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Card v. Principal Life Insurance Co.

United States District Court, E.D. Kentucky, Central Division, Lexington

September 11, 2018

SUSAN CARD Plaintiff,



         This matter is before the Court on Cross Motions for Summary Judgment, one filed by Plaintiff Susan Card, (DE 68), and the other filed by Defendant Principal Life Insurance Company, (DE 71). For the following reasons, Defendant's Motion is GRANTED, and Plaintiff's Motion is DENIED.


         This dispute arises over disability insurance policies held by Plaintiff Susan Card that were underwritten and administrated by Defendant Principal Life Insurance Company. (DE 1 at 2). On May 17, 2015, Plaintiff filed a complaint this this Court alleging that Defendant breached its disability insurance contracts with Plaintiff by wrongfully denying her claim, both when it was filed in December of 2013 and on appeal.[1] (DE 1). The Complaint further alleges that Plaintiff was denied a full and fair review, due in part to Defendant's operating under an inherent conflict of interest as both the evaluator and payor of claims under Plaintiff's policy. Id. at 2 ⁋⁋ 13-14. This Court has jurisdiction over these claims pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132, which provides a mechanism for enforcing insurance policies like Plaintiff's.

         Plaintiff Card has now filed a motion for summary judgment, (DE 68), in which she argues entitlement to relief because she believes that medical evidence supports her claim of disability and Principal both ignored relevant evidence and relied on flawed medical records in denying her claims. (DE 68-1). In response, Defendant Principal filed a cross motion for summary judgment, (DE 71), in which it argues that the denial of benefits was not arbitrary and capricious because the decision is supported by substantial evidence in the administrative record. The Court reviews the parties' arguments below.

         II. ANALYSIS

         A. Legal Standards

         As a threshold matter, the Court once again takes up the parties' arguments regarding the standard of review applicable in this case. On March 31, 2016, the Court ruled that it would “review Defendant's determination under the ‘highly deferential arbitrary-and-capricious standard of review.'” (DE 30 at 6) (quoting Canada v. Am. Airlines, Inc. Pilot Ret. Ben. Program, 572 Fed.Appx. 309, 312 (6th Cir. 2014)).

         In its previous Order, the Court found that Principal had sufficiently shown that the benefit plan in this case gives Principal authority to determine eligibility for benefits and construe the terms of the plan. (DE 30 at 5) (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948 (1989)). The Court was further satisfied that Principal also exercised its delegated authority. Id. Nothing in Card's motion for summary judgment undermines this basis for applying the arbitrary and capricious standard of review.

         Nonetheless, Card attacks the plan's grant of discretionary authority due to the “exception” process through which Card's employer might have requested that a claim be paid under the plan. (DE 68-1 at 20). Card cites to a portion of deposition testimony by Nancy Taylor, presumably an employee of Principal, to show that Card's employer may request an “exception” under the plan's terms, which is defined as “any decision that is not consistent with normal plan policy provisions and administrative processes.” (DE 68-2 at 6). Card does not cite to a policy provision, nor to any evidence, however, showing that any exception request by Card's employer is automatically granted under the terms of the plan, or that any exception request otherwise usurps the discretionary authority of Principal in any way. And the evidence contained in the Record refutes any such assertion.

         The only reference in the Record to the process by which an exception is approved-here, taken from a section of Taylor's deposition supplied to the Court-contemplates an examiner “not[ing] something and tak[ing] it to senior staff . . . to have a discussion about it.” Id. at 7. In contrast, Principal has provided the sworn statement of Lisa Dickhoff, Assistant Director of Disability Claims for Principal, which states that exceptions are not automatically granted and the exception request in this case would not have been approved. (DE 71-2). Thus the Record does not reflect that the exception process would permit Continuum, rather than Principal, to have final decision-making process under the plan.

         Next, Card attempts to relitigate the matter of the plan's grant of discretion to Principal, arguing that the express terms of the plan prohibit such a grant. Although it does not appear to have been argued in Card's original briefing on the applicable standard of review, she now argues that the plan prohibits Principal from being the Named Fiduciary, essentially arguing that Principal had no discretionary authority over the plan. (DE 68-1 at 20-22). Card's argument, however, fails to recognize that a Named Fiduciary, in this case Continuum, may designate other fiduciaries relative to aspects of the plan. See 29 U.S.C. § 1102(c). Here, the plan explicitly provides Principal with the “discretion to construe or interpret the provisions of this Group Policy, to determine eligibility for benefits, and to determine the type and extent of benefits . . . .” (DE 18-1 at 23). Principal must also receive proof of loss before benefits may be paid out under the plan, which may include medical records, examinations, claim forms completed by physicians, and “other proof of loss as required by The Principal.” (DE 18-1 at 48-49; DE 18-2 at 7-8).

         The Court once again finds that this language tracks that used by the Supreme Court. See Firestone Tire & Rubber Co., 489 U.S. at 115 (applying de novo standard “unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan”) (emphasis added). The Court also again find that the language also tracks prior discretionary clauses approved for arbitrary and capricious review by the Sixth Circuit.[2]

         Further, that Principal is both the evaluator and payor of claims under the policy does not alter the standard of review. See Smith v. Continental Cas. Co.,450 F.3d 253, 260 (6th Cir. 2006). Rather, the conflict of interest should be considered a factor in the Court's review of the denial. Id. Here, the Court has previously allowed the parties to conduct limited discovery for the purpose of determining how the conflict should impact the Court's review. (See DE 30 at 7). With this limited discovery completed, the Court is prepared to review the cross motions for summary judgment, viewing Principle's ...

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