Barbu v. Life Insurance Company of North America et al

Filing 74

ORDER granting 54 Motion for Declaratory Judgment. IT IS HEREBY ORDERED that for the reasons set forth herein, plaintiff's Rule 57 motion is granted, and the Court will apply the de novo standard of review to the denial of plaintiff's claim for long-term disability benefits. SO ORDERED. Ordered by Judge Joseph F. Bianco on 12/19/2013. (Lamb, Conor)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 12-cv-1629 (JFB)(WDW)
_____________________

JONEL BARBU,
Plaintiff,
VERSUS

LIFE INSURANCE COMPANY OF NORTH AMERICA, DBA CIGNA,
Defendant.
___________________
MEMORANDUM AND ORDER
December 19, 2013
___________________

JOSEPH F. BIANCO, District Judge:
Plaintiff Jonel Barbu (“plaintiff”)
brings this action under the Employee
Retirement Income Security Act of 1974
(“ERISA”), challenging the denial of his
claim for long-term disability benefits.
Plaintiff’s claim was denied by defendant
Life Insurance Company of North America
(“defendant” or “LINA”). Plaintiff brings
the present motion, pursuant to Rule 57 of
the Federal Rules of Civil Procedure, and
the Declaratory Judgment Act, 28 U.S.C. §
2201, seeking an order declaring that a de
novo standard of review applies to this
action. For the reasons set forth below,
plaintiff’s
motion
is
granted.
It is well settled that the standard of
review is de novo, unless the disability plan
grants greater discretion to the insurer. In
the present motion, plaintiff argues that
LINA did not receive such discretion in the
insurance policy governing the disability
plan, and that de novo review is, therefore,

required. Defendant does not dispute that
the insurance policy itself grants no
discretion, but identifies discretionary
language in a separate document—namely,
the “Employee Welfare Benefit Plan
Appointment of Claim Fiduciary” (the
“ACF”)—and contends that this document
triggers the application of arbitrary and
capricious review. In a recent decision,
CIGNA Corp. v. Amara, the Supreme Court
made clear that a summary document about
a plan—in that case, a Summary Plan
Description or “SPD”—does not, simply by
its existence and reference to the policy and
plan, constitute the terms of the plan itself.
131 S. Ct. 1866 (2011). As other courts
(such as the Tenth Circuit) have made clear
since Amara, an insurer can still make a
summary document part of the plan by, for
example, explicitly doing so in the policy or
on the face of the summary document itself.
This Court concludes that the Amara
holding applies with equal force to the ACF
and, thus, defendant has the burden of
demonstrating that the policy itself or

B. The Policy and Plan

another document (such as the ACF itself)
made clear that the language of the ACF was
integrated into the plan and contained terms
of the plan. Ultimately, in this particular
case, defendant fails to meet that burden
because it has not shown clear language that
any document besides the insurance policy
contains enforceable plan terms. On the
contrary, the insurance policy contains an
integration clause defining the “entire
contract,” which does not include the
ACF. Moreover, neither the ACF itself, nor
any other document, identifies the ACF as
part of the plan. At the very least, the
conflict among the documents in this case
creates an ambiguity to be construed in
plaintiff’s favor. Thus, it is clear that the de
novo standard of review must be applied.

As noted, there is no dispute that the
Plan falls under ERISA, but the question of
what constitutes the Plan is at the center of
this motion. Defendant contends that the
Plan is comprised of multiple “plan
documents,” just one of which is the group
policy it issued to Underwriter Laboratories
(“the Policy”). In defendant’s view, other
“plan documents” also contain enforceable
Plan terms. Plaintiff, in contrast, argues that
the Policy alone sets forth the terms and
conditions of the Plan. The Policy contains
language—requiring a claimant to submit
“satisfactory proof”1—that courts have
relied on in applying a de novo standard of
review. See, e.g., Kinstler v. First Reliance
Standard Life Ins. Co., 181 F.3d 243, 251
(2d Cir. 1999). Thus, plaintiff contends that
the de novo standard must apply because the
Policy is the only enforceable “plan
document” in this case.

I. BACKGROUND
A. Factual History
The following facts are not disputed
by the parties. Plaintiff was an employee of
Underwriter Laboratories and was covered
by its Long Term Disability Plan (“the
Plan”), which is a benefit plan under
ERISA. (Def. Br. at 1.)
Defendant
determined eligibility for Plan benefits in its
capacity as Claim Administrator. (Id.)

There is no document before the
Court that, on its face, defines the term “plan
documents.”
The Policy does state,
however, that it “describes the terms and
conditions of coverage.” (Ex. A to Delott
Aff. at LINA 1222.) It also contains the
following integration clause, under the
heading “Entire Contract”:

Plaintiff’s recent medical history
includes back and neck problems, carpal
tunnel syndrome, ulcerative colitis and
inflammatory bowel disease, among other
ailments. (Ans. ¶¶ 35, 55.)
In 2010,
defendant approved several of plaintiff’s
claims for disability benefits. (Id. ¶¶ 29, 34,
40.) In 2011, defendant adjusted plaintiff’s
benefits because plaintiff also began
receiving Social Security Disability benefits.
(Id. ¶ 67.)
In June 2011, defendant
determined that plaintiff was no longer
entitled to disability benefits under the Plan.
(Def. Br. at 1.)

The entire contract will be made up
of the Policy, the application of the
Employer, a copy of which is
attached to the Policy, and the
applications, if any, of the Insureds.
(Id. at LINA 1242.) Plaintiff argues that
these two provisions provide a textual basis
for the conclusion that documents besides
the Policy and the applications are extrinsic,
and do not contain enforceable Plan terms.
1

2

Ex. A to Delott Aff. at LINA 1233.

Rather, the insurer must demonstrate that the
SPD is part of the Plan, for example, by the
SPD clearly stating on its face that it is part
of the Plan.”).

Defendant’s argument rests on a
document not named in the Policy’s
integration clause. That document is called
the “Employee Welfare Benefit Plan
Appointment
of
Claim
Fiduciary”
(hereinafter “ACF”), and it was executed the
same day as the Policy, on January 1, 2004.
In short, the ACF appears to contain a grant
of discretion from the Plan administrator
(the
Compensation
Committee
of
Underwriter Laboratories) to defendant as
“Claim Fiduciary,” enabling defendant to
make final benefit eligibility determinations
under the Plan. Courts interpreting similar
documents have considered this language
sufficient to trigger arbitrary and capricious
review. See, e.g., Raybourne v. CIGNA Life
Ins. Co. of N.Y., 576 F.3d 444, 448-49 (7th
Cir. 2009).

Here,
a
“Group
Insurance
Certificate” (“Certificate”) served as the
SPD.
The Certificate is a document
delivered to individual employees, like
plaintiff, listing the “benefits, conditions,
and limits of the Policy.” (Ex. A to Delott
Aff. at LINA 1242.) It also summarizes the
grant of discretion in the ACF, but states
nothing about whether the ACF was an
enforceable Plan document. (Id. at LINA
1252.) Concerning its own status, the
Certificate states “[t]his is not the insurance
contract” and that it “does not waive or alter
any of the terms of the Policy.” (Id.)

The ACF does not state that it is part
of the Plan—in fact, it refers to “the Plan” as
if it is something separate—but the ACF
does require that its terms be made known to
Plan participants through the Plan’s
summary descriptions.
Summary plan
descriptions (SPDs) are ERISA-required
documents meant to convey the contents of
the Plan “in a manner calculated to be
understood by the average plan participant.”
29 U.S.C. § 1022(a). Whether SPDs are
themselves legally enforceable plan
documents has been the subject of some
debate, with the Supreme Court recently
holding that they generally are not, see
CIGNA Corp. v. Amara, -- U.S. --, 131 S.Ct.
1866, 1877-78 (2011), although SPDs may
still be incorporated into a plan explicitly.
See, e.g., Eugene S. v. Horizon Blue Cross
Blue Shield of N.J., 663 F.3d 1124, 1131
(10th Cir. 2011) (“[A]n insurer is not
entitled to deferential review merely because
it claims the SPD is integrated into the Plan.

In sum, there are three documents
relevant to the present motion: the Policy,
the ACF, and to a lesser extent, the
Certificate, which echoes the ACF and
serves as the SPD. The question is which of
these three documents states enforceable
Plan terms.
C. Procedural History
After exhausting administrative
remedies, plaintiff initiated this suit under
Section 502(a) of ERISA “to recover
benefits due him under the terms of his plan
[and] to enforce his rights under the terms of
the plan.” 29 U.S.C. § 1132(a)(1)(B).
Plaintiff filed his complaint on April 3,
2012, and defendant answered on May 21,
2012. The parties proceeded to engage in
discovery, and in October 2012, plaintiff
received the ACF from defendant for the
first time.
Previously, plaintiff made
multiple requests for his entire claim file,
but he had not received the ACF before.
3

On May 30, 2013, plaintiff filed the
present motion for a declaratory judgment.
In particular, plaintiff seeks an order
declaring that a de novo standard of review
applies based on the language in the Policy.
On June 14, 2013, defendant responded in
opposition to the motion. Defendant does
not oppose the consideration of this motion,
but argues that the ACF is sufficient to
trigger arbitrary and capricious review.
Plaintiff replied on June 23, 2013, and oral
argument was held on December 17, 2013.

discretion of the district court.” Lijoi v.
Continental Cas. Co., 414 F. Supp. 2d 228,
247 (E.D.N.Y. 2006). That discretion is
informed by two primary considerations: (1)
whether the judgment will serve a useful
purpose in clarifying or settling the legal
issues involved; and (2) whether it would
finalize the controversy and offer relief from
uncertainty. See Broadview Chem. Corp. v.
Loctite Corp., 417 F.2d 998, 1001 (2d Cir.
1969). The lack of any dispute about these
factors indicates that the present motion is
useful and will offer relief to the parties.

II. DISCUSSION
Because plaintiff seeks a declaratory
judgment, the discussion turns first to the
standard for considering a declaratory
judgment action, and second to the standard
for reviewing the denial of plaintiff’s
benefits.

District courts may also consider:
“(1) whether the proposed remedy is being
used merely for ‘procedural fencing’ or a
‘race to res judicata’; (2) whether the use of
a declaratory judgment would increase
friction between sovereign legal systems or
improperly encroach on the domain of a
state or foreign court; and (3) whether there
is a better or more effective remedy.” Dow
Jones & Co., Inc. v. Harrods Ltd., 346 F.3d
357, 359-60 (2d Cir. 2003). Neither of the
first two concerns are present, and there
does not appear to a better or more effective
remedy. The alternative would be to decide
the standard of review as part of summary
judgment, which would invite additional
litigation and preclude the parties from
reconsidering settlement once this threshold
question is answered.
Therefore, a
declaratory judgment is appropriate in this
case.

A. Declaratory Judgment
Jurisdiction to consider a declaratory
judgment action exists only if there is an
“actual controversy,” 28 U.S.C. § 2201(a),
defined as one that is “real and substantial ...
admitting of specific relief through a decree
of a conclusive character, as distinguished
from an opinion advising what the law
would be upon a hypothetical state of facts.”
E.R. Squibb & Sons, Inc. v. Lloyd’s & Cos.,
241 F.3d 154, 177 (2d Cir. 2001) (internal
citation and quotation marks omitted).
There is nothing hypothetical about
the facts underlying this motion: plaintiff
has been denied benefits and the resolution
of his case likely depends on the standard of
review applied. Accordingly, neither party
contests this Court’s entertainment of a
declaratory judgment action. “The decision
to grant declaratory relief rests in the sound

B. Standard of Review
“ERISA does not set out the
applicable standard of review for actions
challenging
benefit
eligibility
determinations.” Zuckerbrod v. Phoenix
Mut. Life Ins. Co., 78 F.3d 46, 49 (2d Cir.
4

to have been an identical form. 3 576 F.3d at
448-49. Raybourne rejected the plaintiff’s
theory that the ACF was extrinsic to the
plan, since the plan’s SPD explained the
ACF and, crucially for the purposes of this
case, stated that both the insurance policy
and the ACF set forth the provisions of the
plan. Id.

1996). In Firestone Tire & Rubber Co. v.
Bruch, the Supreme Court held that the
standard of review is de novo until it is
shown that the benefit plan grants broader
discretion to an administrator or fiduciary.
489 U.S. 101, 115 (1989). If the plan does
grant discretion, an arbitrary and capricious
standard of review applies. Zuckerbrod, 78
F.3d at 49. Defendant carries the burden of
proving that the arbitrary and capricious
standard of review applies, and any
ambiguities are resolved in plaintiff’s favor.
Krauss v. Oxford Health Plans, Inc., 517
F.3d 614, 622 (2d Cir. 2008); see also
Kinstler, 181 F.3d at 249.

The present case is distinguishable
from Raybourne for several reasons. As a
threshold matter, since Raybourne was
decided, the Supreme Court has provided
additional guidance with respect to this
issue. In particular, nearly two years after
Raybourne, the Supreme Court’s decision in
Amara sharpened the focus on which
documents are explicitly incorporated into
an ERISA plan.
Rejecting the
Government’s argument that SPDs may be
enforced as the terms of the plan itself, the
Court noted that the text of ERISA defines
SPDs
as
“communication[s]
with
beneficiaries about the plan, … [which] do
not themselves constitute the terms of the
plan.” 131 S. Ct. at 1878. In short, after
Amara, it is clear that SPDs are not part of
the terms of the plan unless that is conveyed

Here, it is undisputed that the
language of the Policy itself does not trigger
arbitrary and capricious review. The Policy
requires a beneficiary to submit “satisfactory
proof” of disability (Ex. A to Delott Aff. at
LINA 1233), which is the same language
that the Second Circuit has held requires de
novo review. Kinstler, 181 F.3d at 251.
With no support in the text of the
Policy, defendant turns to the ACF. It
contains a grant of some form of discretion,2
which is significant only if the ACF is an
enforceable “plan document.”
The
argument that the ACF is a “plan document”
capable of triggering arbitrary and
capricious review derives largely from the
Seventh Circuit’s decision in Raybourne v.
CIGNA Life Ins. Co. of N.Y., which reached
that result when it considered what appears

3

Defendant also appears to rely on Siegel v. Conn.
Gen. Life Ins. Co., a case about whether an ACF
could be considered a proper plan amendment. 702
F.3d 1044 (8th Cir. 2013). Plaintiff’s motion
anticipated that defendant would make a similar
argument, but defendant explicitly chose not to,
instead characterizing the ACF as a “stand-alone plan
document.” (Defs. Br. at 5.) At oral argument,
defendant again declined to argue an amendment
theory, see infra note 4. That concession is not
surprising given that it is uncontroverted here that the
requirements of an amendment of the plan were not
satisfied. Therefore, Siegel does not offer support to
defendant’s position in this case.

2

Because defendant has not met its burden to show
that the ACF is part of the Plan, the Court need not
decide whether the language in the ACF is sufficient
to trigger arbitrary and capricious review.

5

in a clear and unambiguous manner, which
the Tenth Circuit has suggested could be
done with explicit language of the SPD
itself. See Eugene S., 663 F.3d at 1131.
This Court concludes that the guidance of
the Supreme Court in Amara on SPDs
applies with equal force to ACFs. Thus, any
attempt by defendant to have this Court
simply infer that the ACF is part of the Plan,
even if there is no textual support for that
inference in the Policy or the ACF itself, is
contrary to Amara.

contract,” not the “entire set of plan
documents.”
Courts in this and other
circuits, however, have relied on very
similar integration clauses when declining to
enforce documents extrinsic to the insurance
policy. See Hammill v. Prudential Ins. Co.
of Am., No. 11-CV-1464, 2013 WL 27548,
at *2 (E.D.N.Y. Jan. 2, 2013) (noting
importance of SPD’s omission from policy’s
integration clause referring to “[t]he entire
Group Contract”); Francis v. Anacomp, Inc.
Accidental Death & Dismemberment Plan,
No. 10-CV-467, 2011 WL 4102143, at *4-5
(S.D. Cal. Sept. 14, 2011) (rejecting
argument that ACF was an enforceable plan
document where policy purported to be fully
integrated); Jobe v. Med. Life. Ins. Co., 598
F.3d 478, 486 (8th Cir. 2010) (reviewing
multiple “plan documents” and concluding
that fully-integrated policy “controls over
the inconsistent grant of discretion to the
administrator in the summary plan
description”); Grosz-Salomon v. Paul
Revere Life Ins. Co, 237 F.3d 1154, 1161
(9th Cir. 2001) (holding SPD unenforceable
where policy’s integration clause limited
entire contract to policy and applications).

That point brings the Court to the
critical factual distinction between this case
and Raybourne. There, the defendant could
at least point to a clause in the SPD stating
that the ACF contained plan terms. Here,
the SPD (which is the Certificate) does not
contain a similar provision, and defendant
has relied on its text only to argue that it
provided notice of the ACF’s terms, not to
argue that it supports the ACF’s
incorporation into the Plan.
In short,
defendant has identified no text in any
document that incorporates the ACF into the
Plan to any extent. Moreover, not only does
this case lack equivalent text noting the
incorporation of the ACF into the Plan, it is
distinguished from Raybourne in another
material way: there is actually text to
support the opposite conclusion. Here, the
integration clause does not include the ACF
among the three items (“the Policy, the
application of the Employer…and the
applications… of the Insureds,”) making up
the “entire contract.” (Ex. A. to Delott Aff.
at LINA 1242.) There was no integration
clause discussed in Raybourne.

This Court likewise concludes that
the ACF’s grant of discretion is
unenforceable because it is not part of the
“entire contract” described in the Policy. To
the extent that defendant urges a distinction
between the “Policy” and the “Plan” which
would leave room for the enforcement of
other “plan documents” besides the Policy,
there is simply no textual basis for that
distinction among the documents in this
case. At oral argument, the Court asked
defendant’s counsel directly what made the
ACF part of the broader Plan. Counsel
responded that the ACF was signed by
LINA and a representative of the employer,

It is worth noting that the integration
clause refers to the Policy, not to the Plan,
and on its face it defines the “entire
6

Underwriter Laboratories. He was unable to
cite any case or other legal support for the
proposition that two signatures alone can
incorporate a document into an ERISA plan,
and the Court is not aware of any authority
to that effect.4 In sum, given the integration
clause in the Policy and the fact that neither
the ACF nor any other document makes the
ACF part of the Plan, the Court concludes
that the ACF’s discretionary language is not
an enforceable Plan term.

possibility of more than one writing
constituting an ERISA plan.”).
Of the many documents available in
an ERISA case, however, it is not always
obvious which ones contain plan terms. As
part of its burden to justify more deferential
review, the insurer must show that the
document containing a grant of discretion is
incorporated into the broader plan. See
Wenger v. Prudential Ins. Co. of Am., No.
12-CV-1896, 2013 WL 5441760, at *6
(S.D.N.Y. Sept. 26, 2013) (“Like the courts
in Durham, Hamill, and Sullivan … this
Court finds that Defendant has failed to
meet its burden of showing that the [SPD]
was incorporated into the LTD Plan.” (citing
Durham v. Prudential Ins. Co. of Am., 890
F. Supp. 2d 390, 395 (S.D.N.Y. 2012);
Hammill, 2013 WL 27548, at *6; Sullivan v.
Prudential Ins. Co. of Am., No. 12-CV1173, 2013 WL 1281861, at *1 (E.D. Cal.
Mar. 25, 2013))).

To be clear, the Court certainly does
not disagree with defendant that there may
be multiple enforceable plan documents.
That general point has long been recognized.
See, e.g., Myron v. Trust Co. Bank Long
Term Disability Benefit Plan, 522 F. Supp.
511, 519 (N.D. Ga. 1981) (“[T]he Court has
found no authority that states this written
instrument must be one all-inclusive
document. Indeed the legislative history
indicates that Congress contemplated the

The burden to show incorporation of
a particular document flows naturally from
Amara’s focus on which documents actually
contain plan terms. Wenger and the cases it
cites are all post-Amara cases. Although
each of them dealt with SPDs, the same
logic applies to an ACF, particularly when
the policy contains an integration clause.
A policy’s integration clause could
distinguish which of multiple “plan
documents” contained enforceable plan
terms even before Amara.
See, e.g.,
Palmiotti v. Metro. Life Ins. Co., 423 F.
Supp. 2d 288, 298-99 (S.D.N.Y. 2006).

4

Defendant explicitly declined to argue, both in its
brief and at oral argument, that the ACF amended the
Policy. In other cases, defendants have argued that
non-policy documents were enforceable as
amendments, see, e.g., Siegel, 702 F.3d at 1048-49,
but in this case, the amendment provision requires
any amendment to be “endorsed on, or attached to,
the Policy.” (Ex. A to Horbatiuk Aff. at LINA 1242.)
Plaintiff did not receive the ACF until discovery,
despite earlier requests for his entire claim file, and
defendant has not attempted to show that the ACF
complied with the amendment rule. See Francis,
2011 WL 4102143, at *4 (holding in the alternative
that the ACF was unenforceable because it was
“neither attached to nor endorsed on the policy”); see
also Heim v. Life Ins. Co. of N. Am., No Civ.A. 101567, 2010 WL 5300537, at *2 (E.D. Pa. Dec. 22,
2010)(finding ACF not a plan document where it was
not attached to the policy or part of the claim file
plaintiff was provided).

In essence, the question presented
here is decided by the defendant’s burden to
show that the Plan grants it broader
discretion than de novo review affords.
7

Language triggering more discretionary
review is easy to draft, and where the insurer
failed to do so, this Court will “decline to
search in semantic swamps for arguable
grants of discretion.” Kinstler, 181 F.3d at
251. Kinstler and most subsequent cases
tend to focus on the language of the grant of
discretion, but clear language must first
define which documents contain enforceable
plan terms. Such language is as easy to draft
as a grant of discretion, and likely deserving
of even greater scrutiny after Amara.

III. CONCLUSION
For the reasons set forth above,
plaintiff’s Rule 57 motion is granted, and the
Court will apply the de novo standard of
review to the denial of plaintiff’s claim for
long-term disability benefits.

SO ORDERED.

________________________
JOSEPH F. BIANCO
United States District Judge

Defendant has thus failed to meet its
burden to prove that arbitrary and capricious
review applies because it has not shown that
clear language incorporates the ACF into the
Plan.
On the contrary, the Policy’s
integration clause defines the “entire
contract,” which does not include the ACF.
In any event, at the very least, the conflict
between the Policy and the ACF creates an
ambiguity to be construed in plaintiff’s
favor, and mandates application of the de
novo standard of review.

Dated: December 19, 2013
Central Islip, NY

***
Plaintiff is represented by Jeffrey D. Delott,
366 North Broadway, Suite 410k-3, Jericho,
NY 11753. Defendant is represented by
Kevin G. Horbatiuk and Marcin J.
Kurzatkowski, Russo, Keane & Toner, LLP,
33 Whitehall Street, 16th Floor, New York,
NY 10004.

8