Justice v. Reliance Standard Life Insurance Company et al (JRG2)

Filing 25

ORDER: Plaintiffs objections to the Report and Recommendation are OVERRULED. It is hereby ORDERED that this Report and Recommendation dated February 22, 2016, [Doc. 21], is ADOPTED and APPROVED as an order of this Court. Plaintiffs motion to determine the standard of review, [Doc. 12], is DENIED. See order for details. Signed by District Judge J Ronnie Greer on 3/24/2016. (RLC, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT GREENEVILLE

ROBERT JUSTICE,

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Plaintiff,
v.
RELIANCE STANDARD LIFE INSURANCE
COMPANY,
Defendant.

No. 2:15-CV-134

ORDER
This matter is before the Court to address the plaintiff’s objections, [Doc. 23], to a Report
and Recommendation of the magistrate judge dated February 11, 2016, [Doc. 21].

The

defendant has responded, [Doc. 24], and the matter is ripe for review.
In this Employee Retirement Income Security Act of 1974 (“ERISA”) matter the plaintiff
alleges that the defendant improperly terminated his long-term disability (“LTD”) benefits in
violation of the terms of an employee welfare benefits plan. Plaintiff was an hourly employee of
Berkline, a company which has since gone out of business, from March 10, 2004 until he became
disabled on May 15, 2008. Plaintiff, with the assistance of Berkline, applied for and received
LTD benefit payments until May 22, 2014.

Defendant Reliance Standard Life Insurance

Company (“Reliance Standard”) is the insurance company that administers Berkline’s employee
benefits plan. On May 22, 2014, Defendant discontinued Plaintiff’s LTD benefit payments
because Defendant discovered that Plaintiff, as an hourly employee, was not covered for LTD
benefits under Berkline’s plan and that Defendant has mistakenly been paying LTD benefits
which Plaintiff was not entitled to receive.

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Defendant has produced a copy of the LTD benefits policy for the Court record, the same
policy that was used to determine Plaintiff’s eligibility before the plan administrator. This policy
has the signature of Reliance Standard’s executives; however, it does not have the signature of a
Berkline executive. Additionally, some of the letters from Defendant’s employee claims adjuster
were printed on letterhead of Matrix, a company with the same parent company as Defendant, as
opposed to Reliance Standard letterhead. The claims adjuster submitted an affidavit stating that
the wrong letterhead was used due to a computer coding glitch and that she, as an employee of
Reliance Standard only, made the benefits eligibility decision. Plaintiff brings this action for the
Court to review the Defendant’s decision to discontinue benefits, claiming that he paid premiums
to Berkline to be covered under the employee welfare benefits plan and that Defendant
improperly ceased his LTD benefits payments.
Plaintiff filed a motion for the Court to determine the appropriate standard of review to
be applied to the plan administrator’s decision to cease LTD benefit payments. Plaintiff argued
the review should be de novo while the defendant responded that the review of this Court should
be limited to an arbitrary and capricious standard. Magistrate Judge Corker heard oral argument
on this motion and issued a Report and Recommendation. Magistrate Judge Corker found that
the arbitrary and capricious standard of review should apply because the submitted plan gave the
requisite discretionary authority to Defendant to determine benefit eligibility and because
Reliance Standard, not another entity, made the final eligibility determination. The Court will
now address Plaintiff’s objections to the Report and Recommendation.
The Court will review the Report and Recommendation to determine if the portions
objected to are clearly erroneous or contrary to law. Fed. R. Civ. Pro. 72(a); United States v.
Curtis, 237 F.3d 598, 603 (6th Cir. 2001). The district court must have a “firm conviction that a

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mistake has been committed” in order to modify or set aside the magistrate judge’s order.
United States v. Ellis, 497 F.3d 606, 611 (6th Cir. 2007). The Plaintiff’s objection argues this
Court should review the magistrate judge’s order de novo, citing Federal Rule of Civil Procedure
72(b)(3). However, section (b) of Rule 72 applies only to “Dispositive Motions and Prisoner
Petitions.”

Section (a) of Rule 72 applies to “Nondispositive Matters.”

This motion to

determine the standard of review is a nondispositive matter as it does not have the potential to
“dispose of a party’s claim or defense.” See id. Therefore, the court will review the order to
determine if it is clearly erroneous or contrary to law.
A denial of benefits under ERISA is subject to de novo review by a district court
generally. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). However, where
the plan documents expressly grant the plan administrator discretion to make benefits
determinations, the administrator’s denial of benefits is reviewed under the highly deferential
arbitrary and capricious standard. Moos v. Square d Co., 72 F.3d 39, 41 (6th Cir. 1995).
The plaintiff notes in his objection that this Court has “suggested that its review is de
novo,” citing to an ERISA briefing schedule, [Doc. 11], where the court stated it would be
conducting a de novo review of the administrator’s decision. Defendant states in its response
that it contacted the court multiple times after this order was entered to voice its concerns about
the de novo language but soon thereafter the plaintiff filed this motion to determine the standard
of review. Plaintiff notes the Court’s language in the order as a “suggestion” and does not base
its argument for a de novo standard of review on this mistake in the Court’s briefing schedule
order.
Plaintiff’s objections to the magistrate judge’s order are largely the same arguments made
in his motion to determine the standard of review. The plaintiff’s first objection is that the

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defendant has not produced a “fully-executed version of the LTD policy” and therefore cannot
show that the plan granted the requisite authority to Defendant. Plaintiff, when asked during oral
argument, admitted that it did not have another policy to submit to the Court that it believes
applies to this matter. Instead Plaintiff speculates that another policy must exist that covers
hourly workers based on a pattern of practice where he paid premiums and received benefits for
about five years. Defendant states it has produced the plan that covers Plaintiff in this case and
attached an affidavit of Ms. Strickler, a claims adjuster of the defendant, who made the eligibility
decision based on the submitted plan.
The magistrate judge correctly found that merely because the policy produced does not
have one party’s signature does not nullify the policy. The evidence before the magistrate judge
and before this Court is the administrator’s record and Ms. Strickler’s affidavit which leads to the
conclusion that the submitted plan is the plan that covers Plaintiff’s claim. Plaintiff presents no
evidence other than argument from counsel and speculation that another plan must exist based on
a pattern of payments. To find that the submitted plan is not in fact the plan that governs
Plaintiff’s claim would require the court, as noted by the magistrate judge, to “speculate that the
‘actual’ plan is lost.” The Court will not so speculate given the record before it. The Plaintiff
does not present any argument that the magistrate judge’s determination of law that the contract
is not required to be fully executed to be enforceable is incorrect or inapplicable. This objection
is OVERRULED.
Plaintiff next objects to the magistrate judge’s reliance on Ms. Strickler’s affidavit.
Plaintiff argues that because the affidavit is outside of the administrative record considering it is
improper in an ERISA review. The defendant responds that a court is allowed to consider
evidence outside of the administrative record in an ERISA case when determining a procedural

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challenge to the administrator’s decision.

The Court agrees with the defendant and the

magistrate judge that where the Court is determining whether the submitted plan is the applicable
plan document or factual determination, such as whether or not the entity granted discretionary
authority under the plan actually made the final benefits decision, it may consider submitted
evidence outside of the administrative record. See Shelby County Health Care Corporation v.
Majestic Star Casino, 581 F.3d 355, 366 (stating that an executive of the insurance company
submitted an affidavit to show that she was involved in the final benefits decision when
determining the appropriate standard of review based on a factual dispute), Curtis v. Hartford
Life and Accident Insurance Company, No. 11 C 2448, 2012 WL 138608, at n.3 (N.D. Ill. June
18, 2012) (considering affidavits filed by the defendant when determining which of two benefits
policies was applicable to the underlying ERISA claim).
Plaintiff also asks this Court to strike Ms. Strickler’s affidavit as improper because she
does not aver to be a custodian of records for Reliance Standard, the affidavit fails to meet the
business records requirement of Federal Rule of Evidence 803(6), Ms. Strickler did not aver that
she reached out to Berkline or “looked for” the fully executed version of the policy, and because
she is not the person who certified the administrative record. However, Plaintiff’s arguments
misinterpret the purpose of Ms. Strickler’s affidavit. Ms. Strickler’s affidavit did not have to
meet the business records exception in order for the court to consider the submitted plan because
a copy of that plan is already before the court in the administrative record. [A.R. 1-35]. Ms.
Strickler’s affidavit is sufficient to show that she has personal knowledge of her employment
history, her appeal determination of Plaintiff’s disability benefits, and Reliance Standard’s
computer system.

There is no basis for striking Ms. Strickler’s affidavit.

Therefore, the

Magistrate Judge did not err by considering the affidavit to help determine that the submitted

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plan is the plan that governs the determination of benefits in this matter. Plaintiff’s objection is
OVERRULED.
Plaintiff next argues that Matrix, not Reliance Standard, made the benefits determination
and therefore the de novo standard of review should apply. Even where plan documents confer
discretionary authority to the plan administrator, if the benefits decision is made by an entity
other than the one authorized by the plan, the court will review the benefits denial under a de
novo standard. Shelby County, 581 F.3d at 365.
Plaintiff objects to the magistrate judge “deeming the Strickler Affidavit uncontroverted.”
Essentially, Plaintiff argues that Matrix, a company under the same parent corporation as
Reliance Standard, made the benefits determination, not Defendant. This argument is based on a
number of letters sent to Plaintiff and his counsel on Matrix letterhead. The defendant argues
that Ms. Strickler, an employee of Reliance Standard, made the final benefits determination and
therefore, any involvement by Matrix in the initial determination does not require the court to
review the matter under the de novo standard.
It appears in the administrative record that the initial determination regarding benefits
was made by Cynthia Pietrowski and the initial denial letter was sent on Matrix letterhead on
June 19, 2014. [AR 350-52]. This letter informed Mr. Justice of the appeal process, an appeal
which should be submitted in writing to Reliance Standard Life Insurance Company. [Id.]. A
letter was sent to Plaintiff counsel from Matrix on August 13, 2014 enclosing copies of the
policies used to make the initial benefits determination.1 [AR 354-55]. Although not mentioned
in his objection, Plaintiff received a letter on December 23, 2014 from the claims department on
Reliance Standard letterhead stating that Reliance Standard had received the appeal claim and

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The Court notes that this letter was sent from Matrix “in response to [Plaintiff counsel’s] letter dated August 6,
2014” and appears to be a correspondence that Plaintiff counsel requested from Matrix.

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requested an authorization be sent to Susan Strickler so that a Reliance Standard Life’s Quality
Review Unit could obtain current medical information. [AR 357].
The real crux of Plaintiff’s objection is that Susan Strickler’s first three letters to Plaintiff
and Plaintiff’s counsel were on Matrix letterhead instead of Reliance Standard letterhead.
Plaintiff argues that the magistrate’s judge’s characterization of Ms. Strickler’s affidavit as
“uncontroverted” is improper where the affidavit only addresses the January 7th letter but not the
other two letters from Ms. Strickler on Matrix letterhead. However, these letters do not convey
any eligibility determination but instead are correspondence relating to requests made by
Plaintiff, [AR 360], and a follow-up letter. The actual benefits appeal determination letter was
sent by Ms. Strickler on Reliance Standard letterhead on March 23, 2015. [AR 362-64]. This
letter sets out the policy requirements and the reasons for Ms. Strickler’s determination. Ms.
Strickler’s affidavit states that she alone made the benefits appeal decision on behalf of Reliance
Standard.
The Plaintiff presents no evidence other than three preliminary contact letters on Matrix
letterhead to argue that Matrix made the final benefits determination. The first of these Matrix
letters is explained by Ms. Strickler’s affidavit as a result of a computer glitch. Although the
affidavit does not address the January 14th or January 21st letters on Matrix letterhead, there is no
contrary evidence that these too are not due to computer glitches. The initial letters from Matrix
were merely the initial determination letter, not the final benefits determination decision. The
portions of Ms. Strickler’s affidavit stating that she does not and has never worked for Matrix is
uncontroverted. Plaintiff’s objection is OVERRULED.
In conclusion, Plaintiff’s objections to the Report and Recommendation are
OVERRULED. It is hereby ORDERED that this Report and Recommendation dated February

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22, 2016, [Doc. 21], is ADOPTED and APPROVED as an order of this Court. Plaintiff’s motion
to determine the standard of review, [Doc. 12], is DENIED.
ENTER:

s/J. RONNIE GREER
UNITED STATES DISTRICT JUDGE

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