United States District Court, E.D. Michigan, Southern Division
CHERYL L. WALLACE, Plaintiff,
BEAUMONT HEALTHCARE EMPLOYEE WELFARE BENEFIT PLAN f/k/a OAKWOOD HEALTHCARE, INC. EMPLOYEE WELFARE BENEFIT PLAN, HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, and RELIANCE STANDARD LIFE INSURANCE CO., Defendants.
OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR
JUDGMENT [ECF NO. 43] AND DENYING DEFENDANT RELIANCE STANDARD
LIFE INSURANCE COMPANY'S MOTION FOR JUDGMENT [ECF NO.
HONORABLE LINDA V. PARKER JUDGE.
an action for long term disability (“LTD”)
benefits pursuant to the Employee Retirement Income Security
Act of 1974 (“ERISA”). Plaintiff Cheryl L.
Wallace (“Wallace”) filed the lawsuit on February
19, 2016, against the following Defendants: Beaumont
Healthcare Employee Welfare Benefit Plan, f/k/a Oakwood
Healthcare, Inc. Employee Welfare Benefit Plan
(“Plan”); Hartford Life and Accident Insurance
Company (“Hartford”); and Reliance Standard Life
Insurance Company (“Reliance”). In an Amended
Complaint filed May 20, 2016, Wallace asserts these claims:
(I) Action under ERISA Section 502(a)(1)(B), 29 U.S.C. §
1132(a)(1)(B), to recover full employee benefits against
Defendants Hartford and Reliance;
(II) Violation of Procedural Due Process under ERISA Section
503, 29 U.S.C. § 1133, against Defendants Hartford and
(III) Action under ERISA Section 502(a)(3), 29 U.S.C. §
1132(a)(3), against Defendants Beaumont EBP [the Plan] and
Reliance for appropriate equitable relief.
(ECF No. 16.)
opinion and order issued January 18, 2017, the Court
dismissed Counts II and III of Wallace's Amended
Complaint. (ECF No. 36.) Pursuant to a stipulated order
entered February 28, 2017, Wallace's claims against
Hartford were dismissed without prejudice. (ECF No. 41.)
Presently pending before the Court are cross-motions for
judgment on the administrative record and for declaratory
judgment, filed by Wallace and Reliance on May 22, 2017. (ECF
Nos. 43, 44.) The parties have fully briefed those motions.
Finding the facts and legal arguments adequately presented in
their briefs, the Court is dispensing with oral argument
pursuant to Eastern District of Michigan Local Rule 7.1(f).
Factual and Procedural Background
began working at Oakwood Healthcare, Inc. Health System
(“Oakwood”) as a registered nurse on April 11,
2005. (Am. Compl. ¶ 11, ECF No. 16; Admin. R.
(“A.R.”) at 40, ECF No. 42-1 at Pg ID 768.)
Incident to her employment, Wallace was a participant in the
Oakwood Healthcare, Inc. Employee Welfare Benefit Plan, which
afforded LTD benefits to eligible employees. (Am. Compl.
¶¶ 4, 5.) Hartford served as the Plan's insurer
until Oakwood cancelled its contract with Hartford, effective
January 1, 2013. (Id. ¶ 25.) On that date,
Reliance became the Plan's insurer. (Id. ¶
interim, on October 8, 2012, Wallace stopped working at
Oakwood due to a serious and worsening health
condition. (Id. ¶ 11.) She remained off
work from October 12, 2012 through April 7, 2013.
(Id. ¶ 27.) Wallace returned to work on April
7, 2013, but found it necessary to take a medical leave of
absence again starting May 12, 2013. (Id.
¶¶ 28, 29.) Wallace was not able to return to work
thereafter. (Id. ¶ 30.) She submitted a claim
for short-term disability benefits, which was approved for
the period July 15, 2013 through November 22, 2013. (A.R. at
156, ECF No. 42-1 at Pg ID 884.) She thereafter filed a claim
for LTD benefits with Hartford and Reliance. (Am. Compl.
¶ 31; ECF No. 16 at Pg ID 157.)
denied Wallace's claim on the basis that she failed to
satisfy the eligibility requirements in Hartford's
insurance policy-specifically the 180-day Elimination Period.
(Id. ¶ 32.) In making this determination,
Hartford maintained that Wallace's first date of actual
disability was October 12, 2012, rather than October 8, 2012.
denied Wallace's claim based on the Pre-Existing
Condition exclusion in its policy. (Id. ¶ 36;
A.R. at 91-93, ECF No. 42-1 at Pg ID 819-21.) Reliance
maintained that, pursuant to the terms of its insurance
contract, Wallace did not become insured under the policy
until April 7, 2013, when she returned to active work from
her medical leave. (A.R. at 91-92, ECF No. 42-1 at Pg ID
819-20.) Reliance determined that Wallace then became
disabled on May 13, 2013, when she again went on medical
leave. (Id.) Reliance concluded that Wallace had
been receiving medical treatment, consultation, care or
services during the three months immediately before the
effective date of insurance and that, therefore, the
Pre-Existing Condition clause of the insurance policy barred
her claim for LTD benefits. (Id.) Wallace did not
submit a written request seeking review of Reliance's
decision, but instead filed this lawsuit on February 19,
Standard of Review
parties agree that a de novo standard applies to this
Court's review of Reliance's decision to deny Wallace
benefits. This de novo standard of review applies to
the plan administrator's factual determinations and legal
conclusions. Wilkins v. Baptist Healthcare Sys.,
Inc., 150 F.3d 609, 613 (6th Cir. 1998) (citing
Rowan v. Unum Life Ins. Co., 119 F.3d 433, 435 (6th
Cir. 1997)). A court's review is limited to the record
that was before the plan administrator. Id. at 615
(citing Perry v. Simplicity Eng'g, 900 F.2d 963,
966 (6th Cir. 1998)).
court reviews a denial of ERISA benefits de novo, it must
determine “whether or not it agrees with the decision
under review.” Perry, 900 F.2d at 966.
“The administrator's decision is accorded no
deference or presumption of correctness.” Hoover v.
Provident Life & Accident Ins. Co., 290 F.3d 801,
809 (6th Cir. 2002). “[T]he court must determine
whether the administrator properly interpreted the plan and
whether the insured was entitled to benefits under the
ERISA, “every employee benefit plan [must] be
established and maintained pursuant to a written instrument,
” 29 U.S.C. § 1132(a)(1), “specify[ing] the
basis on which payments are made to and from the plan.”
Id. § 1102(b)(4). An insured's claim for
benefits “stands or falls by ‘the terms of the
plan[.]'” Kennedy v. Plan Adm'r for DuPont
Sav. & Inv. Plan, 555 U.S. 285, 300 (2009) (quoting
29 U.S.C. § 1132(a)(1)(B)). ERISA requires benefit plans
to be “written in a manner calculated to be understood
by the average plan participant.” 29 U.S.C. §
1022(a). As such, “[i]n interpreting a plan, the
administrator must adhere to the plain meaning of its
language as it would be construed by an ordinary
person.” Morgan v. SKF USA, Inc., 385 F.3d
989, 992 (6th Cir. 2004).
Whether Reliance Correctly Determined that its
Policy's Pre-existing Condition Clause Barred
Wallace's Claim for LTD Benefits
determination that the Pre-Existing Condition clause of the
LTD policy barred Wallace's claim for benefits was
premised on its determination that Wallace was not covered
under the plan until April 7, 2013, when she returned to work
from a leave of absence.
respect to the effective date of individual insurance, the
policy provides in relevant part: “The insurance
… will not go into effect on a date he/she is not
Actively at Work because of a Sickness or Injury. The
insurance will go into effect after the person is Actively at
Work for one (1) full day in an Eligible Class, as shown on
the Schedule of Benefits page.” (A.R. at 17, ECF No.
42-1 at Pg ID 745.) Thus while the policy was effective
January 1, 2013, Reliance contends that the effective date of
individual insurance for Wallace was not until April 7, 2013,
when she returned to work. Next, because Wallace remained at
work for less than 40 days after the date of her coverage,
Reliance maintains that the policy's PreExisting
Condition exclusion was triggered.
contends that she was eligible for coverage under the policy
effective January 1, 2013, pursuant to its Transfer of
Insurance Coverage provisions. These provisions state in
If an employee was covered under any group long term
disability insurance plan maintained by you prior to this
Policy's Effective Date, that employee will be insured
under this Policy, provided that he/she is Actively at Work
and meets all of the requirements for ...