United States District Court, E.D. Kentucky, Central Division, Lexington
EUGENE B. SHROUT, JR., Plaintiff,
LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.
MEMORANDUM OPINION AND ORDER
K. CALDWELL, CHIEF JUDGE
matter is before the Court on the parties' motions to
establish the standard of review. Plaintiff Shrout seeks the
Court to apply the de novo standard of review, while
Defendant Life insists that the proper standard of review is
arbitrary and capricious. (DE 15; DE 16). For the reasons set
forth below, the Court grants Life's motion seeking the
application of the arbitrary and capricious standard of
review, denies Shrout's motion seeking the application of
the de novo standard of review, and finds that the
applicable standard of review in this case is arbitrary and
dispute arises over disability insurance policies held by
Shrout that were paid and administrated by Life. (DE 1-1 at
3-9; id. at 7-41). On May 17, 2018, Shrout filed a
complaint with the Bath County Circuit Court, which was
removed to this Court on June 20, 2018, alleging that Life
breached its disability insurance contracts with Shrout by
wrongfully denying his claim. (See generally DE 1;
DE 1-1). The Complaint specifically alleges that Shrout was
denied a full and fair review due, in part, to Life's
operating under an inherent conflict of interest as both the
evaluator and payor of the plan. (DE 1-1 at 7-41). The Court
has jurisdiction over this action pursuant to the Employee
Retirement Income Security Act of 1974 (“ERISA”),
29 U.S.C. § 1132, which provides a mechanism for
enforcing insurance policies.
reviewing benefit determinations under ERISA apply a de
novo standard unless the plan provides “the
administrator or fiduciary discretionary authority to
determine eligibility for benefits, ” in which case a
“deferential standard of review [is]
appropriate.” Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 115 (1989); Univ. Hosp. of
Cleveland v. Emerson Elec., 202 F.3d. 839, 845 (6th Cir.
2000). Shrout argues for de novo review of
Life's decision, arguing that the plan does not contain a
clear grant of discretion, and that the law holding otherwise
is ill-founded. (DE 16; DE 16-1). Life argues for the more
deferential arbitrary and capricious standard due to the
Plain's delegation of discretionary authority and the
holdings of well-settled precedent. (DE 15). While magic
words are not necessary, a clear grant of discretionary
authority is required. Frazier v. Life Ins. Co. of N.
Am., 725 F.3d 560, 566 (6th Cir. 2013).
the policy requires employees to “provide the Insurance
Company, at his or her own expense, satisfactory proof of
Disability before benefits will be paid.” (DE 16-2 at
34). Further, the “Insurance Company will require
continued proof of the Employee's Disability for benefits
to continue.” Id. Shrout acknowledges this
language. (DE 16 at 2). Nonetheless, he argues that Sixth
Circuit cases holding that similar language confers a clear
grant of discretionary authority are outliers that were
wrongly decided. Id. at 3.
was correct to note, this Court has held many times that
Frazier v. Life Ins. Co. of N. Am., 725 F.3d 560
(6th Cir. 2013), is controlling precedent in cases with
“satisfactory proof” language. See,
e.g., Hurd. v. Life Ins. Co. of N. Am., 2018 WL
4456807, *1 (E.D. Ky. Sep. 18, 2018) (Caldwell, J.).
Frazier held, as this Court does today, that plans
requiring “satisfactory proof of Disability before
benefits will be paid” contain a clear grant of
discretionary authority to the plan administrator.
Frazier, 725 F.3d at 567. As such, the arbitrary and
capricious standard of review is appropriate in this case.
argues that Frazier is based on cases that have been
reversed, making its holding incorrect. (DE 16 at 3-4). This
argument, however, is not properly resolved by this Court.
Unless or until the Sixth Circuit reconsiders and reverses
Frazier, this Court is bound to follow its holding.
Similarly, the Court is not persuaded by Shrout's
argument that Hoover v. Provident Life & Accident
Ins. Co., 290 F.3d 801 (6th Cir. 2002), should control.
(DE 16 at 4). The “written proof language involved in
that case is distinguishable from the language included in
the current plan, which is identical to the language
discussed in Frazier v. Life Ins. Co. of N. Am., 725
F.3d 560 (6th Cir. 2013).
of the above reasons, IT IS ORDERED as
1. Defendant Life Ins. Co. of N. Am.'s
Motion, (DE 15), is GRANTED;
2. Plaintiff Shrout's Motion, (DE 16),
is DENIED; and
3. The applicable standard of review in this
case is ARBITRARY AND ...