Smith v. Standard Life Insurance Company et al

Filing 85

ORDER re 81 Order. the case shall proceed to a determination of the merits of Plaintiffs ERISA claims based on the existing record and prior briefs, together with supplemental briefs regarding the issue of prejudgment interest due either as a po licy benefit under 29 U.S.C. § 1132(a)(1)(B) or an equitable remedy under 29 U.S.C. § 1132(a)(3). Plaintiff shall file a supplemental brief on this issue within 21 days from the date of this Order. Defendants shall respond within 14 days thereafter. Each partys brief shall not exceed 10 pages in length.. Signed by Honorable Timothy D. DeGiusti on 2/11/2019. (mb)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
GREGORY SMITH,

)
)
Plaintiff,
)
)
v.
)
)
STANDARD INSURANCE COMPANY, )
et al.,
)
)
Defendants.
)

Case No. CIV-15-1126-D

ORDER
The Court has reviewed the briefs filed in response to the Order of December 28,
2018, which directed the parties to state “their positions regarding how best to proceed in
light of recent developments regarding Plaintiff’s benefit claim.”
[Doc. No. 81] (hereafter, “Order”).

See 12/28/18 Order

Although the parties’ responses are not very helpful,

the following information and positions can be gleaned from their respective briefs:
Defendant Standard Insurance Company (“Standard”), which is the administrator of
the welfare benefit plan that is the subject of Plaintiff’s ERISA claims, states that it
“replaced the denial of Plaintiff’s [benefit] claim with a decision to pay Plaintiff’s claim
for the insurance benefit under the amended policy” and its payment was made “as part of
the claims process after the policy in question was amended resulting in coverage for
Plaintiff’s claim as of June 14, 2018.”

See Standard’s Br. [Doc. No. 84] at 1.

The Court

assumes this coverage date is the effective date of the plan amendment.
Standard does not identify any mechanism by which Plaintiff’s original benefit
claim may have been reopened.

Standard does not explain why Plaintiff apparently

received no notice that his claim had been reopened, no written explanation of an amended
decision, and no notice of his right of appellate review, as required by ERISA.

Standard

does not state any intention of curing these omissions. Thus, at this point, the record
contains no basis for the Court to determine that Plaintiff’s ERISA action has been rendered
unripe, as originally appeared to be the case.

Apparently, Standard did not reopen the

administrative record for Plaintiff’s benefit claim or reconsider the prior denial; it simply
made a new decision, apparently acting on its own initiative, under a later plan
amendment. 1
Plaintiff devotes much of his brief to addressing matters – such as attorney fees and
discovery regarding recovery of attorney fees – that have no bearing on whether a ripe or
live controversy exists regarding the merits of his ERISA action.

He does confirm,

however, that he received no pre-decisional notice of the plan amendment and did not
request the reopening of his benefit claim.

Plaintiff does not indicate that he asked to

amend his claim or submitted a new claim for benefits under the plan amendment.

Thus,

Plaintiff’s submission reinforces the Court’s conclusion that it cannot say his pending
ERISA action is no longer ripe. Accordingly, the Court reaches a negative answer to the
question of “whether the case should be stayed or dismissed while the administrative
process is completed” for a new or amended benefit claim.

1

See Order at 6.

Defendant Carlisle Corporation, the sponsor of the ERISA plan, proposes in its brief that
these omissions could be cured. But Carlisle merely speculates that Standard could reopen the
record for Plaintiff’s benefit claim and could compile or supplement the administrative record, and
that Plaintiff could exhaust the internal review process before proceeding with his ERISA claims.
See Carlisle’s Br. [Doc. No. 82] at 1. The Court rejects Carlisle’s apparent suggestion that this
case should be dismissed in favor of one that does not, and may never, exist.
2

Two other things can be determined from the parties’ briefs.

First, Standard’s

decision to deny Plaintiff’s original benefit claim remains unchanged.

Standard

maintains that Plaintiff had no right to payment under the prior ERISA plan but, instead,
his claim became payable when the amendment changed a coverage requirement.
Standard’s Br. at 1.

See

Second, Standard has implicitly acknowledged that a term of the

ERISA plan, as set out in the group life insurance policy for which Mrs. Smith purchased
coverage, provides for the accrual of interest on a benefit payment. 2

Standard’s present

brief suggests it calculated the amount of Plaintiff’s benefit based on coverage triggered
by the amendment as of June 14, 2018.

Under Plaintiff’s pending ERISA claim, his

benefit payment would include interest calculated from a much earlier date under the
original policy.

Thus, a right to recover interest before June 14, 2018, as claimed by

Plaintiff, remains disputed. 3
The parties’ supplemental briefs confirm the correctness of one conclusion reached
in the December 28 Order:

“Plaintiff’s pending ERISA action is based on Standard’s

denial of a life insurance benefit under the policy in effect when Mrs. Smith died, but
Standard has now replaced the denial with a decision to pay Plaintiff’s claim for the

2

Standard included interest payments in the checks tendered to Plaintiff when it approved
his claim under the policy amendment. See Notice [Doc. No. 69]; Standard’s Mot. Protective
Order [Doc. No. 74] at 3.
3

Plaintiff argues that he is entitled to prejudgment interest either as a plan benefit under
the terms of the insurance policy, which is recoverable under 29 U.S.C. § 1132(a)(1)(B), or as an
equitable remedy available under 29 U.S.C. § 1132(a)(3)(B). Regardless of these alternative
views, it seems clear that Plaintiff’s claimed right to a payment of interest under the terms of the
original policy remains unresolved by Standard’s recent decision treating coverage as starting
years later as of the date of a policy amendment.
3

insurance benefit under the amended policy.”

See Order at 6.

It now appears, however,

that the replacement was not accomplished through further administrative action pursuant
to ERISA.

Further, due to different dates of coverage under the parties’ competing views

and Plaintiff’s right to collect interest, there remains an unresolved dispute that affects the
amount of Plaintiff’s benefit payment.

Because Plaintiff claims he was entitled to interest

on the benefit amount under the terms of the ERISA plan in effect before the amendment,
and that interest remains unpaid despite payment of the principal benefit and a lesser
amount of interest after the amendment, his pending ERISA action is not moot.

See

Templin v. Indep. Blue Cross, 487 F. App’x 6, 11-12 (3d Cir. 2012).
Upon examination of the parties’ prior briefs regarding the merits of Plaintiff’s
ERISA claims, the Court finds no discussion of what interest is due on the principal benefit
amount if Plaintiff succeeds in establishing coverage under the life insurance policy in
effect when Mrs. Smith died or otherwise establishes a right of recovery.

Although this

issue could arguably be decided through a post-judgment motion, the Court finds under the
circumstances – where it is the sole remaining issue (because the principal amount has been
paid) and Plaintiff seeks to recover it as a benefit to which he was entitled under the ERISA
plan or insurance policy (although he alternatively seeks an equitable award) – the parties
should be required to address the issue of prejudgment interest as part of their merits
briefing.
IT IS THEREFORE ORDERED that the case shall proceed to a determination of
the merits of Plaintiff’s ERISA claims based on the existing record and prior briefs,
together with supplemental briefs regarding the issue of prejudgment interest due either as
4

a policy benefit under 29 U.S.C. § 1132(a)(1)(B) or an equitable remedy under 29 U.S.C.
§ 1132(a)(3).

Plaintiff shall file a supplemental brief on this issue within 21 days from

the date of this Order. Defendants shall respond within 14 days thereafter.
brief shall not exceed 10 pages in length.
IT IS SO ORDERED this 11th day of February, 2019.

5

Each party’s