Hall v. Kodak Occupational Accidental Death Insurance Plan et al

Filing 21

DECISION AND ORDER granting 7 Motion to Dismiss. This action is dismissed. Signed by Hon. Charles J. Siragusa on 6/8/11. (KAP)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

PEGGY A. HALL,
Plaintiff,

DECISION AND ORDER

-v08-CV-6402 CJS
KODAK OCCUPATIONAL ACCIDENTAL
DEATH INSURANCE PLAN, et al.,
Defendants.

APPEARANCES
For Plaintiff:

R. Scott DeLuca, Esq.
Schrader, Israely, DeLuca & Waters LLP
2821 Wehrle Drive, Suite 3
Williamsville, New York 14221

For Defendants:

Margaret A. Clemens, Esq.
Littler Mendelson, P.C.
400 Linden Oaks, Suite 110
Rochester, New York 14625

INTRODUCTION
This is an action brought pursuant to ERISA, to recover benefits under two employee
welfare plans. Now before the Court is Defendants’ motion to dismiss pursuant to Federal
Rule of Civil Procedure (“FRCP”) 12(b)(6) (Docket No. [#7]). The application is granted.
BACKGROUND
Peggy A. Hall (“Plaintiff”) is the widow of William D. Hall (“Mr. Hall”). Mr. Hall was
employed by Eastman Kodak (“Kodak”) from 1968 until he retired in May 1992. On
February 20, 2006, almost fourteen years after his retirement, Mr. Hall died of malignant
mesothelioma, caused by his exposure to asbestos while he was employed at Eastman

Kodak. Plaintiff subsequently applied for benefits under two Kodak employee welfare
benefit plans: the Kodak Occupational Accidental Death Insurance Plan (“KOADI” or “the
Accidental Death Plan”) and the Kodak Medical Assistance Plan (“KMA” or “the Medical
Assistance Plan”). With regard to the KMA plan, Plaintiff applied for benefits under the
provision concerning “SE7/Survivors,” discussed further below.
The KOADI plan pays a specified death benefit for qualifying employees. KOADI
states that while an employee is a “Workers’ Compensation Recipient,” he is considered an
employee “for all purposes under the Plan.” KOADI Plan § 2.10. The plan defines covered
injuries, in pertinent part, as follows:
7.01 On-the-Job Injuries
The benefits will be payable in the event that an Employee sustains a bodily
injury in the course of his employment with the Company and, within 1 year of
the injury, dies as a direct result of the injury. Even if these conditions are not
met, the insurance will be paid if death benefits have been determined to be
payable under a Workers’ Compensation Law because of a death resulting
from an injury within one year of the injury.
([#7-4] at 10). However, the plan specifically excludes coverage for “[d]eath which is caused
wholly or partly, directly or indirectly, by disease, or bodily or mental infirmity.” Id. (Plan §
7.03). The KOADI Plan Summary similarly states:
Plan benefits will be payable if you suffer an accidental bodily injury while
working at a Participating Company . . . and, within one year of the accident,
you die as a direct result of that injury. Plan benefits are also payable if death
benefits have been determined to be payable under a Workers’ Compensation
Law because the death resulted from an injury within one year of the injury.
For purposes of the plan, an injury is ‘accidental’ only if the injury was the
result of a sudden incident. It does not include injury or death caused directly
or indirectly, or wholly or partly, by . . . your physical or mental illness[.]

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([#7-4] at 99).
The KMA plan, in pertinent part, pays a portion of a survivor’s health-care insurance
costs, where the deceased employee’s death qualifies for the aforementioned death benefit
under KOADI.1 KMA defines an “SE7/Survivor,” as “a person (1) who is the Survivor of a
decedent who was an Employee at the time of death, (2) where the decedent died on or
after January 1, 1993, and (3) where the decedent died as a result of an occupational
accident qualifying the person for benefits under the [KOADI].” (Obstarczyk Decl., Ex. H).
KMA plan states that an employee who is a Workers’ Compensation recipient “shall be
treated as an Employee for all purposes under the Plan.” KMA Plan § 3.25.
Regarding the submission of claims, at the time of Mr. Hall’s death, KOADI stated that
a claim could be “submitted at any time after the Subscriber’s death.” Obstarczyk Decl., Ex.
A, § 8.02. In July 2006, Kodak issued a “Benefits Update,” which announced a change in
the claims and appeals procedures under the KOADI and KMA plans. ([#7-4] at 35-36). The
document indicates that all “routine” KOADI claims must be filed “[w]ithin one year from the
date of death,” and that “other” KOADI claims must be filed “[w]ithin 60 days from the date
or should have known that there is an issue, dispute, problem or other claim with respect to
the plan.” Id. at 40. Additionally, the Benefits Update stated that all lawsuits relating to the
subject plans must be filed by the earlier of either 90 days after an appealed claim is denied,
or 90 days after a plan representative clearly denies a claim. Id. at 36. The Benefits Update
also stated that the new deadlines became effective on August 1, 2006, and that claims that

1

According to Plaintiff, the two plans differ in that, KOADI is designed “to provide additional financial
security for the surviving dependents of a Kodak Em ployee who dies as a result of an accident arising out of
or in the course of his em ploym ent with Kodak,” while KMA is designed “to help Participants and Dependents
m eet health care expenses resulting from injury or illness.” Com plaint [#1] ¶ ¶ 6-7.

3

arose prior to that date would be subject “to the earlier of the deadline that would have
applied under the plan involved prior to its amendment or the deadline described in this
summary.” Id. at 36.
As noted earlier, Mr. Hall died on February 20, 2006. On March 31, 2006, Kodak sent
Plaintiff a letter summarizing the benefits available to her as a surviving spouse. The letter
did not mention the KOADI or KMA plans. ([#7-4]). On April 14, 2006, Plaintiff, by her
attorney, sent a letter to Kodak’s “Plan Administrator,” indicating that Mr. Hall’s death was
from malignant mesothelioma, caused by his exposure to asbestos while working for Kodak.
([#7-4] at 59). The letter also noted, inter alia, that a Worker’s Compensation case had been
filed on behalf of Mr. Hall. Additionally, the letter stated that “the ‘occupational accident’
provision” should provide Plaintiff with full health insurance coverage, since Mr. Hall died
from occupational disease.2

3

Plaintiff maintains that this letter functioned as a claim for

benefits under both KOADI and KMA. Complaint ¶ 20.
On June 9, 2006, Kodak representative John Littwitz (“Littwitz”) sent a response,
indicating that Plaintiff would have to pay a portion of her monthly health insurance premium,
since, “Occupational Accidental Death benefit coverage is not relevant to health care
coverage.” ([#7-4] at 62). Littwitz stated that Plaintiff could appeal his decision by writing a
letter to the Plan Administrator, within 90 days of the date of his letter.

2

This apparently refers to Plaintiff’s claim , discussed m ore below, that she is entitled to SE7/Survivor
status under the KMA, because her husband died under conditions that quality for benefits under the KOADI.

3

The letter also indicated that by law, Plaintiff was entitled to receive a higher m onthly survivor incom e
benefit than had been referenced in Kodak’s March 31, 2006 letter. ([#7-4] at 60). However, this issue is not
addressed in this lawsuit.

4

On August 28, 2006, Plaintiff wrote to Kodak’s Plan Administrator, and indicated that
she was “responding to [Littwitz’s] letter dated June 9, 2006.” ([#7-4] at 65). Plaintiff stated
that she qualified as an “SE7 survivor,” since Mr. Hall had been found eligible for Worker’s
Compensation death benefits. In that regard, Plaintiff referred to KOADI, stating: “Number
7 of the Kodak Occupational Accidental Death Insurance Plan document states, even if
conditions are not met the insurance will be paid if death benefits have been determined
to be payable under Workers Compensation.” ([#7-4] at 65).
On October 5, 2006, Plaintiff’s attorney wrote to the Plan Administrator, stating that
Plaintiff was entitled to receive a benefit under KOADI, because Mr. Hall had been
diagnosed with work-related malignant mesothelioma in June 2005, and died “less than one
year after his injury was diagnosed.” ([#7-4] at 70) (emphasis added). On December 22,
2006, Littwitz responded by letter, stating that Kodak had received Plaintiff’s October 5, 2006
correspondence and was reviewing the case. Complaint ¶ 23. On March 20, 2007, Plaintiff
wrote to Kodak seeking an update on her KOADI and KMA claims, and requesting copies
of documents pertaining to those claims. ([#7-4] at 79, 81-82). Plaintiff also stated that she
had never received a determination concerning her KOADI claim. ([#7-4] at 82). On June
15, 2007, Kodak representative Kim Chesher (“Chesher”) wrote to Plaintiff, indicating that
Kodak had received Plaintiff’s October 5, 2006, letter, but that Plaintiff had not asserted a
claim under the KOADI plan, and that her appeal was therefore not ripe for decision.
Complaint ¶ 24. The same letter indicated that Kodak was conducting research concerning
Plaintiff’s appeal under the KMA plan. Id.
On July 9, 2007, defendant Patricia Obstarczyk (“Obstarczyk”), Kodak’s Director of
Worldwide Benefits, notified Plaintiff that her “appeal was not successful.” ([#7-4] at 76-77).
5

Obstarczyk specifically purported to address Plaintiff’s claim for KMA benefits. In that
regard, Obstarczyk indicated that Plaintiff’s claim was received on April 18, 2006, that
Kodak’s denial was issued on June 9, 2006, and that Plaintiff’s appeal letter “regarding
[KMA] benefits was received March 22, 2007.” ([#7-4] at 76). Obstarczyk indicated that she
was denying Plaintiff’s KMA appeal, and that her decision “conclude[d] the claims and
appeal process.” Obstarzyk stated, however, that such determination did not address
Plaintiff’s claim under the KOADI plan. ([#7-4] at 77).4
On August 6, 2007, Plaintiff sent a letter to Kodak addressed to both Obstarczyk and
Chesher, regarding Plaintiff’s claims under the KOADI and KMA plans, respectively. ([#7-4]
at 79-80). Specifically, Plaintiff requested re-consideration of those claims, based on “new
information just received by [Plaintiff].” Id. at 79. This new information was that, during a
Worker’s Compensation hearing held on August 1, 2007, Kodak had acknowledged liability
for Mr. Hall’s Worker’s Compensation claims, which, Plaintiff argued, “must alter the
determination made by [K]OADI and KMA[ ]. On August 22, 2007, Kodak’s attorney wrote
to Plaintiff on behalf of the KOADI and KMA plans. Kodak’s attorney noted that, because
there had been “confusion” regarding Plaintiff’s applications for benefits, and because of the
“new developments” identified by Plaintiff, Kodak was going to “re-open” Plaintiff’s claims
and conduct a review on an expedited basis. ([#7-4] at 89).
The Worker’s Compensation Board subsequently issued two decisions. On August
8, 2007, the Worker’s Compensation Board issued a decision awarding disability payments
for the period June 29, 2005 through February 20, 2006. (Obstarczyk Aff., Ex. O). The

4

The m eaning of Obstarczyk’s statem ent on this point is unclear, since Chesher had taken the position
that Plaintiff did not have a pending KOADI claim .

6

decision indicated that Mr. Hall’s “date of accident,” and ”date of disablement,” was June 29,
2005. Id.5

As noted earlier, Plaintiff indicates that June 2005 is when Mr. Hall was

diagnosed with work-related malignant mesothelioma. On September 7, 2007, the Workers
Compensation Board issued a decision awarding Plaintiff death benefits. ([#7-4] at 86-87).
For that decision, the Workers Compensation Board’s decision indicated that Mr. Hall’s “date
of accident” was February 20, 2006, which is his date of death. ([#7-4] at 86-87).
On September 19, 2007, Chesher wrote to Plaintiff that her KOADI and KMA claims
were denied upon reconsideration. ([#7-4] at 92-97). First, Chesher indicated that Plaintiff
was not entitled to KOADI benefits because Mr. Hall was not a Kodak employee at the time
of his death. Additionally, Chesher stated that even if Mr. Hall had been employed at the
time of his death, he would not be eligible for KOADI benefits because he did not die within
one year of his injury, since he retired in 1992 and did not die until 2006. Id. at 93.
Moreover, Chesher indicated that KOADI did not provide benefits for death resulting from
“disease or bodily infirmity.” As for the KMA plan, Chesher indicated that Plaintiff did not
qualify as an “SE7/Survivor,” because Mr. Hall was not an employee at the time of his death,
and because he did not die from an occupational accident as defined by KOADI.6 Id. at 94.
Chesher further advised Plaintiff that any appeal had to be filed within sixty days from her
receipt of Chesher’s letter. ([#7-4] at 96) (“[T]he appeal must be filed within 60 days of your
receipt of this letter.”).

5

Plaintiff m aintains that, during the W orkers Com pensation disability hearing, the parties agreed that
Mr. Hall’s date of disablem ent/injury was June 29, 2005. See, Com plaint ¶ 14]
6

The KMA plan provided, in pertinent part, that SE7/Survivors’ decedents had to have died as the
result of an occupation accident that would qualify for benefits under KOADI.

7

By letter dated November 20, 2007, Plaintiff filed a joint appeal with the
Administrators of the KOADI and KMA plans. In the appeal, Plaintiff indicated that she had
received Chesher’s unfavorable decision on September 22, 2007. According to exhibits
submitted by Defendants, Kodak’s Benefits Center received the appeal on November 26,
2007. ([#7-4] at 103).7 As to the KOADI policy, Plaintiff indicated that Mr. Hall was an
employee at the time of his death, because he was a Worker’s Compensation recipient.
Alternatively, Plaintiff contended that Mr. Hall qualified under KOADI because he had been
awarded a Worker’s Compensation death benefit and had died less than one year after his
injury. In that regard, Plaintiff argued that in the Worker’s Compensation proceeding, Kodak
had agreed that Mr. Hall’s injury occurred on June 29, 2005. As for the KMA policy, Plaintiff
reiterated that she qualifies as an SE7/Survivor, because Mr. Hall died from an occupational
accident that qualifies for benefits under KOADI.
Subsequently, Defendants delayed issuing a decision for more than a year. In April
2008 and June 2008, Plaintiff sent written demands to the Plan Administrators for a
decision, but received no response. Complaint ¶ ¶ 30-31. On September 4, 2008, having
still not received a decision, Plaintiff commenced this action, demanding benefits under
KOADI and KMA, declaratory relief, interest, costs, and attorney’s fees.8

7

Sixty days from Septem ber 22, 2007 would have been Novem ber 21, 2007. Consequently, Plaintiff
m ailed the appeal on the 59th day after receiving Chesher’s decision. Plaintiff m aintains, and Defendant does
not challenge, that Kodak did not stam p the appeal as received until Novem ber 27the because of the
intervening Thanksgiving holiday and weekend.
8

On May 20, 2010, several m onths after Plaintiff com m enced this action, Defendants issued a
decision denying Plaintiff’s appeals. According to Defendants, the decision indicated that Plaintiff had failed
to tim ely exhaust her adm inistrative, that this lawsuit was untim ely, and that the claim s lacked m erit. Def.
Mem o of Law [#7-2] at 7. However, the Court is not considering that decision in ruling upon the pending
12(b)(6) m otion.

8

Defendants filed the subject motion to dismiss the Complaint pursuant to FRCP
12(b)(6), on the following grounds: 1) Plaintiff did not timely exhaust her administrative
remedies; 2) Plaintiff did not timely commence this lawsuit under the terms of the plans; 3)
Mr. Hall was not an employee at the time of his death; 4) Mr. Hall’s death was caused by
disease, not accidental injury; and 5) Mr. Hall’s death occurred more than one year after his
injury. On May 24, 2001, counsel for the parties appeared before the undersigned for oral
argument.
DISCUSSION
The applicable legal standard for determining whether a complaint is sufficient to
survive a Rule 12(b)(6) motion is clear:
Federal Rule of Civil Procedure 8(a)(2) requires only a short and plain
statement of the claim showing that the pleader is entitled to relief, in order to
give the defendant fair notice of what the claim is and the grounds upon which
it rests. While a complaint attacked by a Rule 12(b)(6) motion to dismiss does
not need detailed factual allegations, a plaintiff's obligation to provide the
grounds of his entitlement to relief requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of action will not do.
Factual allegations must be enough to raise a right to relief above the
speculative level, on the assumption that all the allegations in the complaint
are true (even if doubtful in fact).
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964-65 (2007); see also,
ATSI Communications, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (“To survive
dismissal, the plaintiff must provide the grounds upon which his claim rests through factual
allegations sufficient ‘to raise a right to relief above the speculative level.’") (quoting Bell Atl.
Corp. v. Twombly) (footnote omitted); Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)
(Indicating that Bell Atl. Corp. v. Twombly adopted “a flexible ‘plausibility standard,’ which
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obliges a pleader to amplify a claim with some factual allegations in those contexts where
such amplification is needed to render the claim plausible[,]” as opposed to merely
conceivable.), reversed on other grounds, Ashcroft v. Iqbal, 129 S.Ct.1937 (2009). When
applying this standard, a district court must accept the allegations contained in the complaint
as true and draw all reasonable inferences in favor of the nonmoving party. Burnette v.
Carothers, 192 F.3d 52, 56 (2d Cir. 1999). A Plaintiff may satisfy the Twombly plausibility
standard by pleading facts “upon information and belief,” ” where the facts are peculiarly
within the possession and control of the defendant, or where the belief is based on factual
information that makes the inference of culpability plausible.” Arista Records, LLC v. Doe
3, 604 F.3d 110, 120 (2d Cir. 2010) (citations omitted).
Defendants maintain that Plaintiff did not file a timely KOADI claim, and failed to file
a timely administrative appeal for both the KOADI and KMA claims.

Additionally,

Defendants contend that Plaintiff was late in filing this lawsuit, under the terms of the
respective plans.

Defendants’ arguments on these points are not persuasive.9

9

For exam ple, with regard to the filing of Plaintiff’s KOADI claim , her letter dated April 14, 2006, refers
to the “occupational accident provision,” and Kodak understood that Plaintiff was referring to the
“SE7/Survivor” benefit under the KMA, which in turn would depend upon Mr. Hall’s death qualifying under the
KOADI plan. Nevertheless, Kodak argues that such letter qualified as a claim under KMA, but not KOADI.
In any event, Kodak later acknowledged that there had been “confusion” concerning the exact claim s that
Plaintiff was previously attem pting to assert, and it perm itted Plaintiff to m ake renewed claim s under both
KOADI and KMA. Moreover, although Kodak denied the renewed claim s, it did not base its denial on a lack
of tim eliness. Consequently, it appears that Kodak waived any objection to the tim eliness of the initial filing
Plaintiff’s adm inistrative claim s. Additionally, it is unclear whether Plaintiff tim ely appealed the denial of her
claim s, by m ailing the appeal to Kodak on the 59th day after she received the unfavorable decision. W hile
Defendants argue that Plaintiff’s appeal had to be received within sixty days, they cite no authority on that
point. See, Def. Mem o of Law [#7-2] at 16. And finally, Plaintiff was arguably tim ely in filing this action, since
at that tim e, she was still awaiting a decision from the Plan Adm inistrator concerning her appeal. Defendants
contend that when Plaintiff did not receive a decision on her appeal after sixty days, she should have assum ed
that the appeal was denied and com m enced this lawsuit. As to that, the July 2006 Benefits Update states that
if an appeal is not decided within sixty days, the applicant “m ust assum e that the appeal has been denied.”
([#7-4] at 49). In fact, however, Kodak was still working on the appeal, and it eventually issued a decision
denying the appeal. Under Defendants’ theory, though, Plaintiff’s tim e to com m ence this action expired before
the decision was ever issued. Moreover, Plaintiff indicates that she m ade several inquiries concerning the

10

Nevertheless, the Court need not resolve those issues, because it finds that Plaintiff’s claim
must still fail, even assuming that she met all of the required deadlines and exhaustion
requirements. In that regard, even assuming, arguendo, that Mr. Hall qualified as an
employee, by virtue of having posthumously received Workers’ Compensation benefits, the
nature of his death excludes coverage. Specifically, Mr. Hall died from an occupational
disease, malignant mesothelioma, fourteen years after he retired from Kodak. The disease
resulted from Mr. Hall’s exposure to asbestos between 1968 and 1978. Therefore, his death
was not from a sudden accident, nor did it occur within one year after being injured “while
working,” as required by the KOADI plan. See, USX Corp. v. Liberty Mut. Ins. Co., 444 F.3d
192, 200 (3d Cir. 2006) (“[W]e conclude that the only reasonable interpretation of the term
‘bodily injury by accident’ excludes the underlying claims for asbestos-related diseases.”),
cert den., 549 U.S. 888, 127 S.Ct. 296 (2006). In making this determination, the Court must
construe the subject plans’ terms “in an ordinary and popular sense as would a person of
average intelligence and experience.” Pepe v. Newspaper and Mail Deliveries'-Publishers'
Pension Fund, 559 F.3d 140, 147 (2d Cir. 2009) (citations omitted). Under the plain and
unambiguous language of KOADI, the Court finds as a matter of law that Mr. Hall’s death
from mesothelioma is not covered, regardless of whether the Court were to apply the de
novo standard of review or the arbitrary and capricious standard of review.
Nonetheless, Plaintiff argues that Mr. Hall’s death qualifies under KOADI, since he
died within one year of being diagnosed with mesothelioma on June 29, 2005. On this point,
Plaintiff relies on the Workers’ Compensation Board decision, which refers to Mr. Hall’s

appeal before com m encing this action, to which Defendants did not respond.

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diagnosis date as his “date of accident.” Obstarczyk Decl., Ex. O. However, while such
decision refers to June 29, 2005 as both the “date of accident” and “date of disablement,”
Mr. Hall’s date of injury would appear to be the date or dates that he was exposed to
asbestos while working at Kodak, which was approximately twenty-seven years before he
was diagnosed. Moreover, it is undisputed that Mr. Hall died of a disease, malignant
mesothelioma, and deaths from “disease” or “bodily infirmity” are specifically excluded under
KOADI. Additionally, because Mr. Hall’s death is not covered by KOADI, Plaintiff is not able
to receive benefits under KMA, either. Plaintiff argues that it would be improper for the
Court to grant Defendant’s motion, since there has been no opportunity for discovery.
Plaintiff, though, has not explained how her claim is plausible, in light of the policy terms
discussed above.
CONCLUSION
Defendants’ motion [#7] is granted, and this action is dismissed.
SO ORDERED.
Dated:

June 8, 2011
Rochester, New York
/s/ Charles J. Siragusa
CHARLES J. SIRAGUSA
United States District Judge

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