary, initially submitted a life insurance claim listing an amount of
$50,000, which was different from what the Plan provided. (Id., p. 200, 217-218) That figure may
have originated from the HR manager at Crescent Hotels, who completed the Proof of Death claim
form listing the coverage amount as $50,000. (Id., p. 200) The HR manager later acknowledged
that Johnson only paid 90 cents per pay period, which entitled his beneficiary to "whatever amount
that comes out to." (Id., p. 140) Johnson once signed up for $50,000 from Mutual of Omaha -- a
different company -- before this HR Manager's employment and that was the form she saw. (Id., p.
140, 205) To the extent there was any mix-up between the HR Manager and Crews, such are
addressed by the Plan Document (under "Clerical Error and Misstatement") in which the parties
agreed that the Employer (Crescent) serves as the employee's agent, not Standard's agent. (Id., p.
38)
Standard made payments totaling $62,000 plus interest to Crews and C&J Financial, who
financed the funeral. (Id., p. 69-71, 82, 204) An initial set of payments totaling $31,000 was made
soon after the claim. (Id., p. 147, 165-166) A second set of equal payments (the double indemnity
payment based on the Accidental Death provision) was sent as soon as Standard confirmed the
accidental circumstances of the insured's death. (Id., p. 024, 087)
Soon after receipt of the $62,000 life insurance proceeds from Standard, Crews filed her
complaint in the Circuit Court of Perry County, Alabama. She alleged that Standard "refused to
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honor plaintiff’s' claim for benefits." (Doc. 1-1) Crews did not file an administrative appeal in
accordance with ERISA requirements and the Plan's written terms. (Id., p. 35)
III. Standard of Review

“The court shall grant summary judgment if the movant shows 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). Standard, as the party seeking summary judgment, bears the “initial
responsibility of informing the district court of the basis for its motion, and identifying those
portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any,’
 which it believes demonstrate the absence of a genuine issue of material
fact.”
 Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991) (quoting Celotex Corp. v.
Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). If Standard fails “to discharge
the initial burden, then the motion must be denied and the court need not consider what, if any,
showing the non-movant has made.” Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir.
1993); Clark, 929 F.2d at 608.
If Standard carries its initial summary judgment burden, the responsibility shifts to the nonmovant Crews “to show the existence of a genuine issue of material fact.” Fitzpatrick v. City of
Atlanta, 2 F.3d at 1115. If Crews fails to make a sufficient showing on an essential element of her
case with respect to which she has the burden of proof, then Standard, as the moving party, is
entitled to summary judgment. Celotex, 477 U.S. at 323. In deciding whether Crews has met her
burden, “the court must stop short of weighing the evidence and making credibility determinations
of the truth of the matter ... the evidence of the non-movant is to be believed, and all justifiable
inferences are to be drawn in his favor.” Tipton v. Bergrohr GMBH–Siegen, 965 F.2d 994, 998–999
(11th Cir.1992). The district court must view the evidence and the reasonable inferences arising
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from the evidence in the light most favorable to the nonmovant Crews. Jean–Baptiste v. Gutierrez,
627 F.3d 816, 820 (11th Cir. 2010); McCormick v. City of Fort Lauderdale, 333 F.3d 1234, 1243
(11th Cir. 2003) (same).
Because ERISA does not set out a standard of review for challenges to the denial of benefits
brought under 29 U.S.C. § 1132(a)(1)(B)” the Court of Appeals for the Eleventh Circuit “has
developed a multi-part test, relying on the Supreme Court's opinions in Firestone Tire & Rubber
Company v. Bruch, 489 U.S. 101, 109 (1989), and Metropolitan Life Insurance Company v. Glenn,
554 U.S. 105, 111 (2008).” Oliver v. Aetna Life Ins. Co., 2015 WL 4153628, *3 (11th Cir. 2015).
The district courts proceed as follows:
(1) Apply the de novo standard to determine whether the claim administrator's
benefits-denial decision is “wrong”
 (i.e., the court disagrees with the administrator's
decision); if it is not, then end the inquiry and affirm the decision.

(2) If the administrator's decision in fact is “
 de novo wrong,”
 then determine whether
he was vested with discretion in reviewing claims; if not, end judicial inquiry and
reverse the decision.

(3) If the administrator's decision is “
 de novo wrong”
 and he was vested with
discretion in reviewing claims, then determine whether “reasonable”
 grounds
supported it (hence, review his decision under the more deferential arbitrary and
capricious standard).

(4) If no reasonable grounds exist, then end the inquiry and reverse the
administrator's decision; if reasonable grounds do exist, then determine if he
operated under a conflict of interest.

(5) If there is no conflict, then end the inquiry and affirm the decision.

(6) If there is a conflict, the conflict should merely be a factor for the court to take
into account when determining whether an administrator's decision was arbitrary and
capricious.

Oliver, 2015 WL 4153628 at *3 (citing Blankenship v. Metro. Life Ins. Co., 644 F.3d 1350, 1355
(11th Cir. 2011).

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IV. Analysis
On motion for summary judgment, Standard argues that the sole issue for the Court is
whether it underpaid Crews’ life insurance claim. Standard points out that there is no dispute as to
the amount of group life coverage provided to Johnson, the amount that Johnson purchased, or that
the Plan had a double indemnity provision. Standard argues that Crews has failed to produce any
evidence to show that Standard erred in its calculations.
Alternatively, Standard argues that even should Crews challenge the calculations, Standard’s
decision is entitled to a deferential standard of review under ERISA because it was given discretion
to interpret the Plan, review the employer’s records, and determine the amount of benefits. Under
this review, Standard argues that the Court should uphold the decision, unless it lacked any rational
basis in law or fact, i.e. was not reasonable. Standard argues that since the payment was based on
undisputed payroll records and was consistent with the Schedule of Insurance in the Plan, and
actually included an amount greater than what Johnson purchased by payroll deduction, the decision
to pay $62,000 was not unreasonable and should be upheld.
Standard also argues that Crews failed to allege or produce any facts showing that she
exhausted the applicable administrative appeal procedures before filing suit. Standard argues that it
is entitled to judgment as a matter of law or alternatively, entitled to dismissal of her claims on
procedural grounds for failure to exhaust her administrative remedies.
In response, Crews states that she has “authorized” her attorney to “consent to defendant’s
Motion for Summary Judgment.” (Doc. 24) Crews did not rebut Standard’s statement of undisputed
facts or its argument.
In view of Crews’ consent and the fact that she failed to present any evidence that would
create a genuine dispute of material fact as to whether Standard paid Crews the correct amount due
under the Plan, the Court finds as matter of law, that Standard has not underpaid Crews’ claim.
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Moreover, Crews has failed to present any evidence or argument that Standard’s decision lacked a
rational basis in law or fact, thus as a matter of law, the Court finds that Standard’s decision was not
arbitrary and capricious and was reasonable. Accordingly, Standard is entitled to summary
judgment as to Crews’ claims. See Sherman v. City of Fort Valley, 2015 WL 5162271, at *3 (M.D.
Ga. Sept. 2, 2015) (finding that because Sherman had filed a consent to Defendants’ motion for
summary judgment and did not make any argument or provide any evidence that her constitutional
rights were violated, there was “no evidence to create a genuine issue of fact whether the
Defendants violated her constitutional rights to support a § 1983 claim” and therefore, certain
defendants were entitled to summary judgment).
In consideration of this decision, the Court declines to dismiss Crews’ claims for failure to
exhaust her administrative remedies.2
V. Conclusion
For the reasons set forth herein, Standard’s motion for summary judgment is GRANTED.
Final judgment shall be entered by separate document pursuant to Rule 58(a) of the Federal
Rules of Civil Procedure.
DONE and ORDERED this 22nd day of June 2016.
s / Kristi K DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE

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Florida Health Sciences Ctr., Inc. v. Total Plastics, Inc., 496 F. App'x 6, 10 (11th Cir. 2012)
(“The district court may, however, exercise its discretion not to require exhaustion when ‘resort to
administrative remedies would be futile or the remedy inadequate[.]’”) (quoting Perrino v. S. Bell
Tel. & Tel. Co., 209 F.3d 1309, 1315 (11th Cir.2000) (quoting in turn Counts v. Am. Gen. Life &
Accident Ins. Co., 111 F.3d 105, 108 (11th Cir.1997))).
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