Cassidy v. Union Security Insurance Company

Filing 55

MEMORANDUM OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE: The Court OVERRULES Defendant's Objections 49 and ADOPTS the Report and Recommendation of the Magistrate Judge 48 to the extent it is consistent with this opinion. Accordingly, IT IS HEREBY ORDERED that Plaintiff's Motion in Support of De Novo Standard of Review 14 is DENIED. (Written Opinion) Signed by Chief Judge John R. Tunheim on 3/6/2018. (JMK)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 16-4087 (JRT/FLN)

KRISTA M. CASSIDY,
Plaintiff,
v.
UNION SECURITY INSURANCE
COMPANY,

MEMORANDUM OPINION
AND ORDER ADOPTING
REPORT AND RECOMMENDATION
OF MAGISTRATE JUDGE

Defendant.

Mark M. Nolan, NOLAN, THOMPSON & LEIGHTON, PLC, 5001
American Boulevard West, Suite 595, Bloomington, MN 55437, for plaintiff.
Robyn L. Anderson and S. Russell Headrick and Robyn L. Anderson,
LATHROP & GAGE LLP, 2345 Grand Boulevard, Suite 2200, Kansas
City, MO 64108; and Terrance J. Wagener, MESSERLI & KRAMER
P.A., 1400 Fifth Street Towers, 100 South Fifth Street, Minneapolis, MN
55402, for defendant.

Plaintiff Krista M. Cassidy brings this Employee Retirement Income Security Act
(“ERISA”) action seeking benefits under a long-term disability policy (“the Plan”) issued by
Defendant Union Security Insurance Company (“Union Security”) through the Minnesota
Bankers Association Employee Benefits Trust (the “Bankers Association”). (Compl., Dec.
15, 2016, Docket No. 1). Cassidy moved for de novo review of Union Security’s adverse
benefits determination. (Mot., Apr. 10, 2017, Docket No. 14.) United States Magistrate
Judge Franklin Noel issued a Report and Recommendation (“R&R”) that the motion be
denied because the Plan explicitly bestows discretionary authority to make benefit

determinations upon Union Security. (R&R at 3-4, Jan. 12, 2018, Docket No. 48.) Cassidy
objected, contrasting the Plan’s authority provision with more explicit provisions in other
Union Security policies and in Eighth Circuit precedent. (Pl.’s Objs. to R&R at 3, 6, Jan.
26, 2018, Docket No. 49.) Nonetheless, it is clear enough to grant the relevant authority.
As such, the Court will overrule her objections, adopt the R&R, and deny the motion.

DISCUSSION
When a magistrate judge files an R&R, a party may file “specific written objections
to the proposed findings and recommendations.” Fed. R. Civ. P. 72(b)(2); accord D.
Minn. LR 72.2(b)(1). “The objections should specify the portions of the magistrate
judge’s report and recommendation to which objections are made and provide a basis for
those objections.” Mayer v. Walvatne, No. 07-1958, 2008 WL 4527774, at *2 (D. Minn.
Sept. 28, 2008). “The district judge must determine de novo any part of the magistrate
judge’s disposition that has been properly objected to.” Fed. R. Civ. P. 72(b)(3); accord
D. Minn. LR 72.2(b)(3).

“The district judge may accept, reject, or modify the

recommended disposition; receive further evidence; or return the matter to the magistrate
judge with instructions.” Fed. R. Civ. P. 72(b)(3); accord D. Minn. LR 72.2(b)(3).
Courts review a determination of ERISA benefits de novo “unless the benefit plan
gives the administrator or fiduciary discretionary authority to determine eligibility for
benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489
U.S. 101, 115 (1989). Here, Plan documents identify the Bankers Association as Policy
Holder, Plan Sponsor, and Plan Administrator, but do not explicitly designate any
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fiduciaries. (Aff. of Mark M. Nolan (“1st Nolan Aff.”) ¶ 2, Ex. A at 1, Apr. 10, 2017,
Docket No. 17; 1st Nolan Aff. ¶ 3, Ex. B at 2.) However, the Bankers Association – as
Plan Sponsor – included in the Plan a provision purporting to grant Union Security the
authority to determine eligibility for benefits and to interpret the Plan’s terms. Cassidy v.
Union Sec. Ins. Co., No. 16-4087, 2017 WL 6061620, at *3 (D. Minn. Dec. 6, 2017).
Because this grant of authority falls under the wide net of “any discretionary authority,”
Union Security meets the statutory definition of “fiduciary.”

Id. (citing 29 U.S.C.

§ 1002(21)(A)(i)). But the question remains whether the grant of authority is sufficient to
bestow “discretionary authority to determine eligibility for benefits or to construe the
terms of the plan” upon Union Security as fiduciary such that de novo review is
unwarranted. See Firestone, 489 U.S. at 115.
“[W]hen an insurance policy is the ERISA plan,” courts must determine whether
the contested provision uses “explicit discretion-granting language.” Walke v. Grp. Long
Term Disability Ins., 256 F.3d 835, 839 (8th Cir. 2001) (quoting Bounds v. Bell Atl. Enters.
Flexible Long-Term Disability Plan, 32 F.3d 337, 339 (8th Cir. 1994)). In the Eighth
Circuit, language reading “like a typical insurance policy” does not merit deference.
Ravenscraft v. Hy-Vee Emp. Benefit Plan & Tr., 85 F.3d 398, 403 n.2 (8th Cir. 1996).
The decision to confer discretion on an ERISA plan
administrator affects both the rights of plan participants and
beneficiaries, and the administrator’s burden to assemble an
adequate claims record and to adequately explain its decision
at the administrative level. It is relatively easy for an insurer
to use unambiguous discretion-conferring language when its
group policy will serve as an ERISA plan . . . . Therefore,
when the insurer instead issues a policy containing
ambiguous claims submission language commonly used in
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non-ERISA contexts, the presumption should be there was no
intent to confer such discretion.
Walke, 256 F.3d at 840 (citations omitted). Thus, it is not sufficient to state that benefits
will be paid if the insured “submits satisfactory proof of Total Disability to us,” even
though it would have been sufficient to state that benefits will be paid only if the insured
submits “proof satisfactory to us.” Id. at 839-40 (emphases added). Likewise, it is
insufficient to state that benefits will be paid “after [the insurer] receives adequate proof
of loss,” Bounds, 32 F.3d at 339, or to state that “[w]ritten proof of loss must be
furnished” for benefits to be paid, Brown v. Seitz Foods, Inc., Disability Benefit Plan, 140
F.3d 1198, 1200 (8th Cir. 1998); see also Bowers v. Life Ins. Co. of N. Am., 21 F. Supp.
3d 993, 1000 (D. Minn. 2014) (“In order to qualify for Waiver of Premium an Employee
must submit due proof that he or she has been Disabled . . . .”).
Nor is a grant of authority for one purpose sufficient to grant authority for others. 1
For instance, authority to make a “conclusive” determination about whether or not an
institution is approved to provide certain care does not confer discretionary authority to
determine the nature of a patient’s care. Dvorak v. Metro. Life Ins. Co., 965 F.2d 606,
609 & n.3 (8th Cir. 1992). And “final authority to determine all matters of eligibility for
the payment of claims” does not confer discretionary authority to construe ambiguous
terms in the plan. Baxter ex rel. Baxter v. Lynn, 886 F.2d 182, 188 (8th Cir. 1989).

1

As such – contrary to Union Security’s claim – the Court’s finding that the authority
provision grants at a minimum “any” discretionary authority does not compel the conclusion that
it grants the particular discretionary authority relevant to Cassidy’s motion.

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By contrast, it is sufficient in the Eighth Circuit to state that the insurer may insist
on proof “satisfactory to [the insurer],” 2 that a party has “full and exclusive authority to
control and manage the Plan, to administer claims, and to interpret the Plan and resolve
all questions,” 3 that the insurer has “full discretion and authority to determine eligibility
for benefits and to construe and interpret [the policy’s] terms and provisions,” 4 or that
term definitions may be construed “as determined by the [plan sponsor].” 5 See generally
Armstrong v. Great Lakes Higher Educ. Corp., No. 00-1543, 2002 WL 459077, at *3 (D.
Minn. Mar. 18, 2002) (collecting cases and noting that there is “no bright line test” for
courts to use in making this determination).
The Court must determine whether the authority provision in the Plan is more like
“unambiguous discretion-conferring language” or “ambiguous claims submission
language.” The authority provision reads as follows:
The policyholder delegates to us and agrees that we have the
authority to determine eligibility for participation or benefits
and to interpret the terms of the policy. However, this
provision will not restrict any right you may have to pursue
an appeal or file a lawsuit if your claim for benefits is denied.

2

Prezioso v. Prudential Ins. Co. of Am., 748 F.3d 797, 803 (8th Cir. 2014) (noting that
this formulation eliminates the ambiguity of the “satisfactory proof” term used in Walke).
3

McKeehan v. Cigna Life Ins. Co., 344 F.3d 789, 792 (8th Cir. 2003),

4

McGarrah v. Hartford Life Ins. Co., 234 F.3d 1026, 1027, 1030 (8th Cir. 2000),
abrogated on other grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008).
5

Finley v. Special Agents Mut. Benefit Ass’n, 957 F.2d 617, 619 (8th Cir. 1992).

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(1st Nolan Aff. ¶ 2, Ex. A at 32.) Crucial to Cassidy’s objection is the contrast between
this provision and the more explicit authority provisions in Union Security’s short-term
disability and life insurance policies:
We have the sole discretionary authority to determine
eligibility for participation or benefits and to interpret the
terms of the policy. All determinations and interpretations
made by us are conclusive and binding on all parties.
(Aff. of Mark M. Nolan (“2d Nolan Aff.”) ¶ 2, Ex. A at 3, Nov. 21, 2017, Docket No. 34;
2d Nolan Aff. ¶ 3, Ex. B at 3.)
It is true that the language of the Plan’s authority provision is not nearly as
unequivocal as the language Union Security used in the other two policies – language that
closely tracks the broadest language used above and indisputably grants discretionary
authority. The Plan’s authority provision does not grant “sole” or “full” authority or
specify that the authority granted is “discretionary,” and it does expressly state that the
provision “will not restrict any right [the insured] may have to pursue an appeal or file a
lawsuit.” On the other hand, the language is significantly more discretion-granting than
the “ambiguous claims submission language” of Walke, Bounds, Brown, and Bowers,
because it explicitly grants “authority” to determine benefits and to interpret terms. This
use of the word “authority” is a much more straightforward delegation than that implied
by a requirement of proof “satisfactory to us.”
Although the authority provision is not as clear as it could have been, the Court
nonetheless finds that the Plan explicitly grants the relevant discretion to Union Security.
Therefore, the Court will deny Cassidy’s motion for de novo review.
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ORDER
Based on the foregoing, and all the files, records, and proceedings herein, the
Court OVERRULES Defendant’s Objections [Docket No. 49] and ADOPTS the Report
and Recommendation of the Magistrate Judge [Docket No. 48] to the extent it is
consistent with this opinion. Accordingly, IT IS HEREBY ORDERED that Plaintiff’s
Motion in Support of De Novo Standard of Review [Docket No. 14] is DENIED.

DATED: March 6, 2018
at Minneapolis, Minnesota.

_______s/John R. Tunheim_____
JOHN R. TUNHEIM
Chief Judge
United States District Court

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