Harris-Frye v. United of Omaha Life Insurance Company et al

Filing 59

ORDER granting in part and denying in part 37 Motion for Summary Judgment; granting in part and denying in part 40 Motion for Summary Judgment; accepting and adopting in part and rejecting in part 52 Report and Recommendations ; denying 21 Motion for Judgment on the Pleadings. Signed by District Judge Harry S Mattice, Jr on 9/21/2015. (AML, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
at CHATTANOOGA
MEAGAN HARRIS-FRYE,
Plaintiff,
v.
UNITED OF OMAHA LIFE INSURANCE
COMPANY; and BOARD OF TRUSTEES,
MID-SOUTH CARPENTERS REGIONAL
COUNCIL HEALTH AND
WELFARE FUND,
Defendants.

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Case No. 1:14-cv-72
Judge Mattice
Magistrate Judge Lee

ORDER
On June 1, 2015, United States Magistrate Judge Susan K. Lee filed her Report
and Recommendation (“R & R”) pursuant to 28 U.S.C. § 636(b)(1) and Fed. R. Civ. P.
72(b). (Doc. 52). Magistrate Judge Lee recommended that: (1) Plaintiff’s motion for
summary judgment (Doc. 40) be granted in part to the extent that it seeks $12,760.00 in
statutory penalties under 29 U.S.C. § 1132(c)(3) and denied in part to the extent that it
seeks additional penalties under 29 U.S.C. § 1132(c)(3) and relief under 29 U.S.C. §
1132(a)(3); (2) Defendant Board of Trustees, Mid-South Carpenters Regional Council
Health and Welfare Fund’s (“Defendant Board of Trustees”) motion for summary
judgment (Doc. 37) be granted in part to the extent it seeks judgment on Plaintiff’s claim
for relief under 29 U.S.C. § 1132(a)(3) and denied in part to the extent it seeks judgment
on Plaintiff’s claim for statutory penalties under 29 U.S.C. § 1132(c)(3); (3) Defendant
United of Omaha Life Insurance Company’s (“Defendant United”) motion for judgment
on the administrative record (Doc. 21) be denied; and (4) Plaintiff’s claim for benefits

under 29 U.S.C. § 1132(a)(1)(B) be remanded for a determination of whether the insured
was totally disabled as defined by the relevant policy on January 31, 2012. (Doc. 52 at
34).
Plaintiff and Defendant Board of Trustees filed timely objections (Docs. 54 and
55), and timely responses to each other’s objections (Docs. 57 and 58).1 Specifically,
Defendant Board of Trustees objects to Magistrate Judge Lee’s recommendation that:
(1) Plaintiff exhausted her administrative remedies; (2) Defendant Board of Trustees has
been shown to control administration of the plan such that it is a proper defendant; and
(3) Plaintiff is entitled to $12,760 in statutory penalties under 29 U.S.C. 1132(c).2 (Doc.
54). Plaintiff objects to Magistrate Judge Lee’s recommendation that: (1) Plaintiff’s
Employee Retirement Income Security Act (“ERISA”) § 502(a)(3) claim should be
dismissed because it was merely a repackaged ERISA § 502(a)(1)(B) claim; and (2)
Defendant Board of Trustees should not be assessed a statutory penalty under 29 U.S.C.
1132(c) for its failure to provide Plaintiff with a copy of the Plan Document associated
with the Summary Plan Description (“SPD”). (Doc. 55). The Court has conducted a de
novo review of record and the R & R—specifically reviewing those portions to which
Defendant Board of Trustees and Plaintiff have objected—and will address each party’s
objections, or lack thereof, in turn.
I.

BACKGROUND
Magistrate Judge Lee’s R & R outlined the procedural and factual background of

this case at great length. (Doc. 52 at 3–14). The Parties have not objected to the
Magistrate Judge’s recitation of the facts, and the Court concludes that it is accurate.
1

Defendant United did not file a timely objection to Magistrate Judge Lee’s R & R.

Defendant Board of Trustees argues that it should not be assessed any statutory penalty, or, in the
alternative, that the penalty should be reduced to $9,020.00. (Doc. 54 at 6–8).
2

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Thus, for purpose of addressing the Parties’ objections, the Court ADOPTS BY
REFERENCE the entire “Facts” section of the R & R. (See id.).
II.

STANDARD OF REVIEW
The Court must conduct a de novo review of those portions of the R & R to which

an objection is made. 28 U.S.C. § 636(b)(1). Upon review, the Court may accept, reject,
or modify, in whole or in part, the Magistrate Judge’s findings or recommendations. Id.
III.

DEFENDANT UNITED
Defendant United has not filed an objection to Magistrate Judge Lee’s R & R.3

Nevertheless, the Court has conducted a review of the R & R, as well as the record, and it
agrees with Magistrate Judge Lee’s well-reasoned conclusions regarding Defendant
United’s Motion for Judgment on the Pleadings (Doc. 21). The Court will thus ACCEPT
AND ADOPT Magistrate Judge Lee’s recommendations regarding Defendant United’s
claims. Accordingly, Plaintiff’s claim for benefits under 29 U.S.C. § 1132(a)(1)(B) will be
REMANDED for consideration under the Disability Continuation Provision as of
January 31, 2012 and Defendant United’s Motion for Judgment on the Pleadings (Doc.
21) will be DENIED.
IV.

DEFENDANT BOARD OF TRUSTEES’ OBJECTIONS
A.

Exhaustion of Administrative Remedies and Defendant Board
of Trustees’ Status as a Proper Defendant

Defendant Board of Trustees objects to Magistrate Judge Lee’s finding that
Plaintiff has exhausted her administrative remedies and that Defendant Board of
Magistrate Judge Lee specifically advised the parties that they had 14 days in which to object to the
Report and Recommendation and that failure to do so would waive their right to appeal. (Doc. 52 at 34
n.13); see Fed. R. Civ. P. 72(b)(2); see also Thomas v. Arn, 474 U.S. 140, 148-51 (1985) (noting that “[i]t
does not appear that Congress intended to require district court review of a magistrate’s factual or legal
conclusions, under a de novo or any other standard, when neither party objects to those findings”). Even
taking into account the three additional days for service provided by Fed. R. Civ. P. 6(d), the period in
which Defendant United could timely file any objections has now expired.
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Trustees is a proper defendant in this action. These objections, however, merely restate
the arguments presented in Defendant Board of Trustees’ Memorandum in Support of
its Motion for Summary Judgment, which were fully addressed in Magistrate Judge
Lee’s R & R (Compare Doc. 38 with Doc. 54; see Doc. 52). The Court has conducted a
review of the R & R, as well as the record, and it agrees with Magistrate Judge Lee’s
well-reasoned conclusions. The Court notes that on remand, Defendant Board of
Trustees is free to ensure that the requirements of 29 C.F.R. § 2560.503-1(g)(1)(iv) are
satisfied, namely that any adverse benefit determination notification include a full
“description of the plan’s review procedures and the time limits applicable to such
procedures.” This will afford Defendant Board of Trustees any independent review the
plan may require4 regarding an adverse benefit determination made by Defendant
United with respect to Mr. Harris’ eligibility under the Disability Continuation Provision
as of January 31, 2012.5
Accordingly, Defendant Board of Trustees’ objections with respect to Magistrate
Judge Lee’s findings that Plaintiff has exhausted her administrative remedies and that
Defendant Board of Trustees is a proper defendant in this action will be OVERRULED,
and Defendant Board of Trustees’ Motion for Summary Judgment (Doc. 37) with
respect to Plaintiff’s claim under 29 U.S.C. § 1132(a)(1)(B) will be DENIED.

Plaintiff disputes that Defendant Board of Trustees is entitled to review denials of life insurance benefits.
(Doc. 45 at 1–2).
4

In her R & R, Magistrate Judge Lee correctly found that “Defendant Board of Trustees’ failure to satisfy
its own requirement in the SPD to describe review procedures in any notice of an adverse benefit
determination (AR 216) provides additional grounds for deeming Plaintiff to have exhausted her
administrative remedies.” (Doc. 52 at 19).

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B.

Statutory Penalties Under 29 U.S.C. § 1132(c) (the Policy)

Next, Defendant Board of Trustees objects to Magistrate Judge Lee’s conclusion
that it should be assessed $12,760.00 in statutory penalties for its failure to provide
Plaintiff with a copy of the Life Insurance Policy (“the Policy”). Specifically, Defendant
Board of Trustees contends that because Plaintiff was not prejudiced by the Board’s
failure to provide the Policy and because Defendant Board of Trustees did not act in bad
faith, statutory penalties under 29 U.S.C. § 1132(c) are inappropriate. Alternatively,
Defendant Board of Trustees objects to Magistrate Judge Lee’s timeline, arguing that
March 28, 2013, not May 1, 2013, should be the cutoff date for calculation of the
statutory penalty. For the reasons stated herein, the Court agrees with Magistrate Judge
Lee’s well-reasoned conclusions.
29 U.S.C. § 1132(c) provides, in relevant part,
Any Administrator . . . who fails or refuses to comply with a
request for any information which such administrator is
required by this subchapter to furnish to a participant or
beneficiary (unless such failure or refusal results from
matters reasonably beyond the control of the administrator)
by mailing the material requested to the last known address
of the requesting participant or beneficiary within 30 days
after such request may in the court's discretion be personally
liable to such participant or beneficiary in the amount of up
to $100 a day from the date of such failure or refusal, and the
court may in its discretion order such other relief as it deems
proper.
The $100.00 per day limit was increased to $110.00 per day for violations after July 29,
1997. See Final Rule Relating to Adjustment of Civil Monetary Penalties, 62 Fed. Reg.
40696, 40697 (July 29, 1997). Notwithstanding Defendant Board of Trustees’ repeated
arguments that statutory penalties are inappropriate due to the lack of prejudice to
Plaintiff and Defendant Board of Trustees’ alleged good faith, neither prejudice nor bad

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faith is required to impose a penalty under 29 U.S.C. 1132(c). See McGrath v. Lockheed
Martin Corp., 48 F. App’x 543, 557 (6th Cir. 2002) (“In awarding the $7,700.00 in
penalties [under 29 U.S.C. 1132(c)], the district court was not required to make a finding
that plaintiff’s right to administratively appeal ES Plan benefit decisions was prejudiced,
or that Westmoreland acted in bad faith.”); see also Gregory v. Goodman Mfg. Co., L.P.,
2012 WL 685283 at *3 (E.D. Tenn. Mar. 2, 2012) (“To the extent that Defendant
suggests that penalties may be imposed only after explicit findings of bad faith and
prejudice, it is mistaken.”). The purpose of the penalty is not to punish defendants’ bad
faith actions or for any resulting prejudice to plaintiffs, but rather “to induce
administrators to timely provide participants with requested plan documents, and to
penalize failures to do so.” Bartling v. Fruehauf Corp., 29 F.3d 1062, 1068 (6th Cir.
1994). The Court agrees with Magistrate Judge Lee’s conclusion that penalties are
appropriate in this case, as Defendant Board of Trustees repeatedly failed to provide
Plaintiff with a copy of the Policy despite Plaintiff’s explicit warnings regarding the
possibility of statutory penalties for failure to do so. Accordingly, Defendant Board of
Trustees’ objection to the award of any statutory penalty under 29 U.S.C. § 1132(c) will
be OVERRULED.
Having rejected Defendant Board of Trustees’ contention that statutory penalties
are wholly inappropriate, the Court now turns to the amount of penalties to be assessed
for Defendant Board of Trustees’ failure to provide Plaintiff with a copy of the Policy. It
is uncontested that Defendant Board of Trustees’ period in which to respond timely to
Plaintiff’s first request expired on January 5, 2013 (30 days after Plaintiff’s initial
request for documents). Magistrate Judge Lee found that Plaintiff implicitly withdrew
her request for a copy of the Policy in a letter dated April 29, 2013, and received by
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Defendant Board of Trustees on May 1, 2013.6 (Doc. 52 at 11, 11 n.8, 31 n.12 and
accompanying text).
Magistrate Judge Lee therefore concluded that the proper end date for assessing
penalties under 29 U.S.C. § 1132(c) was May 1, 2013, as Defendant Board of Trustees
could reasonably conclude that, having been informed by Plaintiff that she had received
a copy of the Policy from Defendant United, Defendant Board of Trustees no longer
needed to send her a copy of same. (Doc. 52 at 31–32). In its objections, Defendant
Board of Trustees argues that the proper end date for assessing statutory penalties
should be March 28, 2013, the day on which Plaintiff indicated that she received a copy
of the Policy from Defendant United. (Doc. 54 at 7–8). As discussed above, however, the
purpose of the statutory penalties under 29 U.S.C. § 1132(c) is “to induce administrators
to timely provide participants with requested plan documents.” Bartling, 29 F.3d at
1068. 29 U.S.C. § 1132(c), therefore, seeks to punish administrators for their failure to
respond to beneficiaries’ requests, not to compensate beneficiaries for their lack of
access to requested documents. Therefore, assessing statutory penalties against
Defendant Board of Trustees through May 1, 2013 properly addresses its failure to
respond to Plaintiff’s request for a copy of the Policy.
Accordingly, Defendant Board of Trustees’ objections to Magistrate Judge Lee’s
calculation of statutory penalties under 29 U.S.C. § 1132(c) for failure to provide Plaintiff
a copy of the Policy will be OVERRULED. For this failure, Defendant Board of
Trustees will be assessed a statutory penalty of $12,760.00, calculated at $110.00 per
day for the 116 days between January 5, 2013 and May 1, 2013.

In this letter, Plaintiff stated that she had received a copy of the Policy from Defendant United. (Doc. 52
at 11).
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V.

PLAINTIFF’S OBJECTIONS
A.

Plaintiff’s 29 U.S.C. § 1132(a)(3), ERISA § 502(a)(3) Claim

Plaintiff objects to Magistrate Judge Lee’s finding that Plaintiff is not entitled to
equitable relief under 29 U.S.C. § 1132(a)(3), ERISA § 502(a)(3). Specifically, Plaintiff
argues that her breach of fiduciary duties claim is not merely a repackaged ERISA §
502(a)(1)(B) claim, but rather alleges a separate and distinct injury. For the reasons
stated herein, the Court disagrees with Magistrate Judge Lee’s recommendation that
Plaintiff’s breach of fiduciary duties claim is merely a repackaged ERISA § 502(a)(1)(B)
claim; the Court finds, however, that as to this claim, there is no genuine dispute as to
any material fact, and Defendant Board of Trustees is entitled to judgment as a matter of
law. Therefore, the Court will grant Defendant Board of Trustees’ Motion for Summary
Judgment (Doc. 37) as to Plaintiff’s ERISA § 502(a)(3) claim.
ERISA § 502(a)(3) provides,
A civil action may be brought . . . by a participant,
beneficiary, or fiduciary (A) to enjoin any act or practice
which violates any provision of this subchapter or the terms
of the plan, or (B) to obtain other appropriate equitable relief
(i) to redress such violations or (ii) to enforce any provisions
of this subchapter or the terms of the plan.
29 U.S.C. § 1132(a)(3). This provision “act[s] as a safety net, offering appropriate
equitable relief for injuries caused by violations that § 502 does not elsewhere
adequately remedy.” Varity Corp. v. Howe, 516 U.S. 489, 512 (1996). A claimant is
entitled to bring an ERISA § 502(a)(3) breach of fiduciary duties claim in addition to an
ERISA § 502(a)(1)(B) claim for recovery of benefits “only where the breach of fiduciary
duty claim is based on an injury separate and distinct from the denial of benefits or
where the remedy afforded by Congress under § 502(a)(1)(B) is otherwise shown to be

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inadequate.” Rochow v. Life Ins. Co. of North America, 780 f.3d 364, 372 (6th Cir.
2015) (emphasis in original).
Here, Plaintiff argues that her breach of fiduciary duties claim under ERISA §
502(a)(3) alleges a separate and distinct injury from the arbitrary and capricious denial
of benefits under ERISA § 502(a)(1)(B). Specifically, Plaintiff believes her claim under
ERISA § 502(a)(1)(B) was denied because Defendant United used the wrong date in
assessing Mr. Harris’ eligibility for continued life insurance under the Disability
Continuation Provision. (Doc. 41 at 15–18). Plaintiff further argues that Defendant
Board of Trustees’ breach of fiduciary duties caused Mr. Harris to believe that continued
payment of premiums from his mother’s bank account qualified Mr. Harris for life
insurance coverage under the Conversion provision of the life insurance policy.7 (Id. at
18–21). Defendant Board of Trustees argues that the breach of fiduciary duties claim
should be dismissed, as Plaintiff has only alleged a single injury, namely the denial of
benefits under Mr. Harris’ life insurance policy. This injury, Defendant Board of
Trustees argues, can be fully addressed by an ERISA § 502(a)(1)(B) claim for denial of
benefits, thus leaving Plaintiff unable to make a claim under ERISA § 502(a)(3) for
breach of fiduciary duties.
Both Defendant Board of Trustees and Magistrate Judge Lee’s R & R
mischaracterize Plaintiff’s claimed injuries as one and the same. The facts of Gore v. El
Paso Energy Corp. Long Term Disability Plan, 477 F.3d 833 (6th Cir. 2007), are
instructive. Therein, the plaintiff worked for Tennessee Gas Pipeline Company, which
provided plaintiff with a long-term disability plan that “provided for ‘own occupation’
7 While Mr. Harris’ premiums were automatically deducted from the bank account of his mother, Mary
Hood, on a monthly basis, Ms. Hood was not listed as a beneficiary under Mr. Harris’ life insurance
policy. (Doc. 39 at 4).

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disability benefits for a period of 24 months and ‘any occupation’ disability benefits
thereafter until the age of 65.”8 Id. at 834. On January 1, 1998, plaintiff’s policy changed
in that it provided for “own occupation” disability benefits for only 12 months, as
opposed to the previous plan’s 24 months. Id.at 835. After 12 months under the new
plan, an employee had to demonstrate that his injury prevented him from working in
“any occupation” in order to receive benefits. Id. Plaintiff Gore was subsequently injured
on the job, and received only 12 months of “own occupation” benefits. His claim for
subsequent “any occupation” benefits was denied. Id. at 835–36. In his complaint,
plaintiff Gore alleged
two separate and distinct injuries. First, Gore alleges that
[the] ‘any occupation’ determination was wrongly decided
and that as a result he is entitled to . . . benefits. Second, he
alleges that even if he is not entitled to the ‘any occupation’
determination, he should receive ‘own occupation’ benefits
for two years rather than one based on [the plan
administrator’s] misrepresentation.
Id. at 840.
The United States Court of Appeals for the Sixth Circuit held that plaintiff Gore’s
claim for breach of fiduciary duties was not merely a repackaged ERISA § 502(a)(1)(B)
claim for denial of benefits. Id. at 842. The court explained that
[t]he reason why the district court and the Defendant
confuse Gore’s argument is because the remedy available to
Gore if he had succeeded in his ‘any occupation’ claim would
have rendered the ‘own occupation’ misrepresentation moot
. . . If Gore received . . . benefits under the ‘any occupation’
coverage, Gore would no longer suffer any injury from [the
plan administrator’s] misrepresentation of the ‘own
occupation’ benefit. Gore would receive payment for the
second year regardless of whether [the plan administrator]
should have told him that the ‘own occupation’ benefits only
By ‘own occupation’ and ‘any occupation’ the policy-at-issue meant that, in order to receive benefits, the
claimant’s injury must have prevented him from working in his ‘own occupation’ or in ‘any occupation’ for
which he was qualified. See Gore, 477 F.3d at 834–35.

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lasted a year. However, the opposite result is not true. When
Gore did not receive the ‘any occupation’ wages, his
misrepresentation claim was not moot because his injury
from the misrepresentation was not eliminated.
That Gore’s ‘own occupation’ injury would be rendered moot
if remedied by the ‘any occupation’ determination does not
mean that the Plaintiff’s alleged injury is ‘a repackaged
denial of benefits claim.’ The fact that Plaintiff’s claim for an
equitable remedy ‘could have been’ resolved if his §
1132(a)(1)(B) claim was resolved in his favor, does not mean
that his claim is the same as the one barred in Wilkins.
Id. at 841.
In the present case, Plaintiff’s claim under ERISA § 502(a)(1)(B) for denying
benefits under the Disability Continuation Provision resulted in a separate and distinct
injury from that caused by Defendant Board of Trustees’ alleged misrepresentation
regarding Mr. Harris’ continuation of life insurance benefits under the policy’s
Conversion provision. Like in Gore, Plaintiff’s injury from Defendant Board of Trustees’
alleged misrepresentation would be rendered moot if remedied by a favorable
determination on the Disability Continuation Provision. But the converse is not true. If
Plaintiff receives an adverse determination on the Disability Continuation Provision, the
injury from Defendant Board of Trustees’ alleged misrepresentation regarding Mr.
Harris’ continued coverage under the Conversion provision remains unaddressed.
Furthermore, as in Gore, Magistrate Judge Lee found, and it is undisputed, that Plaintiff
is not entitled to benefits under the strict terms of the Plan’s Conversion Provision.
(Doc. 52 at 21) (“Mr. Harris submitted a COBRA election form before his eligibility
ended, but Defendants never received an application for conversion or portability of Mr.
Harris’s life insurance coverage. The only method by which Plaintiff may be entitled to
benefits under 29 U.S.C § 1132(a)(1)(B), therefore, is the Disability Continuation

11

Provision.”) Because Plaintiff’s “claim of breach of fiduciary duty could not have been
characterized as a denial of benefits claim,” dismissal of Plaintiff’s ERISA § 502(a)(3)
claim as a repackaged ERISA § 502(a)(1)(B) claim is inappropriate.9 Gore, 477 F.3d at
842. Accordingly, the Court REJECTS Magistrate Judge Lee’s finding that Plaintiff’s
ERISA § 502(a)(3) claim is merely a repackaged ERISA § 502(a)(1)(B) claim.
Notwithstanding the propriety of Plaintiff’s ERISA § 502(a)(3) claim, it must be
dismissed as there is no genuine dispute as to any material fact, and Defendant Board of
Trustees is entitled to judgment as a matter of law. In its breach of fiduciary duties
claim, Plaintiff alleges that Defendant Board of Trustees’ continued withdrawals of life
insurance premiums out of Mr. Harris’ mother’s bank account after the expiration of
Mr. Harris’ life insurance policy triggered an affirmative duty for Defendant Board of
Trustees to inform Mr. Harris that his life insurance policy had lapsed. (Doc. 41 at 18–
21).
Several undisputed facts, however, lead the Court to conclude that this claim is
without merit. First, Southern Benefit Administrators (“SBA”), Defendant Board of
Trustees’ third-party administrative manager, mailed COBRA information to Mr. Harris
on January 20, 2012. (Doc. 39 at 5). With this information came an explanatory letter,
stating in bold lettering,
[p]lease note that if your health coverage terminates, or if
you elect COBRA continuation coverage, your life insurance
with Mid-South Carpenters Regional Council Health and
9 Defendant Board of Trustees acknowledges that Plaintiff implicitly abandoned her argument that denial
of benefits under the Conversion provision of the life insurance policy amounted to a violation of ERISA §
502(a)(1)(B) (Doc. 43 at 2–3) (“The portion of the Plaintiff’s brief that addresses her § 502(a)(1)(B) claim
entirely fails to mention that Mr. Harris had the right to convert to an individual life insurance policy
through the Plan’s Conversion Privilege, as alleged in the Plaintiff’s original Complaint. Instead, the
Plaintiff’s claim to the underlying benefit now appears to rest solely on the theory that Mr. Harris was
eligible for life insurance through what the Plaintiff titles the “LWOP,” or “Waiver of Premium Benefit”
contained in the Plan’s SPD.”). Throughout this Order, the Court has referred to the ‘LWOP’ or ‘Waiver of
Premium Benefit” as the Disability Continuation Provision.

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Welfare Fund (Defendant Board of Trustees) will terminate.
You may be eligible to convert your life insurance policy by
completing the Mutual of Omaha Term Life Portability
Request Form that is enclosed.
(Doc. 38-1 at 1). Second, Mr. Harris signed a COBRA election form dated February 27,
2012, and Defendant Board of Trustees never received any written application or any
other communication from Mr. Harris that he wanted to continue his life insurance
benefits after his policy lapsed on January 31, 2012. (Doc. 39 at 5–6). Third, premium
payments continued to be deducted from Mr. Harris’ mother’s bank account after Mr.
Harris’ policy lapsed. After Mr. Harris’ death, his mother (who was not a beneficiary
under the Policy) contacted SBA to inquire about Mr. Harris’ benefits. She was informed
that Mr. Harris was ineligible for benefits as of the time of his death, and the mistaken
deductions were reimbursed to Mr. Harris’ mother by check on August 27, 2012. (Id. at
6–7). Fourth, Defendant Board of Trustees claims, and Plaintiff does not refute, that “no
evidence exists that Mr. Harris was aware of the mistaken deductions being made from
[his mother’s] account.” (Doc. 43 at 7). Finally, Plaintiff, who is the only beneficiary
listed on Mr. Harris’ life insurance policy, did not contact Defendant Board of Trustees
until December 4, 2012, long after the mistakenly deducted premiums had been brought
to Defendant Board of Trustees’ attention and had been reimbursed. (Doc. 39 at 7).
Plaintiff cites Krohn v. Huron Memorial Hospital, 173 F.3d 542 (6th Cir. 1999)
for the proposition that Defendant Board of Trustees had a duty to inform Mr. Harris
that its continued acceptance of premiums did not entitle Mr. Harris to coverage under
the life insurance policy. (Doc. 41 at 19) (“Krohn distills relevant law by holding that . . .
[the duty to inform] entails not only a negative duty not to misinform, but also an
affirmative duty to inform when the trustee knows that silence might be

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harmful.”) (emphasis in original). Plaintiff, however, ignores the court’s statement in
the same paragraph that “a trustee is under a duty to communicate to the beneficiary
material facts affecting the interest of the beneficiary which he knows the beneficiary
does not know and which the beneficiary needs to know for his protection in dealing
with a third person.” Krohn, 173 F.3d at 548 (emphasis added) (citing Restatement
(Second) of Trusts § 173, comment d (1959)).
In the present case, there is no evidence that Defendant Board of Trustees knew
that any policy holder or beneficiary to the life insurance policy knew of the mistaken
deductions from Mr. Harris’ mother’s bank account, and relied on same to assume that
Mr. Harris was still covered under the life insurance policy. Only two such persons exist:
Mr. Harris and Plaintiff. As stated above, there is no evidence that Mr. Harris was even
aware of the mistaken premium deductions from his mother’s bank account. In fact, the
undisputed evidence shows that, because Mr. Harris returned his COBRA election form,
which was included in a packet with information regarding the process for extending his
life insurance policy, he was aware that his life insurance policy lapsed on January 31,
2012. Similarly, there is no evidence on the record that Plaintiff knew of the mistakenly
made deductions from Mr. Harris’ mother’s account. Mr. Harris’ mother, who was not a
beneficiary to the life insurance policy, was the one to bring the mistake to Defendant
Board of Trustees’ attention, and the mistakenly deducted premiums were reimbursed
well before Plaintiff contacted Defendant Board of Trustees to address the life insurance
policy. Accordingly, Defendant Board of Trustees had no reason to know “that silence
might be harmful.” Krohn, 173 F.3d at 548.
Finally, Plaintiff relies on Krohn and Killian v. Concert Health Plan, 742 F.3d 651
(7th Cir. 2013) to support her claim. These cases, Plaintiff argues, stand for the
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proposition that “the fiduciary’s duty to provide complete and accurate information,
even if the beneficiary does not specifically inquire, is triggered when the beneficiary
makes the ERISA fiduciary ‘aware of the beneficiary’s status and situation.’” Killian,
742 F.3d at 669 (emphasis added). Plaintiff then analogizes this case to Palen v. Kmart
Corp., in which the beneficiary under the life insurance plan contacted Kmart and
communicated the policy holder’s desire to continue “all of his benefits.” 2000 WL
658115 at *3 (6th Cir. May 9, 2000). The Sixth Circuit held that because the beneficiary
so indicated, Kmart “became obligated to disclose all material information, including
information that [the beneficiary] had not specifically requested,” and that “Kmart
breached this duty when it responded to [the beneficiary’s] inquiries by providing
information about health insurance only, without a word about continuation of [the
policy holder’s] life insurance.” Id. Here, Plaintiff points to no communication made by
either Mr. Harris or Plaintiff to Defendant Board of Trustees that would trigger such a
duty. Defendant Board of Trustees could not be under a duty to disclose any information
that was not “specifically requested” because nothing was requested at all.
Because Plaintiff has failed to “set forth specific facts showing that” Mr. Harris or
Plaintiff knew of the mistaken premium deductions, or that Mr. Harris or Plaintiff
communicated with Defendant Board of Trustees as did the beneficiary in Palen,
summary judgment in Defendant Board of Trustees’ favor is appropriate. See Moldowan
v. City of Warren, 578 F.3d 351, 374 (6th Cir. 2009) (citing Matsushita Elec. Indus. Co.,
Ltd. v. Zenith Radio Corp., 475 U.S. at 574, 586 (1986); Fed. R. Civ. P. 56). Accordingly,
Plaintiff’s Motion for Summary Judgment (Doc. 40) as to its claim for breach of
fiduciary duties under ERISA § 502(a)(3) will be DENIED and Defendant Board of

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Trustees’ Motion for Summary Judgment (Doc. 37) as to the same claim will be
GRANTED.
B.

Statutory Penalties Under 29 U.S.C. 1132(c)(3) (Plan Document)

Finally, Plaintiff objects to Magistrate Judge Lee’s finding that Defendant Board
of Trustees should not be assessed statutory penalties under 29 U.S.C. 1132(c)(3) for its
failure to provide Plaintiff with a copy of the Plan Document. (Doc. 55 at 5–9). Plaintiff
argues that the Plan Document is a controlling and/or relevant ERISA document, and
therefore should have been produced upon each of Plaintiff’s requests for such
documents. (Doc. 55 at 5). Defendant argues and Magistrate Judge Lee found that the
SPD is the governing document for the life insurance benefits under the Plan, and that
Plaintiff did not clearly request the Plan Document. For the reasons stated herein, the
Court disagrees with Defendant and Magistrate Judge Lee, and finds that Defendant
Board of Trustees is subject to statutory penalties for its failure to provide Plaintiff with
a copy of the Plan Document.
Defendant Board of Trustees repeatedly asserts that it is undisputed that the SPD
is the controlling document for the life insurance benefits. (See, e.g. Doc. 57 at 4; Doc.
39 at 3). While this is not entirely clear from the record,10 it is also not the relevant
inquiry. The relevant inquiry is whether the Plan Document is also a controlling or
relevant document with regards to the ERISA plan at issue. A review of the case law and
the language of the SPD itself show that the Plan Document is such a document.

In their Statement of Material Facts Not In Dispute, the parties stipulate that “SBA on behalf of the
Board of Trustees has identified the Summary Plan Description (“SPD”) and the Plan Document as
controlling documents in regards to the administration of benefits under the ERISA plan.” (Doc. 39 at 11).
Notably, Treva Garrison, Assistant Branch Manager at SBA, admits in her Deposition that the Plan
Document is a controlling document over the life insurance policy. (Doc. 24-3 at 20) (“Question: Okay.
How about the plan, does the plan control the life benefit claim, the plan document? Answer: The plan
document and the SPD, yes.”) (emphasis added).
10

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In CIGNA Corp. v. Amara, the United States Supreme Court held that “summary
documents, important as they are, provide communication with beneficiaries about the
plan, but that their statements do not themselves constitute the terms of the plan for
purposes of § 502(a)(1)(B).” 131 S. Ct. 1866, 1878 (2011) (emphasis in original).
Subsequent Sixth Circuit case law has expanded on this holding: “[s]ince Amara, we
have observed that SPDs are not legally binding, nor parts of the benefit plans
themselves. . . SPDs lack controlling effect in the face of plan language to the contrary.”
Engleson v. Unum Life Ins. Co. of America, 723 F.3d 611, 620 (6th Cir. 2013) (citations
omitted) (internal quotation marks omitted). Most recently, the Sixth Circuit shed light
on this issue in Board of Trustees v. Moore, 2015 WL 5010985 (Aug. 25, 2015)
(designated for publication). Therein, the question was whether the SPD was a binding
document that set out enforceable terms where there was no plan document at all. Id. at
*4 (“In a somewhat unusual process, although not unique to the elevator industry, the
Board omitted what is normally the next step—the drafting of a welfare benefits plan—
and went straight to creation of a summary plan description.”). The court distinguished
this unique situation from Amara, noting that
[i]n Amara, however, it was clear that one document
functioned as the plan itself, that a different document
functioned as the summary plan description, and that the
two documents contained conflicting terms. Nothing in
Amara prevents a document from functioning both as the
ERISA plan and as an SPD, if the terms of the plan so
provide.
Id. at *5 (emphasis added). Ultimately, the court concluded, the SPD functions as the
controlling ERISA plan “in the absence of a separate plan document.” Id.
The present case is easily distinguishable from Moore. First, there is no evidence
on the record that the terms of the plan provide that the SPD functions both as the
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ERISA plan and the SPD. Second, in this case Defendant Board of Trustees has not, and
cannot argue that there is not a “separate plan document” associated with the SPD. In
fact, the language of the SPD specifically addresses the Plan Document:
Although this booklet contains a great deal of information
about your Plan, it is not the purpose of this booklet to cover
every detail or every situation that might arise under your
health plan. However, there is a complete set of Rules and
Regulations which governs the operation and administration
of this plan. These Rules and Regulations are set forth in a
legal document referred to as the Plan Document. . . The
Rules and Regulations set forth in the Plan Document are
final and binding. Nothing in this booklet is meant to
interpret or extend or change in any way the provisions
expressed in the Plan Document itself. If there is any
difference between the Plan Document and the summary in
this booklet, the Plan Document will control.
(Doc. 18-5 at 33) (emphasis added). Defendant Board of Trustees argues that its failure
to provide Plaintiff with the Plan Document is excused because the Plan Document
contains no terms that specifically address the life insurance benefit, and because there
are no conflicting terms between the SPD and the Plan Document regarding same. This
argument represents two sides of the same coin, and is dispelled with the same
reasoning. Even if the parties agree that the SPD is a controlling document for Mr.
Harris’ life insurance policy, the terms of the SPD specifically state that in the event of
any inconsistency between the SPD and the Plan Document, the Plan Document will
control. Ergo, armed only with access to the SPD and not the Plan Document, Plaintiff
could not have known the unequivocal terms of the life insurance policy because she did
not have the opportunity to discover any inconsistencies, or lack thereof, between the
SPD and the Plan Document. In this case, it happens that there are no inconsistencies
between the SPD and the Plan Document with regards to the life insurance policy. This,
however, was not known by Plaintiff until she received the Plan Document on December
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10, 2014, despite multiple requests to Defendant Board of Trustees for copies of all
controlling or relevant ERISA documents. In sum, to claim simultaneously, as
Defendant Board of Trustees does, that only the SPD (and not the Plan Document) is a
controlling ERISA document, but at the same time stating that “[i]f there is any
difference between the Plan Document and [the SPD], the Plan Document will control,”
(id.), belies logic. Accordingly, the Court finds that the Plan Document is a controlling
ERISA document.
Having found that Defendant Board of Trustees was under an obligation to
furnish a copy of the Plan Document at Plaintiff’s request, the Court now turns to the
appropriate time frame for statutory penalties under 29 U.S.C. 1132(c). It is undisputed
that Plaintiff was provided a copy of the Plan Document on December 10, 2014. This will
be the end date for statutory penalties.

Defendant Board of Trustees argues that

Plaintiff’s requests for documents were “broad and did not include a specific request for
the Plan Document.” (Doc. 57 at 6). In Plaintiff’s third request for documents, however,
Plaintiff states:
However, since we wrote the letter to you on March 14, we
have received a copy of the insurance policy from the
insurance company, United of Omaha Life Insurance
Company. The policy defines active eligibility for a member
as someone who is ‘eligible for insurance according to the
Policyholder’s rules of eligibility as stated in the current MidSouth Carpenters Regional Council Health and Welfare Fund
Rules of Eligibility and as approved by Our authorized
representative in Our home office . . . .’ Presumably, these
‘Rules of Eligibility’ would be included in the Plan
documents we have previously requested from you; however,
if they are not, please consider this as a request for those
documents.
(Doc. 1-4 at 1–2) (emphasis added). These “Rules of Eligibility” are addressed at length
in the Plan Document. (See Doc. 55 at 6; Doc. 39-2 at 22–31). Defendant Board of
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Trustees received Plaintiff’s third request for documents on May 1, 2013, and Defendant
Board of Trustees did not respond, (Doc. 39 at 16), despite Plaintiff asking specifically
for the document addressing “Rules of Eligibility,” i.e. the Plan Document. Even giving
Defendant Board of Trustees the benefit of the doubt that Plaintiff’s first and second
document requests may have been ambiguous as to the Plan Document, the Court finds
that given Plaintiff’s third request, Defendant Board of Trustees was under a duty to
furnish a copy of the Plan Document. The proper start date for penalties under 29
U.S.C. 1132(c) is 30 days after the plan administrator receives a request; the proper start
date for penalties in this case, therefore, is May 31, 2013. Given Defendant Board of
Trustees’ deliberate choice not to respond to Plaintiff’s unambiguous third request for
documents, and Defendants failure to respond at all to either the second or third
request for documents, (see Doc. 39 at 15–16), the Court finds that assessing the
maximum penalty is appropriate in this case. Accordingly, Defendant Board of Trustees
will be assessed a penalty of $61,380.00 for its failure to furnish a copy of the Plan
Document, calculated at $110.00 per day for the 558 days between May 31, 2013 and
December 10, 2014. This penalty is in addition to the $12,760.00 for Defendant Board
of Trustees’ failure to provide a copy of the Policy, discussed supra Section IV.B.
VI.

CONCLUSION
Having conducted a de novo review of the R & R, as well as the record, Magistrate

Judge Lee’s R & R (Doc. 52) is hereby ACCEPTED AND ADOPTED in part and
REJECTED in part. Accordingly:


Defendant United’s Motion for Judgment on the Pleadings (Doc. 21) is
hereby DENIED.

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

Defendant Board of Trustees’ Motion for Summary Judgment (Doc. 37) is
hereby GRANTED IN PART to the extent that it seeks judgment on
Plaintiff’s claim for relief for breach of fiduciary duties under 29 U.S.C. §
1132(a)(3) and DENIED IN PART in all other respects.



Plaintiff’s Motion for Summary Judgment (Doc. 40) is hereby GRANTED
IN PART to the extent it seeks statutory penalties of $74,140.00 under 29
U.S.C. § 1132(c) and DENIED IN PART to the extent that it seeks
additional penalties under 29 U.S.C. § 1132(c) and relief under 29 U.S.C. §
1132(a)(3).



Plaintiff’s claim for benefits under 29 U.S.C. § 1132(a)(1)(B) is hereby
REMANDED for consideration under the Disability Continuation
Provision as of January 31, 2012.

SO ORDERED this 21st day of September, 2015.

/s/ Harry S. Mattice, Jr._______
HARRY S. MATTICE, JR.
UNITED STATES DISTRICT JUDGE

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