Holmes v. Aetna Life Insurance Company et al
ORDER denying 43 plaintiff's Motion for Reconsideration. Signed by District Judge George Caram Steeh. (MBea)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
CASE NO. 16-CV-11538
HON. GEORGE CARAM STEEH
PHILIP J. HOLMES,
AETNA LIFE INS. CO. ET AL.,
ORDER DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION
This is an Employment Retirement Income Security Act (“ERISA”)
case brought by plaintiff Philip J. Holmes for the denial of long term
disability (“LTD”) and short term disability (“STD”) benefits against
Defendants Aetna Life Insurance Co. (“Aetna”) and the United Parcel
Services of American Welfare Plan (the “Plan”). The parties filed crossmotions for judgment on the Administrative Record. On June 20, 2017, this
court entered an order granting Defendants’ motion and denying Plaintiff’s
motion. Now before the court is Plaintiff’s motion for reconsideration.
Local Rule 7.1(h) provides that a court will not grant motions for
reconsideration “that merely present the same issues ruled upon by the
court, either expressly or by reasonable implication.” The movant bears a
heavy burden and “must not only demonstrate a palpable defect by which
the court and the parties and other persons entitled to be heard on the
motion have been misled but also show that correcting the defect will result
in a different disposition of the case.” Id.; see also DirecTV, Inc. v.
Karpinsky, 274 F. Supp. 2d 918, 921 (E.D. Mich. 2003). Plaintiff has not
met his burden here.
Plaintiff seeks reconsideration on four grounds: (1) the court applied
the wrong standard of review and should have conducted de novo review
rather than discretionary review; (2) the court improperly found that
Plaintiff’s claims were time-barred for his failure to exhaust his
administrative remedies; (3) the court improperly determined that Plaintiff
could not claim a successive disability based on both his foot/ankle and
mental impairments and in finding that his Financial Analyst job was a
sedentary job; and (4) the court erred in denying his claim that Defendants
allegedly failed to produce Plan documents by relying on proof that
Defendants produced the STD and LTD Plans and Summary Plan
Description (“SPD”) when his claim was based on the alleged
nonproduction of the Aetna policy. The court addresses each argument
Standard of Review
Plaintiff argues that the court erred in relying on discretionary review
and should have conducted de novo review. Plaintiff merely reiterates
earlier arguments presented in his original motion which this court has duly
considered. The court previously held that Georgia law applied under the
policy’s choice-of-law provision and conflict of law analysis because the
master group policy was issued to UPS, a corporation with its principal
place of business in Georgia, and was delivered in Georgia. The Sixth
Circuit has recognized that courts generally honor choice-of-law provisions
in ERISA plans. DaimlerChrysler Corp. Healthcare Benefits Plan v.
Durden, 448 F.3d 918 (6th Cir. 2006).
The court has carefully considered the legal authority cited by both
sides. Whether or not Michigan’s Administrative Code 500.2201(c), which
prohibits discretionary clauses in insurance contracts issued, advertised or
delivered to persons in Michigan, applies when there is a choice-of-law
provision calling for the law of a state which permits such a clause, has not
been addressed by the Sixth Circuit, but several district courts have
weighed in on the issue. See Morrison v. Unum Life Ins. Co., 730 F. Supp.
2d 699, 703-06 (E.D. Mich. 2010) (applying Maine law and holding that
Michigan ban on discretionary clauses would not apply); Fooman v. Liberty
Life Assur. Co. of Boston, 2013 WL 1874738, at *3 (W.D. Mich. May 3,
2013) (applying Pennsylvania law and holding that Michigan ban on
discretionary clauses would not apply); Grimmett v. Anthem Ins. Cos.,
2012 WL 4477218, at * 9 (E.D. Mich. Sept. 27, 2012) (choice-of-law
provision requiring application of Indiana law rendered Michigan’s
regulatory ban inapplicable.)
While Plaintiff’s reliance on Tikkanen v. Liberty Life Assurance Co. of
Boston, 31 F. Supp. 3d 913, 920-22 (E.D. Mich. 2014) offers some support
to his claim that de novo review should apply, the court does not find the
reasoning of that case to be persuasive. In Tikkanen, the court found that
Michigan’s ban of discretionary clauses did not apply because the policy
was not issued or delivered in Michigan. Id. at 922. However, in dicta, the
Tikkanen court suggested that the rule voiding discretionary clauses would
apply if a contract document was “issued or delivered to any person” in
Michigan regardless of a choice-of-law provision in the policy identifying
another state’s law as controlling. Id. at 921-22. The Tikkanen court
refused to undertake a choice of law analysis, ruling that the choice-of-law
provision in the policy would not apply because the insured employee
seeking long term disability benefits was not a party to the policy and the
matter was not a contract dispute. Id. at 921.
This reasoning is contrary to the Sixth Circuit’s holding in
DaimlerChrysler Corp., where the Sixth Circuit rejected a similar argument.
In that case, the Sixth Circuit analyzed whether a choice-of-law provision in
an ERISA plan applied in an interpleader action brought by the pension
plan against two claimants each seeking to recover as the surviving
spouse. 448 F.3d at 922. One of the claimants argued that the choice-oflaw provision did not apply because there was no issue about the rights
and duties under a contract. Id. at 923. The Sixth Circuit disagreed finding
that the pension plan contained a statement of the parties’ choice of law to
govern the contractual rights and duties created by the plan, and thus, the
court looked to the Restatement to conduct a choice of law analysis. Id.
Under the Restatement (Second) of Conflicts of Law § 187, the law of
the state chosen by the parties to govern their contractual rights and duties
is generally applied unless (1) the chosen state has no substantial
relationship to the parties to the transaction and there is no other
reasonable basis for the parties’ choices, or (2) the application of the law of
the chosen state would be contrary to a fundamental policy of a state that
has a materially greater interest in the determination of the particular issue
and that would be the state of the applicable law in the absence of an
effective choice of law by the parties. Id. at 923. In this case, if the choice-5
of-law provision does not apply, Michigan law governs. Under conflict-oflaw analysis, the policy’s choice-of-law provision should apply because the
policy was issued to UPS in its home state; thus, Georgia has a substantial
relationship to the parties. UPS employs over 350,000 employees in the
United States, presumably in all 50 states. If the choice-of-law clause in
the Policy is not honored, then the administrator potentially must adhere to
the laws of 50 states, which would undermine Congress’ goal of achieving
uniformity and efficiency in the administration of ERISA plans.
While Michigan has an interest in providing insured employees with
the highest level of judicial review of ERISA benefit determinations
possible, Michigan does not have a materially greater interest than Georgia
does here, as Georgia has an interest in providing certainty to employers
who enter into ERISA plans in their home state that their determinations of
benefits will be reviewed under the same standard wherever insured
employees file suit. Because the Plan provides benefits to UPS’s
employees nationwide, and the master policy was issued to UPS, a
corporation with its principal place of business in Georgia, and was
delivered in Georgia, the policyholder’s interest in having “[i]ts legal
obligations determined by a single standard of the law of its home state is
patent.” Morrison, 730 F. Supp. 2d at 705.
Based on the above analysis, the court determines that Georgia law
applies and Defendants’ benefits determination is reviewed under the
discretionary standard. However, even if the de novo standard of review
applies, the court would affirm Defendants’ determination that plaintiff was
Plaintiff’s Claims for LTD Benefits Arising out of his On Road
Supervisor Position are Time-Barred
Next, Plaintiff claims the court erred when it found that his claim for
LTD benefits arising out of his On Road Supervisor position was timebarred for his failure to exhaust the STD benefits or the 26-week
Elimination Period. Plaintiff argues the court erred in holding that he was
required to exhaust STD benefits before he was eligible for LTD benefits as
the Policy only requires that Plaintiff satisfy a 26-week Elimination Period,
not the 26-week STD benefit period. Contrary to Plaintiff’s argument, the
Policy’s definition of the Elimination Period does not moot the exhaustion
requirement. The Policy states: “Once you meet the LTD test of disability,
your long term disability benefits will be payable after the Elimination
Period, if any, is over. No benefit is payable for or during the Elimination
Period. The Elimination Period is the amount of time you must be disabled
before benefits begin.” (AR 1460). The Elimination Period is defined as
“The first 26 weeks of a period of disability or later of the exhaustion of STD
benefits.” (AR 1493). As both parties explain in their papers now before
the court, the Policy’s definition of the Elimination Period allows an
employee to use vacation or sick time before receiving STD benefits such
that the Elimination Period may end more than 26 weeks after the
employee’s disability begins, if the employee has not yet exhausted his
STD benefits at 26 weeks. The Elimination Period governs the deadline for
filing a LTD claim. The policy provides, “[t]he deadline for filing a long term
disability claim is 90 days after the end of the elimination period, if any.”
(AR 1471). Thus, if any employee exhausts his or her STD benefits more
than 26 weeks after the disability begins, because for example, he or she
used sick time or vacation time while disabled but before collecting STD
benefits, the employee’s deadline for filing an LTD claim is not shortened.
Plaintiff claims a disability onset date of February 4, 2014. Thus, the
Elimination Period ended on August 4, 2014. Plaintiff did not file his LTD
benefit claim until April 16, 2015, well outside the 90-day period
contemplated by the Policy. Accordingly, the court properly ruled that
Plaintiff’s LTD claim was time-barred.
Plaintiff claims that the LTD policy provides that suit can be brought
up to 2 years after all internal appeals have been decided. This is a non
sequitur. The timing for filing a lawsuit does not alter Plaintiff’s obligation to
exhaust his administrative remedies. Accordingly, Plaintiff’s objection on
the grounds that his LTD claim arising out of his On Road Supervisor
position is not time-barred is overruled.
Successive Disability and Classification of Financial Analyst
Plaintiff also objects to the court’s order on the grounds that it should
have treated his second STD claim as a successive disability and should
not have classified the Financial Analyst position as sedentary. The court
properly rejected Plaintiff’s successive disability theory as Plaintiff’s second
STD application stated a disability onset date of December 10, 2014, and
listed his position for which he was disabled as Financial Analyst. In fact,
Plaintiff had worked as a Financial Analyst for several months, whereas he
had only worked as On Road Supervisor for a mere three days. Because
Plaintiff’s second STD claim was not filed as a successive disability
application, the court did not err in refusing to analyze the claim in that
Secondly, Plaintiff complains that this court treated the Financial
Analyst position as a sedentary position, instead of as a medium position.
While the court noted that Holmes identified the position as sedentary on
his own STD application, the court treated the position as requiring a
medium physical exertional level during peak season. (Doc. 41 at 27).
Even under the medium classification, the court found that Defendants’
independent peer reviewers, Dr. Martin Mendelssohn, an orthopedic
surgeon, and Dr. Philip Marion, a specialist in pain management,
considered Plaintiff’s alleged foot and ankle impairment and found that his
physical limitations in this area would not prevent Plaintiff from medium
work. (AR 970-75, 1127-30).
Plaintiff also argues that this court erred when it failed to impose
monetary sanctions against Defendants for their failure to produce required
documents under ERISA. In his motion for reconsideration, Plaintiff does
not dispute that he received the STD Plan, the Summary Plan Description,
and the STD policy but argues he was not provided with Aetna’s LTD
policy. It is unclear from the First Amended Complaint that relief was
sought on this basis. Paragraph 35 of the First Amended Complaint avers,
“Defendant breached its fiduciary duties to Plaintiff by not providing the
STD Plan and full information on the Plan and appeal requirements.” (Doc.
14 PgID 65). Similarly, paragraph 40 of the First Amended Complaint
avers that “Defendant failed to produce its full STD Plan, the Summary
Plan Description and/or the Short Term Disability Policy in response to
Plaintiff’s request.” Id. at PgID 66. Given this language in the Amended
Complaint, Plaintiff’s argument that this court “apparently misunderstood
Plaintiff as arguing that the STD/LTD plans or SPD were not timely
provided,” but “it was production of the Aetna policy that was at issue” is
not well taken.
Plaintiff claims that he requested the Aetna LTD policy from
Defendants on October 12, 2015, but did not receive the policy until the
Administrative Record was supplemented in this case in February, 2017.
However, the Administrative Record reflects that Aetna provided Plaintiff’s
counsel with a copy of the LTD Policy on May 14, 2015. (AR 390-91).
Even if Plaintiff disputes the Administrative Record showing that he
received the Aetna LTD policy, Plaintiff has not shown monetary penalties
are appropriate under the circumstances presented here. In a similar case,
Moore v. Lafayette Life Ins. Co., 458 F.3d 416, 437 (6th Cir. 2006), the
Sixth Circuit affirmed the denial of monetary penalties, where although the
plan administrator failed to produce the SPD as required by ERISA, plaintiff
could show no prejudice where he had received the policy and was
represented by counsel with ERISA expertise. Here, plaintiff does not
dispute that UPS responded to his October, 2015 request and provided him
with many Plan documents (AR 1583); thus, it is unclear why plaintiff’s
counsel did not follow up with Defendants that he was seeking a copy of
the LTD policy at some point prior to 2017, when he alleges he first
received the document, whose existence would have been well known to
counsel, an experienced ERISA attorney.
In sum, because the Administrate Record demonstrates that Plaintiff
did in fact receive Aetna’s LTD policy, and Plaintiff admits defendants
produced many other Plan documents, Plaintiff can show no prejudice, and
the court declines to award a monetary penalty against defendants or to
bar defendants from relying on any discretionary clause in the policy.
For the reasons set forth above, Plaintiff’s motion for reconsideration
(Doc. 43) is DENIED.
IT IS SO ORDERED.
Dated: August 2, 2017
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE
CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
August 2, 2017, by electronic and/or ordinary mail.
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