Mateus v. Liberty Union Life Assurance Company et al
MEMORANDUM OPINION and ORDER; denying 25 plaintiff's motion for summary judgment; granting 26 and 27 defendants' motions for summary judgment; signed by District Judge Paul L. Maloney (Judge Paul L. Maloney, acr)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MICHIGAN
Case No. 1:16-cv-623
HON. PAUL L. MALONEY
LIBERTY UNION LIFE ASSURANCE
COMPANY, et al.,
MEMORANDUM OPINION AND ORDER
Plaintiff Karlis Mateus was a participant in a welfare plan who lost his health insurance
benefits. He brings an action requesting declaratory judgment and alleging breach of the Employee
Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq. (ECF No. 1.) Plaintiff has
filed a motion for summary judgment (ECF No. 25), and Defendants have filed cross-motions for
summary judgment (ECF Nos. 26, 27). Upon careful review of the record, the Court has decided
that the motions can be resolved without oral argument. See W.D. Mich. LCivR 7.3(d). For the
reasons that follow, Plaintiff’s motion is denied and Defendants’ motions are granted.
Plaintiff is the president, CEO, and an employee of M-Industries. He was formerly a
participant in a sponsored group health insurance plan for M-Industries, which took effect on March
1, 2015. The joint plan administrators were Defendants Liberty Union Assurance Company
(“Liberty Union”) and Mid-America Associates (“Mid-America”). Defendant Liberty Union is a
Michigan insurance company and provider of employee health insurance, and Defendant Mid-
America is a third-party administrator of Liberty Union’s insurance plans. The plan contract
required participants to pay monthly premiums to continue coverage, which were due on the first of
the month. The plan provided:
A grace period of 31 days, without interest, is allowed for payment of each monthly
Plan billing statement including excess loss premium (except the first Plan month)
during which coverage under the Plan shall remain in force. Coverage may terminate
prior to the end of the grace period by the Plan Sponsor giving at least 31 days
advance written notice of cancellation to the Administrator. Unless the Plan Sponsor
notifies the Administrator in writing, failure by the Plan Sponsor to pay as billed
within the Grace Period will cause this Plan to terminate retroactive at the end of the
Grace Period. Coverage under the Plan will terminate on the last day of the month
preceding the date the monthly Plan billing statement is due and unpaid. The Plan
termination date will be pro-rated for any coverage adjustments in effect prior to the
termination date of the Plan.
(Def.’s Mot. for Summ. J. Ex. B, ECF No. 26-1, PageID.512.)
On November 16, 2015, Liberty Union sent Plaintiff a bill for December’s coverage, noting
a due date of December 1, 2015, and that “coverage will terminate if full payment is not received
before the end of the 31 day grace period. The grace period begins on the payment due date.” (Id.
at Ex. C, ECF No. 26-5, PageID.521.) On December 21, 2015, Liberty Union sent a notice to MIndustries that it had not received payment for the November 16 invoice and that “payment must be
received in our office within 31 days of the due date or your coverage will terminate.” (Id. at Ex.
D, ECF No. 26-6, PageID.522.) Ten days later, M-Industries’ insurance agent, Sarah Hall, emailed
Corey Swiftney, who provided accounting services and bill payment for M-Industries, to inquire into
whether the premium payment had been made because the grace period was about to expire. (Id. at
Ex. E, ECF No. 26-7, PageID.523.) Swiftney responded at 3:10 P.M. on the same day, indicating
that he was “ready to make the payment now but no one at the company answer[ed].” (Id.) Because
Liberty Union did not receive the premium payment during the 31-day grace period, it sent a
termination notice to Swiftney on behalf of M-Industries on December 31, 2015, indicating that
coverage was retroactively terminated effective at midnight on November 30, 2015. (Ex. G, ECF
No. 26-9, PageID.527.)
On January 4, 2016, Brian Boyer, an employee at Liberty Union, responded to Swiftney that
Liberty Union could not accept payments by phone and would only accept payment by check. (Id.
at Ex. F, ECF No. 26-8, PageID.526.) Swiftney sent the check for the December premium on
January 5, 2016, and the following day, Liberty Union received the payment. On January 8, 2016,
Liberty Union notified M-Industries and Swiftney that the request for Plaintiff’s reinstatement under
the plan was rejected and returned M-Industries’ check for the untimely December premium
payment. (Id. at Ex. H, ECF No. 26-10, PageID.528.)
II. LEGAL FRAMEWORK
Summary judgment is appropriate only if the pleadings, depositions, answers to
interrogatories and admissions, together with the affidavits, show there is no genuine issue of
material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c); Tucker v. Tennessee, 539 F.3d 526, 531 (6th Cir. 2008). The burden is on the moving party
to show that no genuine issue of material fact exists, but that burden may be discharged by pointing
out the absence of evidence to support the nonmoving party’s case. Bennett v. City of Eastpointe,
410 F.3d 810, 817 (6th Cir. 2005) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). The
facts, and the inferences drawn from them, must be viewed in the light most favorable to the
nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (quoting Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
Once the moving party has carried its burden, the nonmoving party must set forth specific
facts, supported by evidence in the record, showing that there is a genuine issue for trial. Fed. R.
Civ. P. 56(e); Matsushita, 475 U.S. at 586. The question is “whether the evidence presents a
sufficient disagreement to require submission to the jury or whether it is so one-sided that one party
must prevail as a matter of law.” Anderson, 477 U.S. at 251–52. The function of the district court
“is not to weigh the evidence and determine the truth of the matter but to determine whether there
is a genuine issue for trial.” Resolution Trust Corp. v. Myers, 9 F.3d 1548 (6th Cir. 1993) (citing
Anderson, 477 U.S. at 249).
A. ERISA Standard of Review
The Sixth Circuit “has repeatedly held that the appropriate determination in reviewing the
decision of a plan administrator with respect to a claim for benefits is whether the decision was
arbitrary, capricious, made in bad faith or otherwise contrary to law.” Daniel v. Eaton Corp., 839
F.2d 263, 267 (6th Cir. 1988). This standard of review is applied to these cases “in order to avoid
‘excessive judicial interference with plan administration.’” Id. (quoting Cook v. Pension Plan for
Salaried Employees, 801 F.2d 865, 870 (6th Cir. 1986)). “By upholding the decisions of an
administrator that are rational in light of the plan’s provisions and thus not arbitrary or capricious,
the courts contribute to consistency and fairness in plan administration.” Id.
B. Motions for Summary Judgment
Plaintiff seeks declaratory judgment that Liberty Union’s interpretation of the welfare plan
is erroneous. Plaintiff argues that there is no genuine dispute that Defendants wrongfully terminated
his insurance coverage before the end of the 31-day grace period in breach of ERISA. (Pl.’s Mot.
for Summ. J. 7, ECF No. 25, PageID.86.) Plaintiff notes that the plan does not specify how the
31 days should be calculated. (Id.) As a result, Plaintiff contends that federal common law rules
should control how to calculate the time by following the process laid out in Federal Rule of Civil
Procedure 6. Under Rule 6, the Court should “exclude the day of the event that triggers the period”
and “count every day, including intermediate Saturdays, Sundays, and legal holidays,” and “include
the last day of the period, but if the last day is a Saturday, Sunday, or legal holiday, the period
continues to run until the end of the next day that is not a Saturday, Sunday, or legal holiday.” FED.
R. CIV. P. 6. Because the 31-day grace period ended on January 1, 2016, a legal holiday, Plaintiff
argues that he had until the next business day, January 4, 2016, to make a payment within the grace
Plaintiff also alleges that, because the group health plan was an “employee welfare benefit
plan” and “welfare plan” that was established or maintained by an employer for the purpose of
providing for its participants or their beneficiaries medical benefits, it is subject to ERISA. See 29
U.S.C. § 1002(1)(A). Plaintiff argues that, by violating the terms of the plan, Defendants also
Defendants argue that, under the plain language of the plan, Plaintiff needed to pay his
premium within the 31-day grace period. Because Plaintiff failed to make a timely payment, his
coverage lapsed. Defendants contend that, regardless of whether the Court interprets the 31-day
period language to end on January 1, 2016, or applies Rule 6 to conclude that the grace period ended
on January 4, 2016, Plaintiff failed to timely pay his December premium. Liberty Union did not
receive the payment until January 6, 2016, so Defendants assert that there is no actual controversy
meriting declaratory judgment. Likewise, Defendants argue that there was no breach of ERISA or
the plan when Liberty Union terminated Plaintiff’s coverage.
The Court agrees. Regardless of whether the grace period ended on January 1, 2016 or
January 4, 2016, it is undisputed that Defendants did not receive payment until January 6, 2016.
Although Plaintiff alleges that attempts were made, and rejected, to pay over the phone on December
31, 2015, Swiftney indicated that all payments to Liberty Union for the health insurance premiums
were previously made through bill.com. (Def.’s Mot. for Summ. J. Ex. A, ECF No. 26-3,
PageID.353.) Switfney did not attempt to pay for the December premium through bill.com. And
he waited to overnight a paper check to Liberty Union until January 5, 2016. He admitted that he
did not know why he did not overnight a check on January 4, 2016 after receiving the email from
Boyer indicating that payment was not accepted over the phone. (Id. at PageID.371-72.) He also
admitted that he did not know why he did not overnight a check on December 31, 2015. (Id. at
PageID.372.) Thus, there is no genuine dispute of material fact—Defendants did not receive
payment for the December premium during the 31-day grace period. In light of the plan’s
provisions, it was rational for the plan administrator to retroactively cancel the policy when payment
was not received during the grace period. (See Def.’s Mot. for Summ. J. Ex. B, ECF No. 26-1,
IT IS ORDERED that Plaintiff’s motion for summary judgment (ECF No. 25) is DENIED.
IT IS FURTHER ORDERED that Defendants’ motions for summary judgment (ECF Nos.
26, 27) are GRANTED.
A judgment will enter in accordance with this memorandum opinion and order.
June 7, 2017
/s/ Paul L. Maloney
Paul L. Maloney
United States District Judge
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