Kidder v. Aetna Life Insurance Company et al

Filing 64

Plaintiff Charles Kidders first and second Motions for Summary Judgment (docket nos. 46 and 55) are DENIED. Additionally, the Court construes Defendants Responses thereto (docket nos. 52 and 56) as motions for summary judgment. Those motions are GRA NTED. The Court finds Defendants are entitled to judgment as a matter of law as to Kidders claim for benefits for his back surgery under 29 U.S.C. § 1132(a)(1)(B) and Kidders claim for penalty damages under 29 U.S.C. § 1132(c). Those cla ims are dismissed on the merits. The only remaining claims in this case are Kidders state law claims related to the denial of his short-term disability benefits. The parties are hereby ordered to submit a proposed scheduling order for those remaining claims by April 11, 2016. Signed by Judge Xavier Rodriguez. (mr)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
CHARLES KIDDER,
Plaintiff,
v.
AETNA LIFE INSURANCE COMPANY,
TYCO INTERNATIONAL
MANAGEMENT COMPANY as Plan
Administrator for TYCO
INTERNATIONAL HEALTH AND
WELFARE BENEFITS PLAN, TYCO
INTERNATIONAL HEALTH AND
WELFARE BENEFITS PLAN, and
SEDGWICK CLAIMS MANAGEMENT
SERVICES,
Defendants.

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Civil Action No. SA-14-CV-665-XR

ORDER
On this day, the Court considered Plaintiff Charles Kidder’s Motions for Summary
Judgment (docket nos. 46 and 55) and Defendants’ Responses thereto (docket nos. 52 and 56).
After careful consideration, the Court will DENY Plaintiff’s First Motion for Summary
Judgment (docket no. 46) and DENY Plaintiff’s Second Motion for Summary Judgment (docket
no. 55). Additionally, the Court will construe Defendants’ Responses as motions for summary
judgment. The Court will GRANT these motions.
FACTUAL BACKGROUND
Plaintiff Charles Kidder (“Kidder”) worked as a technician supervisor for
SimplexGrinnel, a subsidiary of Tyco International (“Tyco”). Docket no. 46 at 1. Kidder’s
primary responsibilities were to supervise the installation of smoke and fire detectors. Id.
Through his employment with Tyco, Kidder was enrolled in the Tyco Health and Welfare
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Benefits Plan (“the Plan”), administered by Aetna Life Insurance Company (“Aetna”). Docket
no. 52 at 1.
On September 14, 2011, he underwent an anterior cervical discectomy and fusion to
relieve debilitating pain and weakness in his back. Id. at 1–2. In April 2012, Kidder underwent
an additional surgery for his back—a cervical anterior discectomy—and a titanium plate was
implanted in his spine. Docket no. 1 at 5. Aetna denied benefits for this second surgery and
related hospital stay. Id. at 6.
After his claims were denied, Kidder hired an attorney who sent a letter to Aetna on
November 5, 2012, asking for the reasons Kidder’s claim was denied. Docket no. 46 at 3. Aetna
construed this letter as an appeal and replied with a letter that explained “the claim is not payable
because [Kidder’s] healthcare coverage ended before [he] received these services.” Id. This
letter also stated nine potential reasons that his coverage could have been deemed to have ended.
Id. The letter also indicated that the coverage ended on April 1, 2012, and advised Kidder that
he had a right to make a second-level appeal, provided he do so within 60 days. Id.
Kidder’s attorney sent another letter on March 22, 2013. Id. at 4. Aetna replied with a
letter explaining that because the letter was outside the 60 days, a second review would not be
conducted. Id.
Defendants allege that Kidder’s employment ended with Tyco on March 31, 2012, and
that his termination was effective April 1, 2012. 1 Docket no. 52 at 2. As a result, they contend
his health coverage under the Plan ended on April 1, 2012. Id. Aetna was notified by Tyco of
Kidder’s termination on May 26, 2012. Id. Tyco sent Kidder a letter on May 23, 2012, notifying
him of the termination of his Plan benefits. Id. The letter stated that if Kidder wished to

1

It is unclear which of these dates is the official termination date. However, regardless of whether the termination
took place on March 31 or April 1, the Court’s analysis is the same.

2

continue his benefits via the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”), he should contact CONEXIS, Tyco’s COBRA Administrator.

Id.

Kidder

contacted CONEXIS, but despite receiving a notice from CONEXIS that his health coverage had
been terminated and that to receive COBRA coverage he would need to submit an election form
and pay a COBRA premium, Kidder failed to take such steps. Id. at 3.
Kidder claims that he was not terminated on March 31, 2012. Docket no. 46 at 4.
Rather, he alleges he was on an unpaid leave of absence. Id. However, a COBRA notice
indicates that Kidder was in fact terminated on March 31, 2012. Id. But Kidder claims this
COBRA notice was untimely, and that documents outside of the administrative record indicate
that he was not terminated on March 31. Id. at 5. Furthermore, the Plan did allow insureds to
maintain medical coverage during unpaid leaves of absences by paying the premium during the
leave of absence. Id. Kidder sent a check for $498.80 to Aetna, but it was sent back to Kidder
with a letter explaining it did not know how to apply it. Id. Kidder resent the check along with
another check for $207.20. Id. The check for $207.20 was cashed. Id.
PROCEDURAL HISTORY
On July 24, 2014, Kidder filed suit against Aetna Life Insurance Company (“Aetna”),
Tyco International Management Company as Plan Administrator for Tyco International Health
and Welfare Benefits Plan (“Tyco as Plan Administrator”), Tyco International Health and
Welfare Benefits Plan (the “Plan”), and Sedgwick Claims Management Services (“Sedgwick”)
(collectively “Defendants”). Docket no. 1. 2 His amended complaint brings both claims pursuant
to the Employee Retirement Income Security Act (ERISA) and non-ERISA claims. Docket no.
28.

2

This case was initially assigned to Senior Judge Harry Lee Hudspeth. Judge Hudspeth entered various orders, but
the case was later transferred to the undersigned judge on January 20, 2016.

3

On March 9, 2015, Kidder filed his first Motion for Summary Judgment. Docket no. 46.
It requests summary judgment be granted in Kidder’s favor on two issues. Id. at 1. First, he asks
that the Court find Aetna’s decision to deny him medical benefits for his surgery was an abuse of
discretion. Docket no. 46-4 at 1. He also moves that the Court hold Tyco as Plan Administrator
liable under 29 U.S.C. § 1132(c) for failure to provide the 2012 health plan document within 30
days of his request. Id. Defendants filed their Joint Response on April 10, 2015. Docket no. 52.
Kidder filed his Second Motion for Summary Judgment on October 16, 2015. Docket no.
55. It asks that the Court find Aetna committed substantial violations of the claim procedures set
forth by ERISA and that this should result in a remand. Id. at 9. Additionally, he again moves
that the Court find Tyco as Plan Administrator liable for allegedly failing to provide the plan
documents to him pursuant to 29 U.S.C. § 1132(c). Id. Defendants filed their Response to this
motion on November 2, 2015. Docket no. 56. This Court held a hearing on both motions on
February 16, 2016. In their Responses, Defendants urged the Court to “enter judgment in favor
of Defendants and dismiss Plaintiff’s ERISA claim with prejudice.” Docket no. 52 at 10. Thus,
the Court will construe both Responses as a motion for summary judgment. See Anderson v.
Colvin, Civ. Ac. No. 4:13-1622, 2014 WL 1052442, at *1 (S.D. Tex. Mar. 18, 2014) (construing
a defendant’s response to a motion for summary judgment that sought a dismissal as a motion for
summary judgment).
STANDARDS OF REVIEW
I.

Summary Judgment
Standard summary judgment rules still control when a Court evaluates a motion for

summary judgment in an ERISA case. Vercher v. Alexander & Alexander Inc., 379 F.3d 222,
225 (5th Cir. 2004). Summary judgment is proper when the evidence shows “that there is no

4

genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250–52 (1986). To
establish that there is no genuine issue as to any material fact, the movant must either submit
evidence that negates the existence of some material element of the nonmoving party’s claim or
defense, or, if the crucial issue is one for which the nonmoving party will bear the burden of
proof at trial, merely point out that the evidence in the record is insufficient to support an
essential element of the nonmovant’s claim or defense. Lavespere v. Niagara Machine & Tool
Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990), cert. denied, 510 U.S. 859 (1993). Once the
movant carries its initial burden, the burden shifts to the nonmovant to show that summary
judgment is inappropriate. See Fields v. City of South Houston, 922 F.2d 1183, 1187 (5th Cir.
1991).
In order for a court to conclude that there are no genuine issues of material fact, the court
must be satisfied that no reasonable trier of fact could have found for the nonmovant, or, in other
words, that the evidence favoring the nonmovant is insufficient to enable a reasonable jury to
return a verdict for the nonmovant. See Anderson, 477 U.S. at 250 n. 4. In making this
determination, the court should review all the evidence in the record, giving credence to the
evidence favoring the nonmovant as well as the “evidence supporting the moving party that is
uncontradicted and unimpeached, at least to the extent that evidence comes from disinterested
witnesses” and disregarding the evidence favorable to the nonmovant that the jury is not required
to believe. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 152 (2000).
II.

ERISA
A plan participant who is denied benefits under an ERISA plan can sue to recover them.

See 29 U.S.C. § 1132(a)(1)(B) (authorizing the cause of action). This Court has jurisdiction to

5

review determinations made by an ERISA employee benefit plan. Vega v. Nat’l Life Ins. Servs.,
Inc., 188 F.3d 287, 295 (5th Cir. 1999) (en banc) overruled on other grounds by Metro. Life Ins.
Co. v. Glenn, 554 U.S. 105, 128 (2008). A Plan Administrator’s factual determinations are
always reviewed for abuse of discretion. Vercher, 379 F.3d at 226. However, its construction of
the meaning of plan terms or plan benefit entitlement provisions is reviewed de novo unless there
is an express grant of discretionary authority in that respect; and if there is such a grant, then
review of those decisions is also for abuse of discretion. Id. Here, Kidder concedes that Aetna
has been given discretion to interpret the plan, and thus the standard of review is abuse of
discretion. Docket no. 46 at 7 n. 3.
Courts in the Fifth Circuit apply a two-step process to determine whether there is an
abuse of discretion regarding policy interpretation. Humana Health Plan, Inc. v. Nguyen, 785
F.3d 1023, 1036 (5th Cir. 2015); Stone v. UNOCAL Termination Allowance Plan, 570 F.3d 252,
257 (5th Cir. 2009); Wildbur v. ARCO Chem. Co., 974 F.2d 631, 637 (5th Cir. 1992). “First, we
determine whether the Administrator and Committee’s determination was legally correct. If so,
the inquiry ends and there is no abuse of discretion.

Alternatively, if the court finds the

administrator’s interpretation was legally incorrect, the court must then determine whether the
administrator’s decision was an abuse of discretion.” Stone, 570 F.3d at 257 (citing Crowell v.
Shell Oil Co., 541 F.3d 295, 312 (5th Cir. 2008)); see also Wildbur, 974 F.2d at 637. If the
administrator's interpretation directly contradicts the plain meaning of the plan language, then the
administrator has abused his or her discretion. Gosselink v. Am. Tel. & Tel., Inc., 272 F.3d 722,
727 (5th Cir. 2001).
For findings of fact, a claims administrator does not abuse its discretion unless the
decision is arbitrary and capricious. Meditrust Fin. Serv. Corp. v. Sterling Chem., Inc., 168 F.3d

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211, 214 (5th Cir. 1999). A decision is arbitrary or capricious if made without a rational
connection between the known facts and the decision. Dix v. Blue Cross & Blue Shield Ass’n
Long Term Disability Program, 613 F. App’x 293, 295 (5th Cir. 2015) (citing McCorkle v.
Metropolitan Life Ins. Co., 757 F.3d 452, 457 (5th Cir. 2014). Furthermore, a decision is not
arbitrary or capricious if it is supported by substantial evidence. Ellis v. Liberty Life Assurance
Co., 394 F.3d 262, 273 (5th Cir. 2004). For the factual findings to be supported by substantial
evidence, there need only be a rational connection between the known facts and the decision or
between the found facts and the evidence. See Meditrust, 168 F.3d at 215 (“A decision is
arbitrary only if ‘made without a rational connection between the known facts and the decision
or between the found facts and the evidence.’”) (quoting Bellaire Gen. Hosp. v. Blue Cross Blue
Shield of Mich., 97 F.3d 822, 828–29 (5th Cir. 1996))). Substantial evidence is “more than a
scintilla, less than a preponderance, and is such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” Ellis, 394 F.3d at 273. If the Plan fiduciary's
decision is supported by substantial evidence and is not arbitrary and capricious, it must prevail.
Id. “[R]eview of the administrator’s decision need not be particularly complex or technical; it
need only assure that the administrator’s decision fall somewhere on a continuum of
reasonableness—even if on the low end.” Holland v. Int’l Paper Co. Ret. Plan, 576 F.3d 240,
246 (5th Cir. 2009) (quoting Corry v. Liberty Life Assurance Co. of Boston, 499 F.3d 389, 398
(5th Cir. 2007)).
When assessing factual questions, this Court is constrained to the evidence before the
Plan Administrator. Robinson v. Aetna Life Ins. Co., 443 F.3d 389, 394 (5th Cir. 2006) (quoting
Vega, 188 F.3d at 299). “The administrative record consists of the relevant information made
available to the administrator prior to the complainant’s filing of a lawsuit and in a manner that

7

gives the administrator a fair opportunity to consider it.” Vega, 188 F.3d at 300. The Court may
not review evidence outside the administrative record to resolve an issue of fact. See id.
ANALYSIS
I.

Denial of Coverage
Kidder brings a claim against Aetna and the Plan for health benefits related to his surgery

in April 2012 under 29 U.S.C. § 1132(a)(1)(B). Docket no. 28 at 10. In his first Motion for
Summary Judgment, Kidder asks the Court to find that Aetna’s decision to deny coverage for his
second surgery was an abuse of discretion and to award him damages. Docket no. 46 at 9. In his
second Motion for Summary Judgment, Kidder moves that the Court determine Aetna committed
a substantial procedural violation and remand the case back to the administrator to give him an
opportunity to extend his coverage. Docket no. 55 at 9.
A. Failure to Exhaust Administrative Remedies
Before the Court addresses Kidder’s arguments, it is necessary to examine its jurisdiction
over this case. The Fifth Circuit requires claimants seeking to recover benefits from an ERISA
plan to exhaust all administrative remedies before bringing a suit to recover benefits.
Coop. Benefit Adm'rs, Inc. v. Ogden, 367 F.3d 323, 336 (5th Cir. 2004); Bourgeois v. Pension
Plan for Emps. of Santa Fe Int'l Corps., 215 F.3d 475, 479 (5th Cir. 2000). Here, Kidder failed
to timely file a second appeal, as is laid forth in Aetna’s “Appeal Process and Member Rights”
document. Docket no. 37-5 at 35; docket no. 37-2 at 13.
However, ERISA exhaustion is not necessarily a prerequisite to federal court jurisdiction.
See Chailland v. Brown & Root, Inc., 45 F.3d 947, 950 n. 6 (5th Cir. 1995) (explaining because
exhaustion is not required by ERISA, it is not prerequisite to jurisdiction). As a result, courts can
excuse a plaintiff’s failure to exhaust available administrative remedies on equitable grounds.

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McGowin v. ManPower Int’l, Inc., 363 F.3d 556, 559 (5th Cir. 2004). Thus, at the very least, the
Court has subject matter jurisdiction over these claims.
Of course, even though the Court has determined it has jurisdiction, summary judgment
may still be proper on the grounds that Kidder did not exhaust his administrative remedies and
there is no excuse for such failure. See, e.g., McGowin, 363 F.3d at 558; Glenn v. L. Ray
Calhoun & Co., 83 F. Supp. 3d 733, 741–42 (W.D. Tex. 2015). Defendants have not filed a
motion to dismiss arguing that Kidder has failed to exhaust his administrative remedies.
However, the Responses to Kidder’s Motions for Summary Judgment—which the Court has
construed as motions for summary judgment in favor of the Defendants on the issues
discussed—do briefly address the argument. They state that “Plaintiff’s failure to file a timely
second-level appeal provides a separate, sufficient ground to deny Plaintiff’s Motion.” Docket
no. 52 at 8 (citing Swanson v. Hearst Corp. Long Term Disability Plan, 586 F.3d 1016, 1018
(5th Cir. 2009)).
It seems uncontested that Kidder failed to timely file a second appeal. In his Amended
Complaint, Kidder requests that Tyco as Plan Administrator “be enjoined from claiming that
Kidder didn’t complete the administrative process by filing a second administrative appeal, if the
second appeal was mandatory rather than voluntary.” Docket no. 28 at 10. He alleges that
“[n]either the Plan Administrator nor Aetna provided sufficient information for Kidder to know
whether the health plan required a second appeal before filing suit for enforcement of the plan
terms under § 1132(a)(1)(B).” Id. But courts in the Fifth Circuit have explained that a plaintiff
must exhaust an administrative remedy even if that remedy is phrased permissively. See Long v.
Aetna Life Ins. Co., Civ. Ac. No. 14-403, 2014 WL 4072026 (E.D. La. Aug. 18, 2014).
Furthermore, “plaintiffs seeking ERISA plan benefits are bound by the plan’s administrative

9

procedures and must use them before filing suit even if they have no notice of what those
procedures are.” Bourgeois v. Pension Plan for Employees of Santa Fe Intern. Corps., 215 F.3d
475, 480 (5th Cir. 2000).
However, given that the briefing schedule entered by Judge Hudspeth did not call for
Kidder to file a reply to Defendants’ Responses, the Court has not had the opportunity to
entertain an argument from Kidder as to why summary judgment should not be granted in favor
of Defendants on the grounds of failure to exhaust his administrative remedies. While the Court
finds no evidence of futility in the administrative record, Kidder may contend that filing a second
appeal would be futile and offer competent summary judgment evidence evincing that fact. See
Bourgeois, 215 F.3d at 479 (explaining that futility is an exception to the affirmative defense of
failure to exhaust administrative remedies). This, in combination with the fact that Defendants
simply cited it as a reason to deny Kidder’s motions but did not attempt themselves to show there
was no genuine issue of material fact regarding the issue, will prevent the Court from granting
summary judgment in favor of the Defendants on the denial of Kidder’s benefits as a result of his
failure to exhaust administrative remedies. At the same time, given that documents in the
administrative record show that Kidder did not file a second appeal within the 60-day deadline,
Kidder has not shown that “there is no genuine dispute as to any material fact” and that he is
entitled to judgment as a matter of law in his claim for benefits. Fed. R. Civ. P. 56(a); Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 250–52 (1986). His motions for summary judgment on his
claim for benefits under 29 U.S.C. § 1132(a)(1)(B) are denied.
B. Abuse of Discretion
However, even if the Court did not deny Kidder’s motions on the above grounds, both
should be denied and summary judgment should be entered in favor of Defendants because the

10

administrative record shows Aetna committed no procedural violation and did not abuse their
discretion in denying Kidder’s claim.
In his first Motion for Summary Judgment, Kidder asks the Court to find that Aetna’s
decision to deny coverage for his second surgery was an abuse of discretion and to award him
damages. Docket no. 46 at 9. To support his motion, he argues that Aetna committed a
substantial procedural violation because in issuing its denial, it “just repeat[ed] a list of plan
terms that [had] the potential to cause coverage to be denied” which left “the claimant and the
court guessing as what plan terms they [chose] to rely on to deny coverage.” Id. at 7. Second,
Kidder maintains that there is not substantial evidence in the record that shows he was
terminated from his employment on March 31, 2012, because Tyco sent Kidder a confirmation
of coverage on April 9, 2012, and accepted a premium payment of $207.20 on June 5, 2012. 3
Docket no. 46 at 8. Kidder does acknowledge that the June 1, 2012, COBRA notice in the
administrative record states that he was terminated on March 31, 2012. Id. Finally, Kidder
maintains that there is no evidence in the administrative record that shows his coverage was
terminated due to non-payment of premiums. Id. at 9. For these three reasons, he argues that
Aetna’s final decision was an abuse of discretion. Id. (citing Robinson v. Aetna Life Ins. Co.,
443 F.3d 389 (5th Cir. 2006)).
In his second Motion for Summary Judgment, Kidder moves that the Court determine
Aetna committed a substantial procedural violation and remand the case back to the
administrator to give him an opportunity to extend his coverage, instead of finding the decision
was an abuse of discretion and that he should be awarded damages. Docket no. 55 at 9. Counsel

3

Kidder also encourages the Court to take note of several “Leave of Absence Direct Bills” sent by Tyco. However,
these documents are not part of the administrative record and Judge Hudspeth previously denied a motion to
supplement the administrative record. As such, the Court cannot consider them in making its determination. See
Vega, 188 F.3d at 300.

11

confirmed this position at the Court’s hearing. Hearing Tr. at 14, 27. In the motion, Kidder
argues that Tamar Williams, Aetna’s employee, committed a substantial procedural violation
because she failed to include required information in her initial denial of Kidder’s coverage.
Docket no. 55 at 7. Kidder cites to 29 C.F.R. § 2560.503-1(g), which provides:
(1) Except as provided in paragraph (g)(2) of this section, the plan
administrator shall provide a claimant with written or electronic
notification of any adverse benefit determination. Any electronic
notification shall comply with the standards imposed by 29 CFR
2520.104b–1(c)(1)(i), (iii), and (iv). The notification shall set forth,
in a manner calculated to be understood by the claimant—
(i) The specific reason or reasons for the adverse
determination;
(ii) Reference to the specific plan provisions on which the
determination is based;
(iii) A description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is
necessary . . .
29 C.F.R. § 2560.503-1(g). He alleges that he should have been told the specific reason his
coverage was terminated, rather than just that his coverage had ended. Docket no. 55 at 9.
According to Kidder, this failure severely prejudiced him, and if Aetna had done so he would
have either paid his unpaid premiums or enrolled in COBRA continuation coverage by the
required deadline. Id. at 9, 10 (citing Lafleur v. Louisiana Health Services and Indem. Co., 563
F.3d 148, 159–160 (5th Cir. 2009).
In their Responses, Defendants argue that Aetna did not abuse its discretion in denying
Kidder’s claim because his eligibility ended when his employment terminated. Docket no. 52 at
4. They point out that even if an administrator’s decision is on the “low end” of reasonableness,
it is not an abuse of discretion. Id. (citing Spenrath v. Guardian Life Ins. Co. of Am., 564 F.
App’x 93, 97 (5th Cir. 2014)). Defendants contend that Kidder’s employment ended on April 1,
2012, and Tyco informed Aetna of this fact on May 26, 2012. Id. Furthermore, Tyco was the
12

entity responsible for making determinations about Kidder’s employment, and Aetna was
“entitled to rely upon those determinations.” Id. at 5. They believe that the administrative
record contains “more than substantial evidence” to support Aetna’s decision to deny benefits
and that “Aetna did not act arbitrarily or capriciously in denying” Kidder’s claim.
Furthermore, Defendants argue that Aetna committed no procedural violation.

Id.

Id.
They

maintain that Aetna’s communication with Kidder did clearly state the reason for denial of
benefits: his coverage had ended. Id. at 6. Thus, Aetna and Tyco “more than substantially
complied with the procedural requirements of Section 1133.” Docket no. 56 at 6. The Court
agrees.
1. Substantial evidence of Kidder’s termination
First, the Court finds that there is substantial evidence in the administrative record that
Kidder had been terminated by Tyco. As a result, Aetna’s decision to deny Kidder benefits was
not arbitrary and capricious and it did not abuse its discretion.
The Fifth Circuit has explained that substantial evidence is “more than a scintilla, less
than a preponderance, and is such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.” Deters v. Sec'y of Health, Educ. & Welfare, 789 F.2d 1181,
1185 (5th Cir. 1986); see also Ellis, 394 F.3d at 273. Additionally, whether or not a plaintiff can
support his or her claim with substantial evidence is not the relevant inquiry. Ellis, 394 F.3d at
273.

Rather, a court looks at whether the plan administrator’s decision is supported by

substantial evidence. Id. (“We are aware of no law that requires a district court to rule in favor
of an ERISA plaintiff merely because he has supported his claim with substantial evidence, or
even with a preponderance. If the plan fiduciary's decision is supported by substantial evidence

13

and is not arbitrary and capricious, it must prevail.”); see also Albert v. Life Ins. Co. of N. Am.,
156 F. App’x 649, 655 (5th Cir. 2005).
For example, in Albert, a plaintiff appealed the denial of her long-term disability benefits
by the plan administrator. Id. at 650. She urged the district court to examine multiple pieces of
evidence outside of the administrative record. Id. at 653. Additionally, she maintained that
several pieces of evidence in the record should not be believed for one reason or another. Id. at
654. However, the Fifth Circuit upheld the district court’s grant of summary judgment in favor
of the plan administrator. Id. at 655. It explained that the district court was correct in its
decision not to consider evidence from outside the administrative record and that a plan
administrator’s decision to deny benefits does not have to be indisputable, but merely based on
some evidence within the record. Id. (citing Vega, 188 F.3d at 299).
The administrative record in this case contains “more than a scintilla” of evidence that
Kidder was terminated on March 31, 2012, and that was the reason Aetna denied his claim for
benefits. A screenshot of an Aetna file shows that Aetna was told by Tyco that Kidder had been
terminated on that date. Docket no. 37-4 at 4. That file listed “Termination” as a “Qualifying
Event” and noted that Kidder needed to elect COBRA coverage by August 3, 2012.

Id.

Furthermore, there is a Tyco personnel form that states Kidder was terminated as of March 31,
2012. Docket no. 37-4 at 15.
Moreover, the administrative record shows that Kidder had notice that his benefits were
denied because he had been terminated. A letter from CONEXIS to Kidder sent June 1, 2012,
states that his coverage ended because he had been terminated, and that the date of coverage loss
was March 31, 2012. Docket no. 37-3 at 22. This letter also instructed Kidder that if he wished
to continue his coverage, he needed to complete a COBRA election form and pay a COBRA

14

premium. Id. The administrative record also shows Kidder called and spoke to someone about
what he needed to do to elect COBRA coverage. Docket no. 37-4 at 5.
These documents provide “more than a scintilla” of evidence that Aetna denied Kidder’s
claim for benefits because it had been told by Tyco that Kidder had been terminated. Such a
decision by Aetna has a “rational connection” to the known facts—Kidder had been terminated,
and thus was no longer eligible for benefits. See Meditrust, 168 F.3d at 215. This decision was
supported by substantial evidence and was thus not arbitrary and capricious. As a result, Aetna’s
decision was not an abuse of discretion and must prevail. See Ellis, 394 F.3d at 273.
2. No substantial procedural violation
Second, the Court concludes that there is no question of material fact and that Aetna did
not commit a substantial procedural violation. 29 U.S.C. § 1133(1) provides that an ERISA plan
must “provide adequate notice in writing to any participant or beneficiary whose claim for
benefits under the plan has been denied, setting forth the specific reasons for such denial . . . .”
29 U.S.C. § 1133 (2012). “Challenges to ERISA procedures are evaluated under the substantial
compliance standard.” Robinson v. Aetna Life Ins. Co., 443 F.3d 389, 392–93 (5th Cir. 2006)
(citing Lacy v. Fulbright & Jaworski, 405 F.3d 254, 257 (5th Cir. 2005); Hackett v. Xerox Corp.
Long-Term Disability Income Plan, 315 F.3d 771, 775 (7th Cir. 2003); Marks v. Newcourt
Credit Group, Inc., 342 F.3d 444, 460 (6th Cir. 2003). As a result, “technical noncompliance” is
excused so long as “the purposes of section 1133” are fulfilled. Id. at 493 (citing White v. Aetna
Life Ins. Co., 210 F.3d 412, 414 (D.C. Cir. 2000)). The Fifth Circuit has previously explained
that “[t]he purpose of section 1133 is to . . . ensure meaningful review of [a] denial [of benefits.”
Rossi v. Precision Drilling Oilfield Services Corp. Employee Benefits Plan, 704 F.3d 362, 367–
68 (5th Cir. 2013).

15

Here, Kidder was provided the specific reason his benefits were denied: his coverage had
been terminated per Tyco’s instructions. See docket no. 37-2. Kidder was told:
Our records show that Mr. Kidder's coverage ended on April 1,
2012; therefore, the claims are not eligible for payment. If this
information is incorrect in any kind of way, the employer needs to
be contacted. Aetna does not certify eligibility, as it is the
employer's responsibility.
Id. Kidder seems to argue that Aetna was responsible for informing him why his coverage was
terminated by Tyco. However, the statute merely requires Aetna to inform him why his benefits
were denied—a different inquiry. Moreover, the substantial compliance standard looks at “all
communications between an administrator and plan participant to determine whether the
information provided was sufficient under the circumstances.” See Moore v. LaFayette Life Ins.
Co., 458 F.3d 416, 436 (6th Cir. 2006).

Here, Kidder was aware that the reason Aetna

considered his coverage to have ended was because Tyco had terminated him—the COBRA
letter from CONEXIS stated as such, and Kidder made a phone call confirming his notice of
such. Docket no. 37-3 at 22; docket no. 37-4 at 5.
The Court has determined that there is no question of material fact and that Aetna did not
commit a substantial procedural violation. Additionally, as explained above, the Court finds that
Aetna did not abuse its discretion in denying Kidder’s claim for benefits because there is
substantial evidence in the administrative record that Kidder had been terminated, and thus its
decision was neither arbitrary nor capricious. As a result, Kidder’s Motions for Summary
Judgment are denied as to his claim for benefits under 29 U.S.C. § 1132(a)(1)(B). Defendants’
request for judgment in favor of Defendants found in their Responses—construed by the Court as
motions for summary judgment—are granted as to this claim.

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II.

Failure to Provide the Plan Documents
Kidder brings a claim against Tyco as Plan Administrator under 29 U.S.C. § 1132(c) for

failing to provide him with plan documents as is required by 29 U.S.C. § 1024(b)(4). Docket no.
28 at 10. In both motions for summary judgment, he argues that he sent four written requests for
information to Tyco as Plan Administrator between May 20, 2013, and March 6, 2014, and all
four were ignored. Docket no. 46 at 9. The first three requests are part of the administrative
record. Docket nos. 37-1, 37-2.
Tyco as Plan Administrator claims it did not receive any of the four requests and thus
should not be faulted for its failure to respond. Docket no. 52 at 8. It maintains that its failure
was caused by matters reasonably beyond its control, which would exempt it from liability under
the statute. Id. Furthermore, Tyco as Plan Administrator argues that it should not be held liable
for three other reasons. Id. First, it alleges for the first three letters, Kidder was “not requesting
‘a copy of the latest updated summary plan description . . . or other instruments under which the
plan is established or operated’” and thus the request was not within the narrow confines of 29
U.S.C. § 1024(b)(4). Id. Second, Tyco as Plan Administrator argues that the first three requests
for information were sent to the wrong entity and wrong address. Id. at 9. Finally, as to the last
request, it contends that the deadline for Kidder to file a second appeal had expired more than a
year before the date of the request, and thus, any failure to provide the Plan documents could not
have prejudiced Kidder’s ability to challenge Aetna’s determination. Id. at 10.
29 U.S.C. § 1024(b)(4) requires plan administrators to, “upon written request of any
participant or beneficiary, furnish a copy of the latest updated summary [ ] plan description, and
the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract,
or other instruments under which the plan is established or operated.” 29 U.S.C. § 1024(b)(4). If

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a plan administrator fails to comply with this requirement, courts have discretion to impose a
penalty of up to $100 per day. 29 U.S.C. § 1132(c)(1)(B); 29 C.F.R. § 2575.502c–1.
The imposition of a statutory penalty is within the discretion of the district court. Paris v.
Profit Sharing Plan for Emp. of Howard B. Wolf Inc., 637 F.2d 357, 362 (5th Cir. 1981). To
make this determination, courts consider: “(1) bad faith by the administrator, (2) the length of
delay, (3) the number of requests, (4) the documents withheld, and (5) the existence of any
prejudice to the plan participant.” Thomason v. Metro. Life Ins. Co., Civ. Ac. No. 3:14-CV0086-P, 2016 WL 791044, at *7–8 (N.D. Tex. Feb. 25, 2016) (citing Romero v. SmithKline
Beecham, 309 F.3d 113, 120 (3d Cir. 2002); Friz v. ADS Power Res., Inc., Civ. Ac. No. 3:00–
CV–1116–D, 2001 WL 732197, at *4 (N.D. Tex. June 27, 2001)). While a plaintiff is not
required to show he was prejudiced in order to be entitled to penalty damages under the statute,
the Fifth Circuit has suggested that a court should consider it in exercising its discretion.
Godwin v. Sun Life Assur. Co. of Canada, 980 F.2d 323, 327 (5th Cir. 1992).
Additionally, the Fifth Circuit has held that “[a]s a penalty provision section 1132(c)
must be strictly construed.” Fisher v. Metro. Life Ins. Co., 895 F.2d 1073, 1077 (5th Cir. 1990).
In Fisher, the plaintiff requested “a copy of the policies covering [her] contract for salary
continuation.” Id. The court ruled that this request did not meet the narrow confines of 29
U.S.C. 1024(b)(4). Id. Thus, the district court was within its discretion in deciding to decline to
award penalty damages. Id.
A. First Three Requests
At the Court’s February 16, 2016 hearing, counsel for Kidder conceded that the first
three letters and any failure by Tyco as Plan Administrator to respond to them do not entitle
Kidder to penalty damages under 29 U.S.C. § 1132(c). Hearing Tr. at 24. As Defendants point

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out and Kidder has conceded, these requests were for documents related to the cancellation of
Kidder’s coverage, not the documents listed in 29 U.S.C. 1024(b)(4). Docket no. 56 at 11.
Moreover, the requests were sent to the wrong organization and the wrong address. Id. The
Summary Plan Descriptions state that any requests for Plan documents should be sent to Tyco
International Management Company, 9 Roszel Road, Princeton, New Jersey, 08540. Docket no.
33 at 64. But Kidder sent the first three requests to Tyco Benefits, P.O. Box 8269, Princeton,
New Jersey, 08543. Id. at 8, 14, 26. Other courts in the Fifth Circuit have declined to award
penalty damages when a plaintiff sends his or her request for Plan documents to the wrong
address. See Mouton v. Mobil, Civ. Ac. No. H-00-1403, 2001 WL 963957, at *10–11 (S.D. Tex.
June 18, 2001). Given that these three letters did not specifically seek documents enumerated in
29 U.S.C. 1024(b)(4), were sent to the wrong entity at the wrong address, and that Kidder has
conceded the issue, the Court finds that Kidder is not entitled to under 29 29 U.S.C. § 1132(c) for
the first three requests. Kidder’s motions for summary judgment on these claims are denied and
Defendant’s request for judgment as to these claims are granted.
B. Fourth Request
The fourth request for Plan documents sent by Kidder’s counsel does specifically ask for
“the plan document covered by Mr. Kidder in 2012.” Dahl Aff. at 2. It was sent to the correct
address and the correct entity. Id. However, as Defendants point out, this request was sent more
than a year after Kidder’s deadline to file a second appeal had expired. Docket no. 56 at 10.
Additionally, Kidder has alleged no facts that indicate any bad faith on the part of the
administrator or the existence of any prejudice to him in preparing for this lawsuit.
Thomason, 2016 WL 791044 at *7–8.

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See

Courts in the Fifth Circuit regularly deny a request for penalty damages when the plaintiff
does not allege bad faith by the defendant or show that it has been somehow prejudiced. See,
e.g., Godwin, 980 F.2d at 327 (determining that the district court’s decision not to award penalty
damages because plaintiff was not prejudiced was not an abuse of discretion); Shelby County
Health Care Corp. v. Genesis Furniture Indus., Inc., 100 F. Supp. 3d 577, 585 (N.D. Miss.
2015); Mouton, 2001 WL 963957 at *10–11. In Mouton, the plaintiff argued that he had been
prejudiced by the defendant’s failure to provide him the plan documents because he was
“‘hampered’ in his ability to prepare for the lawsuit,” experienced “frustration and aggravation,”
and was “prevented from knowing the reason for denial of benefits.” Id. at 10. In spite of these
allegations, the court determined he had not been prejudiced because the documents did not
contain information that “would have materially added to the Administrator’s explanation for the
denial of benefits” and the documents were provided to the plaintiff early on in the lawsuit. Id.
at 11. As a result, the court declined to award penalty damages. Id.
Similarly, the document requested here would not have offered Kidder a more detailed
explanation as to why his benefits were denied. Even if it had, the request was not sent until well
after Kidder could no longer file a second appeal, and the document was provided to Kidder well
in advance of his deadline to file his brief in this lawsuit. Kidder has not shown that he was
prejudiced by Tyco’s failure to respond to this fourth request, and thus the Court will exercise its
discretion and decline to award penalty damages under 29 U.S.C. § 1132(c). Kidder’s motions
for summary judgment on this fourth request are denied and Defendants’ request for judgment as
a matter of law as to this claim is granted.

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CONCLUSION
Plaintiff Charles Kidder’s first and second Motions for Summary Judgment (docket nos.
46 and 55) are DENIED. Additionally, the Court construes Defendants’ Responses thereto
(docket nos. 52 and 56) as motions for summary judgment. Those motions are GRANTED. The
Court finds Defendants are entitled to judgment as a matter of law as to Kidder’s claim for
benefits for his back surgery under 29 U.S.C. § 1132(a)(1)(B) and Kidder’s claim for penalty
damages under 29 U.S.C. § 1132(c). Those claims are dismissed on the merits.
The only remaining claims in this case are Kidder’s state law claims related to the denial
of his short-term disability benefits. The parties are hereby ordered to submit a proposed
scheduling order for those remaining claims by April 11, 2016.
It is so ORDERED.
SIGNED this 28th day of March, 2016.

XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE

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