Opinion
CIVIL ACTION NO. 1:17-CV-4431-RWS
2021-10-12
Faheem POTTAYIL and Farzana Shihabudheen, Individually and as Next Friend and Guardian of her minor child, Sameeh Pottayil, Plaintiffs, v. THYSSENKRUPP ELEVATOR CORPORATION and Hartford Life and Accident Insurance Company, Defendants.
Glenn R. Kantor, Pro Hac Vice, Kantor & Kantor, Northridge, CA, Richard J. Dreger, Richard J. Dreger, Attorney at Law, P.C., Roswell, GA, Jerry A. Lumley, Lumley & Harper, LLC, Macon, GA, for Plaintiffs. David S. Fryman, Pro Hac Vice, Shaina E. Hicks, Ballard Spahr Andrews, LLP, Philadelphia, PA, Sarah Tope Reise, Troutman Pepper Hamilton Sanders LLP, Atlanta, GA, for Defendant Thyssenkrupp Elevator Corporation. Elizabeth Johnson Bondurant, Nikole Marie Crow, Womble Bond Dickinson (US) LLP, Atlanta, GA, Sarah Tope Reise, Troutman Pepper Hamilton Sanders LLP, Atlanta, GA, for Defendant Hartford Life and Accident Company.
Glenn R. Kantor, Pro Hac Vice, Kantor & Kantor, Northridge, CA, Richard J. Dreger, Richard J. Dreger, Attorney at Law, P.C., Roswell, GA, Jerry A. Lumley, Lumley & Harper, LLC, Macon, GA, for Plaintiffs.
David S. Fryman, Pro Hac Vice, Shaina E. Hicks, Ballard Spahr Andrews, LLP, Philadelphia, PA, Sarah Tope Reise, Troutman Pepper Hamilton Sanders LLP, Atlanta, GA, for Defendant Thyssenkrupp Elevator Corporation.
Elizabeth Johnson Bondurant, Nikole Marie Crow, Womble Bond Dickinson (US) LLP, Atlanta, GA, Sarah Tope Reise, Troutman Pepper Hamilton Sanders LLP, Atlanta, GA, for Defendant Hartford Life and Accident Company.
OPINION AND ORDER
RICHARD W. STORY, United States District Judge
This case comes before the Court on Defendant Thyssenkrupp Elevator Corporation's Motion for Summary Judgment [Dkt. 89] and Defendant Hartford Life and Accident Insurance Company's Rule 52(a) Motion for Judgment [Dkt. 91]. The Court, after a careful review of the record, enters the following Opinion and Order.
BACKGROUND
In this lawsuit, Plaintiffs Faheem Pottayil and Farzana Shihabudheen, individually and as next friend and guardian of her minor child, Sameeh Pottayil, seek additional supplemental life insurance benefits offered by Defendant Thyssenkrupp Elevator Corporation ("TKE") to its employees through Defendant Hartford Life and Accident Insurance Company ("Hartford"). The benefits are under Group Policy No. GL-677112 ("the Group Policy"), which was issued to TKE to fund supplemental term life insurance and other benefits under an employee welfare benefit plan sponsored by TKE and governed by the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1001 et seq.
I. Factual Background
Beginning on or around February 2, 2009, and continuing until his death, Shihabudheen Pottayil ("Mr. Pottayil") was an employee of TKE. (Statement of Undisputed Material Facts of Def. TKE ["SUMF"], Dkt. [89-2], at ¶ 1.) Mr. Pottayil was the husband of Plaintiff Farzana and the father of Plaintiffs Faheem and Sameeh. ( Id. at ¶ 2.)
In March 2009, Mr. Pottayil enrolled in the Supplemental Group Life Insurance Plan ("the Plan"), an ERISA-qualified welfare benefit plan offered by TKE to its employees. ( Id. at ¶ 3.) The Plan is fully insured by the Hartford Life and Accident Insurance Company ("Hartford"), which also acts as the Plan's Claims Administrator. ( Id. ) Mr. Pottayil designated Plaintiffs as his beneficiaries under the Plan. ( Id. at ¶ 4.) TKE was the Plan Administrator. ( Id. at ¶ 5.)
Upon enrolling in the Plan, Mr. Pottayil initially elected Supplemental Life Insurance Coverage in an amount equal to his annual earnings (the "Guaranteed Issue Amount") to become effective March 4, 2009. ( See Dkt. [76] at ¶ 16; Dkt. [78] at ¶ 16.) During the 2013 open enrollment period, Mr. Pottayil elected to increase his Supplemental Life Insurance Coverage from the Guaranteed Issue Amount to an amount equal to give (5) times his annual earnings. ( See Dkt. [76] at ¶ 19; Dkt. [78] at ¶ 19.)
Upon the commencement of the 2013 Plan year and continuing until Mr. Pottayil's death more than three years later, TKE deducted premiums from Mr. Pottayil's salary every month for Supplemental Life Insurance Coverage for Mr. Pottayil in the amount sufficient to pay a monthly premium for life insurance coverage in an amount equal to five times Mr. Pottayil's annual earnings. ( See Dkt. [76] at ¶ 20; Dkt. [78] at ¶ 20.)
Mr. Pottayil died on April 5, 2016. (Dkt. [89-2] at ¶ 6.) Following Mr. Pottayil's death, Plaintiffs made a claim for the Supplemental Life Insurance Coverage benefit in the amount of $848,000, which was equal to five times Mr. Pottayil's annual earnings. ( See Dkt. [76] at ¶ 24; Dkt. [78] at ¶ 24.) On August 9, 2016, Hartford approved the portion of Plaintiffs’ claim equal to the Guaranteed Issue Amount of $170,000. ( See Dkt. [76] at ¶ 25; Dkt. [78] at ¶ 25.) On August 11, 2016, Hartford rejected Plaintiffs’ initial claim for the additional $678,000 in supplemental life insurance benefits. ( See Dkt. [76] at ¶ 26; Dkt. [78] at ¶ 26; Dkt. [89-2] at ¶ 7.)
Plaintiffs object to this fact and several other facts as irrelevant and of no consequence in determining TKE's Motion for Summary Judgment. (Pls.’ Resp. to Def. TKE's Mot. For Summ. J. [Dkt. 90] at ¶¶ 7, 8, 9, 12, 13, 14, 17, 18, 19, 20, 21.) The Court overrules Plaintiffs’ objections and finds that these facts are relevant to the issue of whether Plaintiffs were prejudiced by TKE's delayed production of documents.
On September 12, 2016, Plaintiffs, through former counsel, requested a copy of the claim file from Hartford, which Hartford provided on September 27, 2016. (Dkt. [89-2] at ¶ 8.) Also, on September 12, 2016, Plaintiffs, through former counsel, appealed Hartford's initial rejection of their claim. ( Id. at ¶ 9.) Hartford denied the appeal on September 29, 2016. ( Id. )
On or around March 30, 2017, Plaintiffs, through current counsel, sent TKE a letter requesting that TKE provide certain documentation and information regarding a claim for supplemental life insurance benefits Plaintiffs had made with Hartford that Hartford had rejected initially and again on appeal. ( Id. at ¶ 10.) The letter contained 23 separate requests for documents. ( Id. )
On June 26, 2017, TKE, through counsel, responded to Plaintiffs’ letter. ( Id. at ¶ 11.) TKE's June 26th letter responded to each of counsel for Plaintiffs’ 23 requests with either responsive documents or an explanation that any responsive documents would reside with Hartford and/or that it had no documents responsive to the request. ( Id. at ¶ 12.) TKE also explained that TKE does not determine whether to pay any claim for benefits under the Plan and does not maintain records of claims for life insurance benefits. ( Id. at ¶ 13.) Rather, TKE explained, Hartford serves as the Claims Administrator and administers and determines claims under the Plan. ( Id. at ¶ 14.) Therefore, Hartford maintained any materials related to claims for benefits, and TKE referred Plaintiffs to Hartford for many of the documents requested. ( Id. ) The documents TKE enclosed in its response included the relevant Plan documents, the 2013 Benefits Guide Corporate Salaried, a screenshot from TKE's open enrollment process showing the Evidence of Insurability ("EOI") requirement, the EOI Form, and communications between TKE and Hartford concerning Plaintiffs’ claim. ( Id. at ¶ 15.)
Plaintiffs’ counsel also addressed his March 30, 2017, request to Hartford. ( Id. at ¶ 16.) On or around April 13, 2017, less than 30 days later, Hartford replied, once against attaching Mr. Pottayil's entire claim file, which included, among other things, the Group Policy, the Summary Plan Description, and internal communications between TKE and Hartford. ( Id. at ¶ 17.)
Plaintiffs state that a genuine issue of material fact exists as to whether the Group Policy was among the documents produced. (Pls.’ Resp. to Def. TKE's Mot. For Summ. J. [Dkt. 90] at ¶¶ 17, 19.) However, as the Court will explain in this Opinion and Order, the evidence cited does not establish a genuine dispute.
On or around June 14, 2017, Plaintiffs, through counsel, sent a letter to Hartford regarding the denial of Plaintiffs’ request for additional supplemental life insurance benefits, which Hartford treated as a second appeal. ( Id. at ¶ 18.) All the documents that Plaintiffs quote and rely upon in connection with their second appeal, including the language of the Group Policy, internal communications between TKE and Hartford, and TKE's correspondence with Plaintiffs, were already in Plaintiffs’ possession before Plaintiffs sent their second appeal on June 14, 2017. ( Id. at ¶ 19.) On or around July 25, 2017, Hartford denied Plaintiffs’ second appeal of their claim for supplemental life insurance. ( Id. at ¶ 20.) Plaintiffs did not supplement their second appeal with documents or information that they received from TKE on or around June 26, 2017, even though Hartford had not yet rendered a decision on their second appeal at that time. ( Id. at ¶ 21.)
A copy of the Group Policy, with amendatory riders, is contained within the administrative record filed by Hartford on March 3, 2021. (Dkt. [84-1], 2-14). The Group Policy provides that the contract between Hartford and TKE consists of:
1) The Policy;
2) any Certificate(s) of Insurance incorporated and made a part of The Policy;
3) any riders issued in connection with such Certificate(s) of Insurance;
4) the Policyholder's application, if any, a copy of which is attached to and made part of the Policy when issued; and
5) any individual application submitted by the Employee and accepted by The Company in connection with The Policy.
( Id. at p. 8.) The Group Policy further provides:
Certificate(s) of Insurance
The Company will give individual Certificate(s) of Insurance to:
1) the Policyholder; or
2) any other person according to a mutual agreement among the other person, the Policyholder, and The Company; for delivery to persons covered under The Policy and which will explain the important features of The Policy.
( Id. at p. 9.)
Under the caption, "INCORPORATION PROVISION," the Group Policy lists "Certificate(s) of Insurance and Rider(s)" which "are attached to, incorporated in and made a part of, The Policy." ( Id. at p. 10.) One of the Certificate(s) of Insurance listed in the INCORPORATION PROVISION is "Form GBD-1100 (10/08). ( Id. )
The Certificate of Insurance for TKE's "Supplemental Dependent Life, Supplemental Term Life, Supplemental Accidental Death and Dismemberment" coverage under the Group Policy ("the Supplemental Life Certificate") is contained in the administrative record filed by Hartford on March 3, 2021. ( Id. at pp. 15-54.) The face page of the Supplemental Life Certificate indicates in the lower left-hand corner that the Certificate is "Form GBD-1100 (10/08)." ( Id. at p. 20.)
With respect to the Guaranteed Issue amount for supplemental life insurance, the Supplemental Life Certificate provides for "1 or 2 times Your annual Earnings, subject to a maximum of $750,000 rounded to the next higher $1,000 if not already a multiple of $1,000." ( Id. at p. 22.) In the section entitled "ELIGIBILITY AND ENROLLMENT," the Supplemental Life Certificate contains the following provision regarding EOI:
Evidence of Insurability: What is Evidence of Insurability?
Evidence of Insurability must be satisfactory to Us and may include, but will not be limited to:
1) a completed and signed application provided by Us;
2) a medical examination;
3) an attending Physician's statement; and
4) any additional information We may require.
Evidence of Insurability will be furnished at Our expense except for Evidence of Insurability due to late enrollment. We will then determine if You or Your Dependents are insurable for initial coverage or an increase in coverage as described in the Increase in Amount of Life Insurance provision.
( Id. at p. 24.) The Increase in Amount of Life Insurance provision states the following:
Increase in Amount of Life Insurance: If I request an increase in the Amount of Life Insurance for myself or my Dependents, must we provide Evidence of Insurability?
If You or Your Dependents are:
1) already enrolled for an Amount of Supplemental Life Insurance under The Policy, then You and Your Dependents must provide Evidence of Insurability for any increase; or
2) not already enrolled for Supplemental Life Insurance under the Policy, You and Your Dependents must provide Evidence of Insurability for any amount of Supplemental Life Insurance coverage including an initial amount.
In any event, if the Amount of Life Insurance You request is greater than the Guaranteed Issue Amount, You or Your Dependents, as applicable, must provide Evidence of Insurability.
If Your Evidence of Insurability is not satisfactory to Us, the Amount of Life Insurance You had in effect on the date immediately prior to the date You requested the increase will not change.
...
( Id. at p. 27.)
The Plan documents provide that Hartford has "full discretion and authority to determine eligibility for benefits and to construe and interpret all terms and provisions of The Policy." ( Id. at p. 39.)
II. Current Procedural Posture
Following motion practice and a series of amendments to Plaintiffs’ complaint, two claims are pending in this case. First, Plaintiffs assert a claim against Hartford for recovery of supplemental life insurance benefits under Section 502(a) of ERISA. Second, Plaintiffs assert a statutory penalty claim against TKE for its alleged failure to supply required plan documents in accordance with Section 502(c) of ERISA.
TKE seeks judgment in its favor as a matter of law on the statutory penalty claim. Hartford moves the Court pursuant to Federal Rule of Civil Procedure 52(a) for judgment on the administrative record as to Plaintiffs’ claim for recovery of benefits. The Court first will address Plaintiffs’ claim against TKE and then will address Plaintiffs’ claim against Hartford.
DISCUSSION
I. Section 502(c) Claim Against TKE for Refusal to Supply Requested Information
A. Standard of Review
1 The typical summary judgment standard is the applicable standard of review for claims brought pursuant to 29 U.S.C. § 1132(c). Harris v. Lincoln Nat'l Life Ins. Co. , 365 F. Supp. 3d 1208, 1230 n.22 (N.D. Ala. 2019). That standard is well-established.
Federal Rule of Civil Procedure 56 requires that summary judgment be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." "The moving party bears ‘the initial responsibility of informing the ... court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.’ " Hickson Corp. v. N. Crossarm Co. , 357 F.3d 1256, 1259 (11th Cir. 2004) (quoting Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). Where the moving party makes such a showing, the burden shifts to the non-movant, who must go beyond the pleadings and present affirmative evidence to show that a genuine issue of material fact does exist. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The applicable substantive law identifies which facts are material. Id. at 248, 106 S.Ct. 2505. A fact is not material if a dispute over that fact will not affect the outcome of the case under the governing law. Id. An issue is genuine when the evidence is such that a reasonable jury could return a verdict in favor of the non-moving party. Id. at 249-50, 106 S.Ct. 2505.
In resolving a motion for summary judgment, the court will "consider the record and draw all reasonable inferences in the light most favorable to the non-moving party." Blue v. Lopez , 901 F.3d 1352, 1357 (11th Cir. 2018). But the court is bound only to draw those inferences which are reasonable. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Allen v. Tyson Foods, Inc. , 121 F.3d 642, 646 (11th Cir. 1997) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson , 477 U.S. at 249–50, 106 S.Ct. 2505 (citations omitted).
B. Analysis
Under ERISA, "[t]he administrator shall, 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). Section 502(c)(1)(B) provides the following regarding the discretionary imposition of a statutory penalty for an administrator's failure to comply with § 1024(b)(4) :
The comma placed after "summary" is in the original text of the statute but is likely a scrivener's error. See Till v. Lincoln Nat'l Life Ins. Co., No. 2:14-CV-721-WKW, 2014 WL 6895285, at *5 n.7 (M.D. Ala. Dec. 5, 2014).
Any administrator ... who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court's discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper.
29 U.S.C. § 1132(c)(1). Federal regulations have increased this penalty to $110 per day for violations occurring after July 29, 1997. 29 C.F.R. § 2575.502c-1.
234 The penalty provision of § 1132(c) "is meant to be in the nature of punitive damages, designed more for the purpose of punishing the violator than compensating the participant or beneficiary." Scott v. Suncoast Beverage Sales, Ltd. , 295 F.3d 1223, 1232 (11th Cir. 2002). "[B]ecause § 1132(c) imposes penalties, it must be strictly and narrowly construed." Williamson v. Travelport, LP , 953 F.3d 1278, 1293 (11th Cir. 2020). "The decision to grant relief under 29 U.S.C.A. § 1132(c) is committed to the discretion of the trial judge." Paris v. Profit Sharing Plan for Emp. of Howard B. Wolf, Inc. , 637 F.2d 357, 362 (5th Cir. 1981).
In Bonner v. Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh Circuit Court of Appeals adopted as binding precedent all of the decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981.
567"In determining whether to assess a penalty under this provision, courts generally consider factors such as bad faith or intentional conduct on the part of the administrator, the length of the delay, the number of requests made and documents withheld, and the existence of any prejudice to the participant or beneficiary." Hamilton v. Mecca, Inc. , 930 F. Supp. 1540, 1556 (S.D. Ga. 1996). Because § 1132(c) is punitive rather than compensatory, a plaintiff need not demonstrate prejudice, bad faith, or harm to obtain § 1132(c) penalties. Daughtrey v. Honeywell, Inc. , 3 F.3d 1488, 1494 (11th Cir. 1993) ("[S]ection 1132(c) is intended to punish noncompliance with the employer or administrator's disclosure obligations and not to compensate the participant."); Curry v. Contract Fabricators Inc. Profit Sharing Plan , 744 F. Supp. 1061, 1066 (M.D. Ala. (1988) (stating that "because § 1132(c) is punitive rather than compensatory in nature, this court sees no reason to condition its operation on prejudice"). However, the absence of prejudice, bad faith, or harm is a factor the Court should consider in exercising its discretion to award penalties. Byars v. Coca-Cola Co. , 517 F.3d 1256, 1271 (11th Cir. 2008) ("While a district court may not deny penalties solely on the basis of a lack of prejudice, prejudice is a factor that a court should consider in exercising its discretion."); Daughtrey , 3 F.3d at 1494 (considering an employer or administrator's bad faith to be relevant under section 1132(c) ); Curry , 744 F. Supp. at 1066 ("[O]f course, reason dictates that lack of prejudice should be a factor considered in determining whether to impose a civil penalty.").
8 In this case, Plaintiffs, through counsel, requested 23 separate categories of documents on March 30, 2017. The documents requested were not limited to those required to be supplied pursuant to § 1024(b)(4) but included such requests as "[a]ll documents relevant to the Claim" and various documents, notices, and communications related to the Plan, EOI procedures, and the administration of Plaintiffs’ claim. (Dkt. [83-1] at 5-7.)
TKE provided a comprehensive response to Plaintiffs’ 23 separate requests for documents but not within the statutory period provided by § 1132(c). Rather, it was not until June 26, 2017, that TKE responded to the request of March 30, 2017. Taking into account the 30-day time period that TKE had under the statute to respond, TKE's response was 58 days late.
Notwithstanding the TKE's delay, TKE supplied to Plaintiffs the Plan documents that § 1024(b)(4) requires. Among the documents that TKE included in its response were the Group Policy and the Summary Plan Description. Plaintiffs argue that a genuine issue of material fact exists as to whether the documents TKE enclosed in its response included the Group Policy. In this regard, Plaintiffs point to language in the document that TKE identifies as the Group Policy, which states the following:
AMENDMENT TO GROUP POLICY GL/GLT/GRH-677112 ON JANUARY 3, 2017. ANY CHANGES BETWEEN THIS POLICY AND THE PREVIOUSLY ISSUED POLICY ARE EFFECTIVE JANUARY 1, 2017. ALL OTHER TERMS, CONDITIONS AND DATES REMAIN UNCHANGED.
(Dkt. [83-1] at 52.) Relying on this language and asserting that there may have been terms, conditions, and dates in the previously issued policy that remained unchanged, Plaintiffs maintain that TKE should have provided the previously issued policy to comply fully with § 1024(b)(4).
Plaintiffs also state that language in the Certificate of Insurance creates a genuine issue of fact as to whether the document that TKE represents is the Group Policy is in fact the Group Policy. The Certificate of Insurance provides:
We have issued The Policy to the Policyholder. Our name, the Policyholder's name and the Policy Number are shown above. The provisions of the Policy, which are important to You, are summarized in this certificate consisting of this form and any additional forms which have been made a part of this certificate. This certificate replaces any other certificate We may have given to You earlier under the Policy. The Policy alone is the only contract under which payment will be made. Any difference between the Policy and this certificate will be settled according to the provisions of the Policy on file with Us at Our home office. The Policy may be inspected at the office of the Policyholder.
(Dkt. [83-1] at 67.) Plaintiffs maintain that TKE has never provided Plaintiffs with the Policy on file with Hartford at its home office.
This Court's review of the document that both TKE and Hartford represent to be the Group Policy informs that there is no genuine dispute as to whether this is the Group Policy. The document is a comprehensive, ten-page document that contains the name of the policyholder, the policy number, an effective date, a table of contents, a schedule of insurance, premium provisions, policy provisions, and an incorporation provision. (Dkt. [83-1] at 52-61.) The document is not merely a recitation of amendments that must be read in conjunction with a separate document. This document stands on its own and includes even those terms, conditions, and dates that did not change. The prefatory language on the first page of the Group Policy and the language in the Certificate of Insurance simply do not create a genuine issue for trial.
The Court further finds that TKE's short delay of 58 days in responding to Plaintiffs’ request for documents does not warrant the imposition of a penalty, particularly in light of TKE's good-faith effort to respond in a comprehensive manner to Plaintiffs’ wide-ranging requests and the absence of prejudice to Plaintiffs. See Disanto v. Wells Fargo & Co. , No. 8:05-CV-1031-T-27MSS, 2007 WL 2460732, at *15 (M.D. Fla. Aug. 24, 2007) (declining to impose penalty for 33-day delay where no showing of calculated delay, bad faith, or significant prejudice). The Court is of the opinion that TKE could have further shown good faith by advising Plaintiffs’ counsel that it was in the process of drafting a response and gathering the requested documents, but Plaintiffs have not pointed to any evidence that TKE's failure to respond within the 30-day window was a calculated delay or in bad faith. Moreover, Plaintiffs suffered no prejudice as a result of TKE's delayed production of documents. At the time of Plaintiffs’ letter, they were not facing an impending deadline or a pressing need for the information. Plaintiffs had already made a claim for benefits to Hartford, and Hartford had denied both the claim and Plaintiffs’ appeal of the claim denial. The Court additionally notes that Plaintiffs received the documents from TKE in enough time to supplement their second appeal of the benefits denial, which Plaintiffs filed on June 14, 2017. Plaintiffs did not supplement their second appeal with any of the documents from TKE, which further indicates that Plaintiffs were not harmed by TKE's slight delay.
910 Also, Hartford provided Plaintiffs a copy of the full claim file on April 13, 2017, which means that Plaintiffs had access to the Group Policy, the Summary Plan Description, and internal communications between Hartford and TKE within 30 days of the request made of TKE. The only documents Plaintiffs did not have until TKE provided its response on June 26, 2017, were documents that are not within the scope of those required to be provided under 29 U.S.C. § 1024(b)(4). As set forth above, § 1024(b)(4) requires the administrator to supply "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." The residual clause referring to "other instruments under which the plan is established or operated" includes only "formal or legal documents under which a plan is set up or managed." Williamson , 953 F.3d at 1294-95 (citation and internal marks omitted). "Penalties ... cannot be imposed for failure to provide documents other than those specifically enumerated in § 1024(b)(4)." Id. at 1294. As such, TKE's delayed production of documents not within the scope of § 1024(b)(4) did not prejudice Plaintiffs and does not support a claim for statutory penalties.
In sum, under the circumstances presented in this case, where the delay was slight, there was no bad faith, and Plaintiffs suffered no prejudice, the Court exercises its discretion under 29 U.S.C. § 1132(c)(1) not to impose a penalty upon TKE.
II. Section 502(a)(1)(B) Claim for Recovery of Benefits Against Hartford
A. Standard of Review
111213 ERISA provides a claimant the right to seek redress in federal court, but the statutory language does not give a standard for reviewing benefits decisions by plan or claim administrators. Blankenship v. Metro. Life Ins. Co. , 644 F.3d 1350, 1354 (11th Cir. 2011) (citing Firestone Tire & Rubber Co. v. Bruch , 489 U.S. 101, 109, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) ). Given the silence of the statute, the Eleventh Circuit has developed a multi-step framework for analyzing ERISA claims and administrators’ decisions. See Blankenship , 644 F.3d at 1354. The framework is as follows:
(1) Apply the de novo standard to determine whether the claim administrator's benefits-denial decision is "wrong" (i.e., the court disagrees with the administrator's decision); if it is not, then end the inquiry and affirm the decision.
(2) If the administrator's decision in fact is "de novo wrong," then determine whether he was vested with discretion in reviewing claims; if not, end judicial inquiry and reverse the decision.
(3) If the administrator's decision is "de novo wrong" and he was vested with discretion in reviewing claims, then determine whether "reasonable" grounds supported it (hence, review his decision under the more deferential arbitrary and capricious standard).
(4) If no reasonable grounds exist, then end the inquiry and reverse the administrator's decision; if reasonable grounds do exist, then determine if he operated under a conflict of interest.
(5) If there is no conflict, then end the inquiry and affirm the decision.
(6) If there is a conflict, the conflict should merely be a factor for the court to take into account when determining whether an administrator's decision was arbitrary and capricious.
Id. at 1355. The court undertakes the review by considering "the material available to the administrator at the time it made its decision." Id.
B. Analysis
Here, the Court need not proceed past the first step of the multi-step framework for analyzing ERISA claims and administrators’ decision. Applying the de novo standard to determine whether Hartford's benefits denial was wrong, the Court finds that Hartford's decision was not wrong. Therefore, that decision is due to be upheld.
141516"Federal common law generally applies to the interpretation of policy language under ERISA." Raymond v. Life Ins. Co. of N. Am. , 924 F. Supp. 2d 1345, 1349 (S.D. Fla. 2010) (citing Kane v. Aetna Life Ins. , 893 F.2d 1283, 1285 (11th Cir. 1990) ). "As a general matter, unambiguous language in an ERISA plan must be interpreted and enforced in accordance with its plain meaning." Raymond , 924 F. Supp. 2d at 1349 (citation and punctuation omitted). When plan documents unambiguously address the substantive rights of the parties at issue, the plan language controls. Meadows ex rel. Meadows v. Cagle's, Inc. , 954 F.2d 686, 691 (11th Cir. 1992).
In this case, the Group Policy and the Supplemental Life Certificate are the applicable Plan documents with respect to Plaintiffs’ claim for additional supplemental life insurance benefits. The Group Policy incorporates the Supplemental Life Certificate and makes it a part of the Group Policy. (Dkt. [84-1] at p. 9.)
17 Plaintiffs argue that the Supplemental Life Certificate is not a Plan document and that there consequently was no requirement that Mr. Pottayil submit EOI when he elected to increase his Supplemental Life Insurance Coverage. Plaintiffs’ contentions are without merit. The Policy provides that it consists of several items, including, among other things, the following: "1) The Policy [and] 2) any Certificate(s) of Insurance incorporated and made a part of The Policy." (Dkt. [84-1] at p. 8.) The Policy's Incorporation Provision provides that Certificate of Insurance Form CBD-1100 (10/08) (67712) 3.35 has been made a part of the Policy. ( Id. at p. 10.) The Incorporation Provision further states that "[t]he provisions found in the Certificate(s) of Insurance will address the benefit plan, period of coverage, exclusions, claims and other general policy provisions pertaining to state insurance law requirements." ( Id. )
Plaintiffs assert that only a one-page document constitutes the Certificate of Insurance that was incorporated into and made a part of The Policy. (Dkt. [84-1] at p. 20.) Plaintiffs point out that this is the only page labeled "Form GBD-1100 (10/08) (677112) 3.35." Hartford argues that the Certificate of Insurance consists of 40 pages, notwithstanding that only one page contains the form number. The Court agrees with Hartford.
Significantly, the one-page document that Plaintiffs maintain constitutes the entirety of the Certificate of Insurance does not address the various matters that the Incorporation Provision states the Certificate of Insurance will address. ( See Dkt. [84-1] at pp. 10 and 20.) Rather, the Table of Contents for the remaining pages of the Certificate of Insurance reveals that the period of coverage, exclusions, and other general provisions are covered in the pages that Hartford correctly contends also make up the Certificate of Insurance. ( See Dkt. [84-1] at p. 21.) Additionally, the Amendatory Rider contained within the Supplemental Life Certificate indicates on the first page that it is "Form PA-9394 (10/08)" [ id. at p. 42], which is also listed as one of the "Rider(s)" that is "attached to, incorporated in and made a part of, The Policy" [ id. at p. 10]. The Amendatory Rider states that it "is attached to a certificate given in connection with the Policy" and "is intended to amend Your Certificate, as indicated below, to comply with the laws of Your state of residence." ( Id. at p. 42.) The Amendatory Rider then lists amendments to other provisions found in the Supplemental Life Certificate and concludes with the following statement: "In all other respects the certificate remains the same." ( Id. at p. 47.) This language supports Hartford's argument that the pages that precede the Amendatory Rider are part of the Certificate of Insurance that is incorporated into and made a part of the Group Policy. For these reasons, the Court finds that all 40 pages are part of the Certificate of Insurance and are likewise a part of the Group Policy and Plan.
18 The sole remaining issue that the Court must determine is whether the Plan documents required Mr. Pottayil to submit EOI to increase his life insurance coverage above the Guaranteed Issue Amount. This Court thoroughly examined this issue in its Opinion and Order of October 9, 2018 [Dkt. 37] and held that the Plan language unambiguously required Mr. Pottayil to submit EOI to apply for an increase in supplemental life insurance coverage. (Dkt. [37] at pp. 15-18.) The parties later disputed what documents constituted the Plan documents, and the Court found that this genuine dispute put its prior holding in question. (Dkt. [75] at pp. 1-2.) Now that the record has been perfected and the contents of the Plan documents confirmed, the Court concludes that its prior holding was correct. The provisions of the Supplemental Life Certificate, which the Court also refers to herein as the Certificate of Insurance, indisputably required Mr. Pottayil to submit EOI to increase his supplemental life insurance coverage above the Plan's Guaranteed Issue Amount, ( see Dkt. [84-1] at pp. 24, 27), and the Supplemental Life Certificate was expressly incorporated into and made a part of the Group Policy.
Since Plaintiffs do not dispute that Mr. Pottayil failed to submit EOI as required by the Plan documents and there is no evidence that he did, no additional Plan benefits are payable. Hartford's benefits decision was therefore not wrong and is due to be upheld. Hartford is entitled to judgment on the administrative record.
CONCLUSION
For the foregoing reasons, Defendant Thyssenkrupp Elevator Corporation's Motion for Summary Judgment [Dkt. 89] and Defendant Hartford Life and Accident Insurance Company's Rule 52(a) Motion for Judgment [Dkt. 91] are GRANTED. Defendant Hartford Life and Accident Insurance Company is entitled to judgment as a matter of law on Plaintiffs’ claim for recovery of supplemental life insurance benefits under Section 502(a) of ERISA (Count I), and Defendant Thyssenkrupp Elevator Corporation is entitled to judgment as a matter of law on Plaintiffs’ statutory penalty claim under Section 502(c) of ERISA (Count II).
SO ORDERED this 12th day of October, 2021.
ORDER GRANTING RECONSIDERATION IN PART
This case comes before the Court on Plaintiffs Faheem Pottayil and Farzana Shihabudheen, individually and as next friend and guardian of her minor child, Sameeh Pottayil's Motion for Reconsideration [Dkt. 101]. After reviewing the record, the Court enters the following Order.
BACKGROUND
Plaintiffs seek reconsideration of the Court's Order [Dkt. 98] denying their claim for supplemental life insurance benefits offered by Defendant Thyssenkrupp Elevator Corporation ("TKE") to its employees through Defendant Hartford Life and Accident Insurance Company ("Hartford"). The benefits are under Group Policy No. GL-677112 ("the Group Policy"), which was issued to TKE to fund supplemental term life insurance and other benefits under an employee welfare benefit plan sponsored by TKE and governed by the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1001 et seq.
I. Factual Background
Beginning on or around February 2, 2009, and continuing until his death, Shihabudheen Pottayil ("Mr. Pottayil") was an employee of TKE. [Dkt. 89-2, at ¶ 1]. Mr. Pottayil was the husband of Plaintiff Farzana and the father of Plaintiffs Faheem and Sameeh. [Id. at ¶ 2].
In March 2009, Mr. Pottayil enrolled in the Supplemental Group Life Insurance Plan, an ERISA-qualified welfare benefit plan offered by TKE to its employees. [ Id. at ¶ 3]. The plan is fully insured by Hartford, which also acts as the Claims Administrator. [Id.]. Mr. Pottayil designated Plaintiffs as his beneficiaries under the plan. [Id. at ¶ 4]. TKE was the plan Administrator. [Id. at ¶ 5].
A copy of the Group Policy, with amendatory riders, is contained within the administrative record filed by Hartford on March 3, 2021. [Dkt. 84-1, at 2-14]. With respect to the Guaranteed Issue amount for supplemental life insurance, the Supplemental Life Certificate provides for "1 or 2 times Your annual Earnings, subject to a maximum of $750,000 rounded to the next higher $1,000 if not already a multiple of $1,000." [Id. at 22]. In the section entitled "ELIGIBILITY AND ENROLLMENT ," the Supplemental Life Certificate contains the following provision regarding EOI:
Evidence of Insurability: What is Evidence of Insurability? Evidence of Insurability must be satisfactory to Us and may include, but will not be limited to: (1) a completed and signed application provided by Us; (2) a medical examination;(3) an attending Physician's statement; and (4) any additional information We may require.
Evidence of Insurability will be furnished at Our expense except for Evidence of Insurability due to late enrollment. We will then determine if You or Your Dependents are insurable for initial coverage or an increase in coverage as described in the Increase in Amount of Life Insurance provision.
[Id. at 24]. The Increase in Amount of Life Insurance provision states the following:
Increase in Amount of Life Insurance: If I request an increase in the Amount of Life Insurance for myself or my Dependents, must we provide Evidence of Insurability?
If You or Your Dependents are:
1) already enrolled for an Amount of Supplemental Life Insurance under The Policy, then You and Your Dependents must provide Evidence of Insurability for any increase; or
2) not already enrolled for Supplemental Life Insurance under the Policy, You and Your Dependents must provide Evidence of Insurability for any amount of Supplemental Life Insurance coverage including an initial amount.
In any event, if the Amount of Life Insurance You request is greater than the Guaranteed Issue Amount, You or Your Dependents, as applicable, must provide Evidence of Insurability.
If Your Evidence of Insurability is not satisfactory to Us, the Amount of Life Insurance You had in effect on the date immediately prior to the date You requested the increase will not change....
[Id. at 27].
The Plan documents provide that Hartford has "full discretion and authority to determine eligibility for benefits and to construe and interpret all terms and provisions of The Policy." [Id. at 39].
Upon enrolling in the plan, Mr. Pottayil initially elected Supplemental Life Insurance Coverage in an amount equal to his annual earnings (the "GI policy") to become effective March 4, 2009. [See Dkt. 76, at ¶ 16]. During the 2013 open enrollment period, Mr. Pottayil elected to increase his Supplemental Life Insurance Coverage from the Guaranteed Issue Amount to an amount equal to five (5) times his annual earnings ("the Policy"). [Id. at ¶ 19]. The Policy documents "required Mr. Pottayil to submit [evidence of insurability ("EOI")] to increase his supplemental life insurance coverage above the Plan's Guaranteed Issue Amount" [Dkt. 84-1, at 24].
Upon the commencement of the 2013 plan year and continuing until Mr. Pottayil's death more than three years later, TKE deducted premiums from Mr. Pottayil's salary every month for Supplemental Life Insurance in the amount sufficient to pay a monthly premium for coverage equal to five (5) times Mr. Pottayil's annual earnings. [See Dkt. 76, at ¶ 20]. TKE also sent Mr. Pottayil several confirmations stating that he had registered for supplemental coverage. [Id. at ¶ 21].
Mr. Pottayil died on April 5, 2016. [Dkt. 89-2, at ¶ 6]. Following Mr. Pottayil's death, Plaintiffs made a claim for the Supplemental Life Insurance Coverage benefit in the amount of $848,000, which was equal to five (5) times Mr. Pottayil's annual earnings. [See Dkt. 76, at ¶ 24; Dkt. 78, at ¶ 24]. On August 9, 2016, Hartford approved the portion of Plaintiffs’ claim equal to the Guaranteed Issue Amount of $170,000. [See Dkt. 76, at ¶ 25; Dkt. 78, at ¶ 25]. On August 11, 2016, Hartford rejected Plaintiffs’ initial claim for the additional $678,000 in supplemental life insurance benefits. [Dkt. 76, at ¶ 26; Dkt. 89-2, at ¶ 7]. Hartford based its decision on Mr. Pottayil's failure to submit EOI as required by the Policy documents. [See Dkt 76, at ¶ 27.]
On or around June 14, 2017, Plaintiffs, through counsel, sent a letter to Hartford regarding the denial of Plaintiffs’ request for additional supplemental life insurance benefits. [Dkt. 98-2, at ¶ 18]. On or around July 25, 2017, Hartford denied Plaintiffs’ second appeal of their claim for the remaining $678,000 in benefits. [Id. at ¶ 20].
II. Procedural History
Plaintiffs brought this action on November 6, 2017. [Dkt. 1]. Plaintiffs filed a total of four (4) complaints [Dkts. 1, 3, 54, and 76], asserting various theories of recovery under 29 U.S.C. § 1132(a)(1) and 29 U.S.C. § 1132(a)(3), including: (a) waiver; (b) negligence; (c) breach of fiduciary duty; and (d) equitable estoppel. [See generally id. ].
Following motion practice and a series of amendments to Plaintiffs’ complaint, two claims were left pending in this case. First, Plaintiffs asserted a claim against Hartford for recovery of supplemental life insurance benefits under Section 502(a) of ERISA. [Dkt. 76, at ¶ 38]. Second, Plaintiffs asserted a statutory penalty claim against TKE for its alleged failure to supply required plan documents in accordance with Section 502(c) of ERISA. [Id. at 40].
The Court resolved Plaintiffs’ claims on the parties’ cross-dispositive motions on October 12, 2021. [Dkt. 98]. In that order, the Court upheld Hartford's reason for denying Plaintiffs’ request for benefits: that no additional benefits were payable because the decedent, Mr. Pottayil, failed to submit EOI required by the Policy to increase his coverage above the plan's Guaranteed Issue Amount ("GI Amount").
After the Court resolved both claims in Hartford and TKE's favor, Plaintiffs filed a Motion for Reconsideration [Dkt. 101], arguing that the Policy's incontestability clause "prohibits Hartford from asserting Mr. Pottayil's failure to provide EOI as a defense." [Dkt. 101-1, at 2]. Plaintiffs’ motion does not address their claim against TKE, which the Court dismissed on summary judgment. [See Dkt. 101; see also Dkt. 98, at 18]. Accordingly, the Court's ruling on Plaintiffs’ 29 U.S.C. § 1024(b)(4) claim against TKE still stands and the Court will only address Plaintiffs’ claim against Hartford.
DISCUSSION
I. Legal Standard
The Local Rules of the Northern District of Georgia allow for the filing of motions for reconsideration only when "absolutely necessary." N.D. Ga. L.R. 7.2(E). "Reconsideration is only ‘absolutely necessary’ where there is: (1) newly discovered evidence; (2) an intervening development or change in controlling law; or (3) a need to correct a clear error or prevent a manifest injustice." Pres. Endangered Areas of Cobb's History, Inc. v. U.S. Army Corps of Eng'rs, 916 F. Supp. 1557, 1560 (N.D. Ga. 1995).
A motion for reconsideration is not "a vehicle to present new arguments or evidence that should have been raised earlier." Brogdon ex rel. Cline v. Nat'l Healthcare Corp., 103 F. Supp. 2d 1322, 1338 (N.D. Ga. 2000). Neither is it "an opportunity for the moving party and their counsel to instruct the court on how the court ‘could have done it better’ the first time." Pres. Endangered Areas, 916 F. Supp. at 1560. A motion for reconsideration most assuredly should not be used to "repackage familiar arguments to test whether the Court will change its mind." Chesnut v. Ethan Allen Retail, Inc., 17 F. Supp. 3d 1367, 1370 (N.D. Ga. 2014) ; see also O'Neal v. Kennamer, 958 F.2d 1044, 1047 (11th Cir. 1992).
II. Plaintiffs’ Section 502(a)(1)(B) Claim for Recovery of Benefits Against Hartford
Plaintiffs ask the Court to reconsider its Order [Dkt. 98] granting Hartford's Motion for Judgment as a Matter of Law [Dkt. 91], arguing that reconsideration is necessary to prevent manifest injustice. [Dkt. 101-1, at 1]. Plaintiffs specifically argue that the Policy had an incontestability clause that barred Hartford from "asserting Mr. Pottayil's failure to provide EOI as a defense." [Id. at 2]. Plaintiffs contend that allowing Hartford to rely on provisions from the policy that support their defense and ignore others that are less favorable constitutes manifest injustice. [Id. ]
Hartford opposes Plaintiffs’ motion, arguing that (1) it does not meet the standard for reconsideration; (2) Plaintiffs will not suffer injustice because they had four opportunities to amend their complaint and raise this claim; and (3) the claim is factually inaccurate and legally insufficient. [See Dkt. 108].
A. The Court Will Rule on the Merits of Plaintiffs’ Motion.
The Court will reconsider its dismissal of Plaintiffs’ claim against Hartford. Reconsideration is appropriate when there is: "(1) newly discovered evidence; (2) an intervening development or change in controlling law; or (3) a need to correct a clear error or prevent a manifest injustice." Pres. Endangered Areas, 916 F. Supp. at 1560. Plaintiffs’ motion does not put forth new evidence, show any change in controlling law, or argue that the Court made a clear error in a previous ruling. This admittedly weighs against reaching the merits of Plaintiffs’ motion.
However, the Court finds that it is appropriate to rule on the merits because the wrongful denial of benefits could constitute manifest injustice under the circumstances. Courts in the Eleventh Circuit have substantial discretion when presented with a motion to reconsider premised on manifest injustice. Medley v. Westpoint Stevens, Inc., 162 F.R.D. 697, 698 (M.D. Ala. 1995) (internal citations omitted). "[A] manifest injustice analysis requires a ‘fact-specific’ analysis that resides in the discretionary authority of the reviewing court." Salinas v. Hart, no. 15-167-HRW, 2020 WL 1560061, at *3 (E.D. Ky. Apr. 1, 2020). "The movant must be able to demonstrate that the underlying judgment caused them some type of injustice which could be avoided if the judgment were reconsidered. Essentially, the movant must be able to show that altering or amending the underlying judgment will result in a change in the outcome in their favor." Harris v. Perry, No. 2:12-CV-02668-STA-dkv, 2016 WL 5396701, at *3 (W.D. Tenn. Sept 27, 2016) (citations omitted).
The facts of this case justify ruling on the merits. To illustrate, this case largely arose because TKE mistakenly led Mr. Pottayil and his family to believe that he successfully registered for increased benefits despite the lack of EOI. [See Dkt. 76, at ¶ 20-21]. The Pottayils’ belief, reinforced by erroneous confirmations from TKE (Id. at ¶ 21), likely informed Mr. Pottayil's plans to provide for his family upon his death. Moreover, the difference between the benefits the Pottayils thought they were entitled to versus those paid by Hartford is significant: Plaintiffs received only $170,000 of the $848,000 guaranteed under the upgraded Policy. [See id. at ¶ 24-25]. Not only that, but TKE also deducted the increased premiums1 from Mr. Pottayil's paycheck for years, withholding funds that Mr. Pottayil could have invested in other life insurance plans to support his family and forwarding those funds to Hartford.
While Plaintiffs could and should have raised their claim sooner, the livelihood of Mr. Pottayil's family may hang in the balance. The Court also notes that Plaintiffs did attempt to raise the incontestability clause in their first appeals to Hartford. [See Dkt. 84-2, at 51]. This lends some credence to their decision to focus on the EOI issue during litigation. For these reasons, the Court will proceed to evaluate the merits of Plaintiffs’ motion.
B. The Incontestability Clause Bars Hartford From Raising Failure of Condition Precedent to Avoid Liability.
The Court now turns to the merits of Plaintiffs’ motion. Plaintiffs argue that the incontestability clause bars Hartford from defending against the Policy because Hartford did not object during the contestability period. [Dkt. 101-1, at 2]. Plaintiffs further claim that Hartford did not need to know of the Policy's existence or that Mr. Pottayil was paying premiums for the contestability period to toll. [Dkt. 109, at 3-4].
Hartford first argues that the incontestability period never began tolling because it did not know the Policy existed until Plaintiffs made a request for benefits. [Dkt. 108, at 7]. To show it did not have the requisite knowledge, Hartford cites the Court's finding that it did not knowingly waive the Policy's EOI requirement. [Dkt. 37, at 19; Dkt. 108, at 7-8]. Hartford alternatively claims that the incontestability clause and underlying Policy never came into force because it did not waive the EOI condition. [Dkt. 108, at 8-10].
Incontestability clauses preclude all defenses, inclusive of fraud, unless the defense is clearly excepted in the provision or by statute. See Blue Cross & Blue Shield of Georgia, Inc. v. Sheehan, 215 Ga.App. 228, 450 S.E.2d 228, 230 (1994). The purpose of an incontestability clause is to protect the expectations of the insured and to encourage insurers to be diligent in performing their duty to investigate. Id. Incontestability clauses annul all warranties and conditions that might defeat the rights of the insured after the lapse of the stipulated time. See Equitable Life Assur. Soc. v. Florence, 47 Ga.App. 711, 171 S.E. 317 (1933).
The threshold issue here then is whether the incontestability clause bars Hartford from raising Mr. Pottayil's failure to provide EOI, a condition precedent to the Policy, to avoid liability. In general, insurers are not "precluded by the incontestable clause ... from showing that [a claim] was not covered within the terms and provisions of the policy because of restrictions and exclusions therein, although [they are] precluded from asserting as a defense the invalidity of the [policy] because of fraud in the procurement or any other ground affecting the validity of the [policy] as a whole." Ballinger v. C & S Bank of Tucker, 139 Ga.App. 686, 229 S.E.2d 498, 500-501 (1976).
Hartford argues that the incontestability clause does not bar its defense because it is contesting the coverage, not validity, of the Policy. [Dkt. 108, at 10]. However, its defense does not involve a pure question of coverage because it is based on Mr. Pottayil's failure to satisfy a condition precedent. Thus, the defense is distinct from other "coverage defenses" traditionally excluded from incontestability clauses. In Georgia, coverage defenses usually involve assertions that a given hazard is not covered by a policy, an event insured against did not occur, or the insured was ineligible for coverage. National Life & Acc. Ins. Co. v. Chapman, 106 Ga.App. 375, 127 S.E.2d 157, 158 (1962) ; see Schulman v. Federated Life Ins. Co., 154 Ga.App. 479, 268 S.E.2d 704, 706 (1980).
Mr. Pottayil's failure to submit EOI does not relate to the Policy's scope or his eligibility for coverage. The EOI provision is distinguishable from restrictions and exclusions in the Policy because the provision dictated when coverage could begin, as opposed to limiting which risks the Policy covered. [See Dkt. 84-1, at 24]. Further, Mr. Pottayil's eligibility as TKE's employee was not affected by his failure to provide EOI. Hartford cites no authority to support conflating eligibility based on status with meeting one's contractual obligations.2 Accordingly, the Court finds that Hartford's defense is not the kind that the legislature intended to exclude from incontestability clauses. See GA. CODE ANN. § 33-25-7.
Georgia and ERISA case law support this conclusion. In Florence, the court found that an incontestability clause barred the insurer from claiming that a policy was never in force because the decedent was not eligible for coverage in the first place. 171 S.E. at 318, 320. The court rejected this defense, finding that defenses based on failed conditions went to the policy's validity and were thus barred by the incontestability clause. Id. at 319-320 (citing Mut. Rsrv. Fund Life Ass'n v. Austin, 142 F. 398, 398 (1st Cir. 1905) ). In dicta, the court specifically noted that providing evidence of good health was "a condition precedent to the validity of the contract" and was thus subject to an incontestability clause. Id. Although Georgia now protects eligibility defenses from an incontestability clause, the law does not exclude defenses relating to EOI or failure of condition precedent generally. See GA. CODE ANN. § 33-25-7. Accordingly, Florence is still instructive.
The Florence court's holding is by no means unique. In Austin, the First Circuit held that unless a condition precedent was expressly excluded by an incontestability clause, an insurer could not raise it to contest the policy. 142 F. 398 at 402 ; Florence, 171 S.E. at 319-320. After reviewing the history and purpose of incontestability clauses, the First Circuit held that, if an insurance company accepted premiums beyond the contestability period, it could not later raise breach of the condition of good health to avoid liability. Id. at 401-402. The court stated,
We think it clear that the clause contemplates that a policy may have been "in continuous force" for three years, even though the insurance company then had good grounds for avoiding it for the reason that a condition precedent had not been fulfilled. Such a result may be avoided by construing the incontestable clause to mean that if the policy does not mature or terminate within three years, but during that time is outstanding in the hands of the assured, and is not utterly void on its face, and is not avoided by the company, but is acted upon by both parties as a subsisting contract, it is "in continuous force" within the true meaning of the clause.
Id. at 402.
The court in Patterson v. Reliance Standard Life Ins. Co., 986 F. Supp. 2d 1140 (C.D. Cal. 2013), reached a similar conclusion. In Patterson, an insurance company denied the plaintiff beneficiary's claim because it never received proof of the decedent's good health. The court affirmed that the decedent "did not fulfill a condition precedent required by the Plan." Id. at 1149. However, the court held that "the incontestability clause applies to a contest based on breach of a condition precedent. Accordingly, [the insurer's] argument that its denial of benefits is not a ‘contest’ within the meaning of the incontestability clause fails." Id. at 1150 (citing Amex Life Assurance Co. v. Super. Ct., 14 Cal.4th 1231, 60 Cal. Rptr. 2d 898, 930 P.2d 1264 (1997) ).
Although case law supports a finding that the incontestability clause bars Hartford's defense, there are a few wrinkles. While these wrinkles complicate the Court's analysis, they do not change the outcome in this case.
The first issue is the holding in Van Loo v. Cajun Operating Co., 2015 WL 7889034, at *1 (E.D. Mich. Dec. 4, 2015), which directly contradicts the cases cited above. In Van Loo, as in this case, the court applied Georgia law to determine whether an incontestability clause barred an insurer from defending against liability when the decedent failed to provide EOI required by the policy. Id., at *8. The court found that "in Georgia, incontestability clauses cannot be used to ‘breathe life into an insurance contract’ that never became effective due to the failure of a condition precedent to coverage." Id., at *9 (citing Wood v. New York Life Ins. Co., 255 Ga. 300, 336 S.E.2d 806, 808 (1985) ).
We decline to follow Van Loo for several reasons. First, the court incorrectly applied Wood to support its conclusion that incontestability clauses do not bar insurers from raising failure of condition precedent to avoid liability. See id. at *9. In Wood, the Georgia Supreme Court found that an incontestability clause did not bar an insurer from claiming that a policy was void ab initio due to the failure of condition precedent. 336 S.E.2d at 811-812. The condition precedent at issue in Wood, however, violated Georgia public policy and thus its failure made the policy void ab initio. 3 See id. The Van Loo court appeared to interpret Wood to mean that any failure of condition precedent, not just those that violate Georgia's public policy, makes an insurance policy void ab initio. See Van Loo, 2015 WL 7889034, at *9. The court thus concluded that the incontestability clause did not bar the insurer from raising failure of condition precedent as a defense. Id.
The Court disagrees with the Van Loo holding. In Georgia, a contract is void ab initio if it violates the state's public policy. Wood, 336 S.E.2d at 806. EOI is not required by Georgia statute, nor does the provision of EOI implicate the public interest. See GA. CODE ANN. § 33-27-3(a)(4). The Georgia Code only requires that contractual EOI conditions, if any, be set forth in the policy's provisions. Id. The Code does not otherwise require or regulate EOI. Accordingly, failure to provide EOI does not make a policy void ab initio and insurers may not claim as much to avoid liability.
The second wrinkle involves the distinctions between this case and Patterson. To illustrate, the Van Loo court refused to follow Patterson partly because the case was governed by California law and the policy in Van Loo, as here, was governed by Georgia law. 2015 WL 7889034, at *9. However, there is no material difference between California and Georgia's laws on incontestability clauses and EOI. See, e.g., GA. CODE ANN. § 33-25-7 ; GA. CODE ANN. § 33-25-3(a)(2) ; CAL. INS. CODE § 10206(a) ; CAL. INS. CODE § 10113.5. Both states bar all defenses contesting the policy's validity except for the nonpayment of premiums. See id. Both allow defenses based on policy provisions that exclude or restrict coverage. Ballinger, 229 S.E.2d at 500-501 (discussing Georgia law) ; see New York Life Ins. Co. v. Hollender, 38 Cal.2d 73, 237 P.2d 510, 512 (1951) (discussing California law). Finally, neither state requires EOI by law.4 Accordingly, the Court finds that Patterson is not distinguishable on this basis.
The Court must also address the factual distinctions between this case and Patterson. The facts in this case are most similar to those in Van Loo, and the Van Loo court found that Patterson was factually distinguishable. 2015 WL 7889034, at *9. There are two main distinctions between this case and Patterson. First, Mr. Pottayil already had coverage in place with the GI policy, whereas the Patterson plaintiff was seeking initial coverage. See 986 F. Supp. 2d at 1146. Second, Hartford did not know Mr. Pottayil was seeking supplemental coverage, whereas in Amex, (the case relied on by Patterson ), the insurance company knew that the insured applied for benefits and thus had an opportunity to investigate. See Amex, 60 Cal. Rptr. 2d 898, 930 P.2d 1264 ; [Dkt. 108, at 12].
These factual distinctions are not dispositive. The fact that Mr. Pottayil already had coverage in place while the Patterson plaintiff sought initial coverage has no legal consequence. The question is the same: Can insurers be held liable under a policy that they did not know existed? The existence of a previous policy does not materially change the analysis.
Hartford's lack of knowledge about the policy does not allow them to raise a defense otherwise barred by an incontestability clause. Incontestability clauses bar all defenses relating to the validity of the policy, except for those expressly excepted in the clause or protected by statute. Ballinger, 229 S.E.2d at 500-501. Any difference between Hartford and the Amex insurers’ knowledge does not change which defenses the incontestability clause bars. This is confirmed by Patterson, in which the court did not take issue with the defendant insurer's lack of knowledge about the decedent's registration for additional coverage or payment of premiums. See 986 F. Supp. 2d at 1149-1150 (describing the insurer's failure to discover that the decedent lacked EOI and was paying premiums until after her beneficiary made a request for benefits). So too, we find that Hartford's lack of knowledge does not affect the scope of the incontestability clause in Mr. Pottayil's Policy.
Finally, this finding does not overrule the Court's previous holding on waiver. [See Dkt. 37]. This finding only means that, when the decedent satisfied the conditions listed in the incontestability clause and the defense is not otherwise excluded by statute, the insurer cannot raise lack of knowledge to avoid liability.
III. The Court's Finding Best Comports With Georgia Contract Law.
Georgia's rules of contract interpretation also support ruling in favor of Plaintiffs. Under Georgia law, insurance is a matter of contract ( Richards v. Hanover Ins. Co., 250 Ga. 613, 299 S.E.2d 561 (1983) ), and the goal of contract construction is to ascertain the intent of the parties. See Municipal Elec. Auth. of Ga. v. Gold–Arrow Farms, 276 Ga.App. 862, 625 S.E.2d 57 (2005). "To determine the intent of the parties, all the contract terms must be considered together in arriving at the construction of any part, and a construction upholding the contract in whole and every part is preferred." Id. (citation omitted). "[T]he plain meaning of such terms must be given full effect, regardless of whether they might be beneficial to the insurer or detrimental to the insured," Tripp v. Allstate Ins. Co., 262 Ga.App. 93, 584 S.E.2d 692, 694 (2003) (quoting Grain Dealers Mut. Ins. Co. v. Pat's Rentals, 269 Ga. 691, 505 S.E.2d 729, 730 (1998) (internal quotation mark omitted)). A policy should be read as a layman rather than an insurance expert or attorney. Williams Seafood of Albany, 273 Ga. 710, 544 S.E.2d 156, 157 (2001). Finally, policies should not be interpreted to render any provision meaningless. See York Ins. Co. v. Williams Seafood of Albany, 273 Ga. 710, 544 S.E.2d 156 (2001).
The only way to interpret the Policy in this case without "render[ing] any provisions meaningless" is to read the EOI requirement as a condition precedent that can only be foreclosed by the expiration of the contestability period. To find otherwise would make the incontestability clause's promise to bar all defenses except the nonpayment of premiums "mere surplusage." Moreover, a layman would read the plain language of the provision to exclude all defenses except those expressly excluded. As Mr. Pottayil fulfilled the only condition explicitly stated in the clause and the failure to provide EOI is not excluded from incontestability clauses by statute, contract principles support finding that the clause bars Hartford's defense.
IV. Upholding the Incontestability Clause Aligns with Public Policy Considerations.
Finally, ruling in Plaintiffs’ favor best comports with public policy considerations. The purpose of the incontestability clause is "[t]o free the mind of the applicant for life insurance from apprehension raised by [the policy's] numerous conditions and warranties, and to assure him that his beneficiary shall have a clear and incontestable right ...." Austin, 142 F. 398 at 402. "[T]he need for the protection afforded by the incontestability clause is highest here, where [Mr. Pottayil] fulfilled [his] obligation to pay the insurance premiums ... and [Hartford] had ample opportunity to conduct an investigation." Patterson, 986 F. Supp. 2d at 1150.
Hartford had three years to investigate who they were receiving premiums from at TKE. [See Dkt. 76 at ¶ 20; Dkt. 78 at ¶ 20]. In isolating their operations, Hartford took the risk that it would not know if an employee attempted to register for benefits under an employer-administrator's plan. Hartford should not be able to rely "on a compartmentalized system to escape responsibility." See Lesser v. Metro. Life Ins. Co., 2010 WL 4916607, at *5 (C.D. Cal. Nov. 24, 2010) ; see also Kobold v. Aetna U.S. Healthcare, Inc., 258 F.Supp.2d 1317, 1323–24 (M.D. Fla. 2003) (concluding that imputing the knowledge of an agent to its principal under federal common law of agency is consistent with ERISA policy). Insurers cannot "sit back and wait" for claims to come in before they investigate the source of paid premiums. Sheehan, 215 Ga. App. at 231, 450 S.E.2d 228. As the Amex court stated, "[t]o hold otherwise would be to permit such a clause in its unqualified form to remain in a policy as a deceptive inducement to the insured." 60 Cal. Rptr. 2d at 907, 930 P.2d 1264 (citation omitted).
Mr. Pottayil did not act fraudulently to obtain the supplemental coverage, paid his premiums, and reasonably relied on TKE's representation that he registered for the upgraded Policy. "If the incontestable clause applies in cases of actual fraud, it applies all the more in a case of the present kind...." Florence, 171 S.E. at 320. For these reasons, the Court follows Patterson and Austin and will give effect to the upgraded Policy. Hartford may not raise lack of EOI to defeat Plaintiffs’ request for the remaining $678,000 in benefits.
CONCLUSION
For the foregoing reasons, Plaintiffs’ Motion for Reconsideration [Dkt. 101] is GRANTED ; the Order [Dkt. 98] granting Defendant Hartford's Motion for Judgment [Dkt. 91] is VACATED insofar as it grants judgment as a matter of law to Defendant Hartford; the Judgment [Dkt. 100] in favor of Defendants is VACATED insofar as it grants judgment in favor of Defendant Hartford; and Defendant Hartford's Rule 52(a) Motion for Judgment is DENIED . Plaintiffs are entitled to the remaining $678,000 in benefits. Plaintiffs are directed to file a motion for judgment for the outstanding benefit amount of $678,00 and such other relief as they may seek within 21 days of the entry of this Order. Hartford shall respond to the motion within 14 days, and Plaintiffs may reply within 7 days thereafter.
SO ORDERED this 13th day of May, 2022.