Helfman v. GE Group Life Assurance Company et al
Filing
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ORDER Granting 140 Plaintiff's Motion for Interest. Signed by District Judge Victoria A. Roberts. (LVer)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JOEL HELFMAN,
Plaintiff,
vs
Case No: 06-13528
Honorable Victoria A. Roberts
GE GROUP LIFE ASSURANCE COMPANY, Magistrate Judge Majzoub
a foreign corporation, GENWORTH LIFE
AND HEALTH INSURANCE COMPANY,
a foreign corporation, AND SUN LIFE
ASSURANCE COMPANY OF CANADA,
a foreign corporation,
Defendants.
__________________________________/
ORDER GRANTING PLAINTIFF’S MOTION FOR INTEREST
I.
INTRODUCTION
This matter is before the Court on a motion for interest filed by Joel Helfman
(“Plaintiff”). The matter is fully briefed. The legal arguments and factual allegations are
sufficiently set forth in motion papers; oral argument is unnecessary. The Court decides
Plaintiff’s motion on the briefs. See L.R. 7.1(f)(2).
The Court GRANTS Plaintiff’s motion for interest.
II.
BACKGROUND
This case involves termination of Plaintiff’s long-term disability (“LTD”) benefits
by Genworth Life and Health Insurance Company, formerly known as GE Group Life
Assurance Company (“Genworth”), and Sun Life Assurance Company of Canada (“Sun
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Life”) (collectively, “Defendants”).
Plaintiff was employed by two construction businesses owned by his family, Atlas
Filmore Lumber Company (“Atlas”) and Fairway Construction Company (“Fairway”).
Plaintiff worked for both companies, but Atlas officially employed him. In June 2002,
Fairway began covering its employees under a LTD policy that Genworth issued. In
June 2003, Atlas began covering its employees under a LTD policy that Sun Life issued.
Atlas paid premiums for Plaintiff to both Genworth and Sun Life. In January 2004,
Plaintiff applied for disability benefits from Genworth and Sun Life. Genworth and Sun
Life, unbeknownst to the other, began to pay Plaintiff benefits. Through their
investigations, they determined that the other company was paying benefits as well.
Genworth terminated benefits on March 30, 2005; it found Plaintiff’s benefits from
Sun Life was “other income” under its policy. On May 2, 2005, Sun Life terminated
benefits after determining Plaintiff was no longer disabled. On June 14, 2006, Plaintiff
filed suit in Oakland County Circuit Court against Defendants for termination of benefits.
Defendants removed the state court action to this Court under 28 U.S.C. § 1441 based
on 28 U.S.C. § 1331 and 28 U.S.C. § 1332.
This Court held that the Employee Retirement Income Security Act (“ERISA”)
applied to Plaintiff’s LTD benefit plans and that under ERISA standards of review,
Genworth and Sun Life’s decisions to terminate were not arbitrary or capricious.
Plaintiff appealed this Court’s finding that his LTD benefit plans were governed by
ERISA and that Sun Life’s termination of benefits was not arbitrary or capricious. The
Sixth Circuit affirmed this Court’s ruling that the LTD plans were subject to ERISA.
However, it reversed and remanded the decision to uphold Sun Life’s termination of
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benefits. It found Sun Life’s denial of Plaintiff’s disability arbitrary and capricious, and
ordered the Sun Life plan administrator to conduct a full and fair review of Plaintiff’s
claim.
After its review, Sun Life determined Plaintiff was entitled to an additional six
months of benefits. On May 17, 2011, Sun Life paid $28,124.57; $6,289.28 of this total
was accrued interest. Plaintiff administratively appealed Sun Life’s decision, contending
he was entitled to all the remaining benefits and not just the additional six months. On
August 23, 2011, while the administrative appeal was pending, Sun Life agreed with
Plaintiff and decided to pay the remaining benefits, from October 1, 2005, through April
3, 2009, totaling $233,289.04. This was not a negotiated settlement. And, unlike the
six-month payment, this payment did not include accrued interest. Sun Life denied
Plaintiff’s request for interest.
Plaintiff moved for interest on the $233,389.04 payment accruing from October 1,
2005, the date he says payments should have begun, through August 23, 2011, the
date payment was made. Sun Life opposes Plaintiff’s motion; Sun Life argues that
Plaintiff did not have an “unqualified right” to receive disability benefits, and the award
was a settlement, not a judgment.
III.
ANALYSIS
A.
Standard of Review
“[I]n the absence of a statutory provision [,] the award of prejudgment interest is
in the discretion of the court.” Tiemeyer v. Cmty. Mut. Ins. Co., 8 F.3d 1094, 1097 (6th
Cir. 1993). ERISA does not prohibit prejudgment interest. Bricklayers' Pension Trust
Fund v. Taiariol, 671 F.2d 988, 989 (6th Cir. 1982). Therefore, when a party establishes
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contractual rights under ERISA, prejudgment interest may be awarded. Id. at 989-90.
The court may award it according to general equitable principles. Shelby County Health
Care Corp. v. Majestic Star Casino, 581 F.3d 355, 376 (6th Cir. 2009). “Awards of
prejudgment interest are compensatory, not punitive, and a finding of wrongdoing by the
defendant is not a prerequisite to such an award.” Drennan v. Gen. Motors Corp., 977
F.2d 246, 253 (6th Cir. 1992).
B.
Plaintiff is awarded interest although Sun Life agreed to voluntarily
pay him.
Plaintiff asserts that although case law uses the terminology “prejudgment
interest,” the ability of the court to award interest to a beneficiary is not dependent on
entry of a judgment.
Plaintiff is correct. Prejudgment interest may be awarded in a case that resolves
short of judgment. See e.g. Sweet v. Consol. Aluminum Corp., 913 F.2d 268, 272 (6th
Cir. 1990). In Sweet, Edward Sweet retired and elected to receive his pension in
monthly installment payments with a ten-year guarantee. Id. at 269. In 1975, Edward
Sweet disappeared. Id. His son, Carl Sweet (“the plaintiff”), was appointed Special
Administrator of the Estate until Edward’s death was established. Id. Edward Sweet’s
employer informed the plaintiff that the pension trustee was holding the funds until
Edward Sweet’s whereabouts were determined. Id. An Order eventually entered,
declaring the date of Edward Sweet’s death. Id. The plaintiff filed a complaint for
pension benefits. Id. The parties settled, agreeing $19,578.32 was due. Id. After the
settlement, the District Court awarded prejudgment interest from the date the complaint
was filed until the defendant paid the settlement money. Id. at 270. Plaintiff appealed
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the District Court’s limit of the prejudgment interest award and denial of attorney’s fees.
Id. at 269. The Sixth Circuit held that the District Court correctly concluded that the
plaintiff was entitled to the award of interest. Id. at 270-71. However, the Court held that
prejudgment interest should be awarded from the date the Order named the plaintiff
Special Administrator, entitling him to the pension funds. Id. at 270.
This case is no different than Sweet. After the Sixth Circuit ordered review of
Plaintiff’s claim, Sun Life determined Plaintiff would receive payment under the policy.
There was no negotiated settlement; Sun Life unilaterally paid the claim.
Sun Life paid interest on its first six-month payment. It now claims this interest
payment was in error. Sun Life asserts it had the right to recover its mistaken payment
under Michigan law, but Sun Life never asked Plaintiff to return the interest portion.
Moreover, Sun Life’s May 17, 2011 letter, explaining the first payment, does not support
an “erroneous” interest payment. Sun Life stated, “[I]n addition, based on our
calculations, we have included accrued interest.” The interest portion appears to have
been purposefully included.
However, a claimed mistake is of no moment. The Court bases its decision to
award interest on its discretion to do so under general equitable principles. Shelby
County Health Care Corp., 581 F.3d at 376; see Sweet, 913 F.2d at 272. Although
Plaintiff’s case resolved short of judgment, the Court finds, according to Sweet, that
Plaintiff is entitled to consideration for an interest payment.
C.
Plaintiff had an “unqualified right” to receive benefits and was
entitled to them.
Defendant alleges Plaintiff does not have an “unqualified right” to receive benefits
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under the policy because it alone could determine whether Plaintiff satisfied the policy.
Plaintiff asserts his “unqualified right” to receive benefits is undisputed because
Defendant paid him.
A beneficiary has an “unqualified right” to benefits when he or she is entitled to
them. See Sweet, 913 F.2d at 270; see also Gavie v. Stroh Brewery Co., 668 F. Supp.
608, 614 (E.D. Mich. 1987) aff'd, 877 F.2d 62 (6th Cir. 1989). “Interest is due [to the
plaintiff] only if he or she had an unqualified right to immediate receipt of the funds.”
Gavie, 668 F. Supp. at 614. A beneficiary is to receive interest from the date he or she
is entitled to the funds until the date of payment. See Sweet, 913 F.2d at 270-71. An
“unqualified right” does not exist when failure to receive benefits is due to a plaintiff’s
inaction. See Furry v. Champion Spark Plug Co., 911 F.2d 732, at *1 (6th Cir. 1990)
(plaintiff refused to choose any of the available pension plans); see also Gavie, 668 F.
Supp. at 614-15 (plaintiffs refused to sign a release of claim for early disbursement).
Plaintiff had an “unqualified right” to receive benefits under the policy. Sun Life’s
policy required a beneficiary to satisfy the “Total Disability” requirement to receive
benefits. To determine this, Plaintiff needed to provide satisfactory proof of disability.
The Sixth Circuit found the record did not clearly establish Plaintiff was disabled to
entitle him to the policy benefits. Helfman v. GE Group Life Assur. Co., 573 F.3d 383,
396 (6th Cir. 2009). It declared “where [there is a] problem with the integrity of the
plan’s decision-making process” it was more appropriate to, “remand to the plan
administrator” rather than deny benefits. Id.
Following remand, Sun Life paid Plaintiff benefits after deciding Plaintiff provided
sufficient evidence to satisfy the policy definition of “Total Disability.” See Short v. Cent.
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States, Se. & Sw. Areas Pension Fund, 729 F.2d 567, 576 (8th Cir. 1984) (employee fit
policy definition of “employee” and thus was entitled to pension benefits). Unlike the
plaintiffs in Gavie and Furry who were held not to have an “unqualified right” because of
their inaction, Sun Life has not alleged any inaction on the part of Plaintiff. Sun Life’s
payment for the period of October 1, 2005, through April 3, 2009, supports Plaintiff’s
contention that he is entitled and has an “unqualified right” to receive benefits.
Even if Sun Life acted prudently by withholding the funds because it was not
satisfied Plaintiff fulfilled the “Total Disability” requirements, it still retained a benefit by
not submitting payment. Sweet, 913 F.2d at 270. Sun Life denied Plaintiff use of money
that was his. Id.; see Rybarczyk v. TRW, Inc., 235 F.3d 975, 986 (6th Cir. 2000); see
also Wells v. U.S. Steel, 76 F.3d 731, 738 (6th Cir. 1996). Because Plaintiff had an
“unqualified right” to immediate release of the funds, Plaintiff is entitled to pre-judgment
interest. Sweet, 913 F.2d at 270. Sun Life asserts there is not an “unqualified right”
because the policy does not require an interest payment. Again, the Court has
discretion to award interest.
IV.
CONCLUSION
Plaintiff’s motion for interest is GRANTED.
The Court awards plaintiff interest on the $233,289.04 payment. Interest is to be
calculated pursuant to 28 U.S.C. § 1961, from the date Plaintiff was entitled to the
benefits on October 1, 2005, until it was paid on August 23, 2011, together with interest
on the interest amount from August 23, 2011 to the present.
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IT IS ORDERED.
/s/ Victoria A. Roberts
Victoria A. Roberts
United States District Judge
Dated: November 5, 2012
The undersigned certifies that a copy of this
document was served on the attorneys of
record by electronic means or U.S. Mail on
November 5, 2012.
S/Linda Vertriest
Deputy Clerk
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