The opinion of the court was delivered by: Hon. Janet T. Neff
In this ERISA*fn1 action on behalf of the estate of her deceased husband, plaintiff Linda Huizing seeks reversal of defendant Metropolitan Life Insurance Company's denial of her claim for supplemental life insurance benefits under a policy issued by defendant to her deceased husband's employer, Aggregate Industries, Inc. ("Aggregate"). The supplemental life insurance benefits fall under an employee welfare benefit plan ("Plan") governed by ERISA. Defendant serves as the plan administrator and determines eligibility for benefits. The parties have filed cross-motions for judgment on the administrative record.*fn2 After careful consideration, for the reasons that follow, the Court concludes that defendant failed to provide plaintiff an opportunity for a full and fair review of her claim as required by 29 U.S.C. § 1133. Accordingly, this case must be remanded for further administrative review of plaintiff's claim in the first instance.
Plaintiff's husband, Louis Huizing, was employed by Michigan Colprovia, and subsequently by its successor, Aggregate Industries, Inc., both asphalt manufacturers (Compl. ¶¶ 7, 9; AR 91-92, 122). Huizing was covered under a group life insurance policy issued to Aggregate, initially issued by Hartford Life Insurance Company, but transferred to defendant effective January 1, 2007 (Compl. ¶¶ 8, 12; AR 91-92). The life insurance policy coverage included $50,000 of "basic" life insurance, paid for by Aggregate, and $100,000 of "supplemental" life insurance to which employees contributed via payroll deduction (Compl. ¶¶ 4, 14-15; AR 91-92).
Because much of Aggregate's workforce was typically on layoff during the winter months, the life insurance Plan contained provisions for continuation of coverage during the winter months by Aggregate's continued payment of premiums, from the time of layoff, usually December 1, until the employees' return to work on or around April 1 of the next year (Compl. ¶¶ 9, 14-15; AR 92). Under these provisions, the premium payments would then be reimbursed by the employee upon return from layoff in the spring (Compl. ¶¶ 14-15; AR 92).
In December 2006, Huizing went on winter lay-off (Compl. ¶ 10; AR 92). During his lay-off, on March 30, 2007, Huizing was diagnosed with terminal metastatic lung cancer, and he died on April 15, 2007, thus not returning to work for the 2007 season (Compl. ¶ 11; AR 92, 123). Following Huizing's death, plaintiff filed a claim for life insurance benefits (Compl. ¶ 17; AR 93).
Defendant paid the "basic" life insurance coverage of $50,000, but declined coverage for the $100,000 supplemental life insurance (Compl. ¶ 18; AR 93).
Defendant's basis for denying coverage was that Huizing "was not actively at work on or after the contract effective date of January 1, 2007 ." and therefore was not in an "Eligible Class prior to his passing" (Compl. ¶ 19; AR 93, 125). Plaintiff appealed the denial pursuant to the Plan, and in a letter dated July 7, 2008, defendant denied the appeal, again on the ground that Huizing was not actively at work at the time defendant's plan became effective, but stating as follows:
The plan states "You will be eligible for insurance on the later of: January 1, 2007; and the first date of the calendar month coincident with or next following the date You complete the Waiting Period that applies to such insurance". Furthermore, "Your insurance will end on the earliest of: with respect to contributory insurance, the end of the period for which the last premium has been paid by You".
According to the Employer's Statement, Mr. Huizing's date last worked was December 1, 2006, at which time premium payments had stopped. The Group Life Insurance policy for Aggregate Industries became effective with MetLife on January 1, 2007. You believe the initial determination was wrong because the Actively at Work provision of the MetLife policy states "You will be deemed to be Actively at Work during weekends or Policyholder approved vacations, absences, holidays or business closures if You were Actively at Work on the last scheduled work day preceding such time off.["] As described above and in the initial denial letter, Mr. Huizing was not actively at work at the time that the MetLife plan became effective. Therefore, this claim is not the liability of MetLife. (AR 98).
Following defendant's denial of her administrative appeal, plaintiff filed this civil action.
The key issue for decision is whether, as argued by plaintiff, defendant effectively waived its right to assert the failure to pay supplemental life insurance premiums as a defense in this action even though defendant did not assert this ground for claim denial, if at all, until the July 7, 2008 letter denying plaintiff's administrative appeal; or whether, as argued by defendant, defendant's belated defense is a procedural violation that requires that this case be remanded for further administrative processing by defendant to provide plaintiff a full and fair review of her claim.
The Court concludes that under the circumstances of this case, remand is the proper remedy for ...