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Nor-Cote, Inc. v. Reliance Standard Life Insurance Co.

United States District Court, E.D. Michigan, Southern Division

May 8, 2019

NOR-COTE, INC. and STANLEY GROUSE, Plaintiffs,
v.
RELIANCE STANDARD LIFE INSURANCE COMPANY and TMTA INSURANCE AGENCY, LLC, Defendants.

          OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR JUDGMENT AND DENYING DEFENDANT'S MOTION FOR JUDGMENT [1]

          BERNARD A. FRIEDMAN, SENIOR UNITED STATES DISTRICT JUDGE.

         This matter is presently before the Court on cross-motions for judgment on the administrative record [docket entries 14 and 15]. Each side has responded to the other's motion and replied. Pursuant to E.D. Mich. LR 7.1(f)(2), the Court shall decide these motions without a hearing.

         Background

         This case concerns disputed coverage under a group life insurance policy issued by Reliance Standard Life Insurance Company (“Reliance”) to Nor-Cote, Inc. (“Nor-Cote”) for the benefit of its employees. Barbara Grouse, a co-owner and officer of Nor-Cote, died in January 2018. Plaintiff, Barbara Grouse's spouse and designated beneficiary, filed a claim for the death benefit (Administrative Record, hereinafter “AR, ” at 85). On March 1, 2018, defendant denied the claim on the grounds that the decedent was not a full-time employee, as required by the policy (AR 70-72). On March 7, 2018, plaintiff appealed on the grounds that Barbara Grouse, as a co-owner and officer of the company, “worked 30 to 40 hours per week and did not punch a time card” (AR at 87). On May 8, defendant reaffirmed its decision that “Ms. Grouse did not satisfy the definition of ‘Fulltime,' she was not in a class eligible for insurance, and therefore, no insurance coverage under the Policy was in effect at the time of her death” (AR at 77; emphasis in original). Plaintiff then brought the instant action in state court for breach of contract. Pursuant to Metropolitan Life Ins. Co. v. Gen. Motors Corp., 481 U.S. 58 (1987), defendant timely removed the case to this Court, as plaintiff's claim seeks benefits under an employee benefit plan and is therefore preempted by ERISA. See 29 U.S.C. § 1132(a)(1)(B).

         Legal Standards

         In Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 619 (6th Cir. 1998) (Gilman, J., concurring), the Sixth Circuit held that when deciding a case such as this, the Court “should conduct a de novo review based solely upon the administrative record, and render findings of fact and conclusions of law accordingly.” As this Court has noted, “[c]ourts do not use summary judgment procedures for deciding [ERISA] benefit claim denials; rather, parties can file cross motions for judgment on the administrative record . . . .” Zack v. McLaren Health Advantage, Inc., 340 F.Supp.3d 648, 655 (E.D. Mich. 2018).

         The parties agree that the Court's review is de novo. See Def.'s Br. at 8 (PageID.94), Pl.'s Br. at 10 (PageID.164). “When conducting a de novo review, the district court must take a ‘fresh look' at the administrative record but may not consider new evidence or look beyond the record that was before the plan administrator.” Wilkins, 150 F.3d at 616. This standard of review applies “with respect to both the plan administrator's interpretation of the plan and the plan administrator's factual findings.” Id. The review “is without deference to the decision or any presumption of correctness, based on the record before the administrator.” Perry v. Simplicity Eng'g, 900 F.2d 963, 966 (6th Cir. 1990). Further,

[w]hen interpreting ERISA plan provisions, general principles of contract law apply; unambiguous terms are given their “plain meaning in an ordinary and popular sense.” Farhner v. United Transp. Union Discipline Income Protection Program, 645 F.3d 338, 343 (6th Cir. 2011) (quoting Williams v. Int'l Paper Co., 227 F.3d 706, 711 (6th Cir. 2000)). Where plan language is ambiguous, extrinsic evidence may be considered to discern the purpose of the plan as the average employee would have reasonably understood it. Kolkowski v. Goodrich Corp., 448 F.3d 843, 850 (6th Cir. 2006).

Lipker v. AK Steel Corp., 698 F.3d 923, 928 (6th Cir. 2012).

         Procedural History and Record Evidence

         The policy at issue provides life insurance for “active, Full-time employee[s]” who fall within one of four “eligible classes” (AR at 7). The parties agree that if Barbara Grouse worked full-time she fell within Class 1, which encompasses officers “who had supplemental life and accidental death and dismemberment insurance coverage with the prior carrier on June 30, 2006 . . . .” Id. The parties disagree as to whether she was “active, Full-time.” The policy does not define “active” by itself, but it does state, albeit ungrammatically:

“Actively at work” and “active work” means the person actually performing on a Full-time basis each and every duty pertaining to his/her job in the place where and the manner in which the job is normally performed. This includes approved time off such as vacation, jury duty and funeral leave, but does not include time off as a result of injury or illness.

(AR at 9). The policy also states that “‘Full-time' means working for you for a minimum of 30 hours during a person's regularly scheduled work week.” Id.

         On the claim form plaintiff submitted on January 31, 2018, he indicated that Barbara Grouse died on January 15, 2018; that her “Occupation/Title/Position” was “owner/secretary”; that her “Salary on Last Benefit Change Date Per Policy” was $10, 000; that her employment status was “active”[2]; that the “Number of Hours Employee Scheduled to Work Per Week in the Place Where the Job is Normally Performed” was “10”; that the ...


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