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Smith v. Hartford Life and Accident Insurance Co.

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

October 11, 2019

JENNIFER LEE SMITH, Plaintiff,
v.
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

          Danny C Reeves, Chief United States District Judge.

         The parties have submitted memoranda addressing the applicable standard of review for this action which is governed by the Employee Retirement Income Security Act of 1');">1');">1');">1974 (“ERISA”). [Record Nos. 35');">35');">35');">35');">35');">35');">35');">35, 36, and 36-1');">1');">1');">1] Plaintiff Jennifer Smith asserts that the Court should conduct a de novo review of Defendant Hartford Life and Accident Insurance Company's (“Hartford”) denial of her long term disability (“LTD”) benefits claim. [Record No. 35');">35');">35');">35');">35');">35');">35');">35] Conversely, Hartford contends that an arbitrary and capricious standard of review is applicable under the facts presented. [Record Nos. 36 and 36-1');">1');">1');">1]

         Smith seeks relief pursuant to the ERISA civil enforcement provision section 502(a)(1');">1');">1');">1)(B), codified at 29 U.S.C. § 1');">1');">1');">11');">1');">1');">132(a)(1');">1');">1');">1)(B). Pub. L. No. 1');">1');">1');">11');">1');">1');">13-235');">35');">35');">35');">35');">35');">35');">35, Tit. I, § 502(a)(1');">1');">1');">1)(B), 1');">1');">1');">128 Stat. 2793 (201');">1');">1');">14) (codified as amended at 29 U.S.C. § 1');">1');">1');">11');">1');">1');">132(a)(1');">1');">1');">1)(B)). “[A] denial of benefits challenged under § 1');">1');">1');">11');">1');">1');">132(a)(1');">1');">1');">1)(B) is to be reviewed under a 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.” Firestone Tire and Rubber Co. v. Bruch, 89 U.S. 1');">1');">1');">101');">1');">1');">1');">489 U.S. 1');">1');">1');">101');">1');">1');">1, 1');">1');">1');">11');">1');">1');">15 (1');">1');">1');">1989). “When such authority is granted, the highly deferential arbitrary and capricious standard of review is appropriate.” Castor v. AT&T Umbrella Benefit Plan No. 3, 728 Fed. App'x 457, 463 (6th Cir. 201');">1');">1');">18');">1');">1');">1');">18) (internal citations and quotations omitted).

         The pertinent question at this time, however, is not whether Smith's policy accounted for such administrator discretion. The Group Long Term Disability Policy (“Plan”) at issue specifies: “The plan administrator and other plan fiduciaries have discretionary authority to determine Your eligibility for and entitlement to benefits under the Policy.” [Record No. 1');">1');">1');">18');">1');">1');">1');">18, 8');">p. 48] Instead, the issue is whether the Court should apply de novo review despite Hartford's ostensible discretionary authority as administrator under the Plan.

         After careful review of the record, the Court finds that an arbitrary and capricious standard is appropriate to evaluate Hartford's denial of Smith's claim for LTD benefits.

         I.

         Smith has been a resident of Fayette County, Kentucky at all times relevant to this proceeding.[1');">1');">1');">1" name= "FN1');">1');">1');">1" id="FN1');">1');">1');">1">1');">1');">1');">1] [Record No. 1');">1');">1');">1, p. 2');">p. 2');">p. 2');">p. 2] While working at Countrywide Financial Corporation, she enrolled in the company's Plan which was issued by Continental Casualty Company (“Continental”). [Record No. 1');">1');">1');">18');">1');">1');">1');">18, pp. 5-79] Continental initially had discretionary authority to evaluate claims under the Plan. Id. at 8');">p. 48.

         Smith's health deteriorated and she ceased working at Countrywide on January 31');">1');">1');">1, 2001');">1');">1');">1. [Record No. 1');">1');">1');">1, p. 3');">p. 3] She filed a claim for disability benefits two days later. [Record No. 1');">1');">1');">18');">1');">1');">1');">18, p. 1');">1');">1');">156] Continental denied her claim, resulting in protracted litigation and a favorable disposition for Smith on appeal before the United States Court of Appeals for the Sixth Circuit. See Smith v. Cont'l Cas. Co., 450 F.3d 253 (6th Cir. 2006); Record No. 1');">1');">1');">1, p. 4.

         By 2007, Hartford had become the administrator and underwriter of the Plan.[2] [Record Nos. 1');">1');">1');">1 and 8] By letter dated June 8, 2007, the company approved the initial 2001');">1');">1');">1 claim and authorized retroactive as well as prospective LTD benefits payments. [Record No. 1');">1');">1');">18');">1');">1');">1');">18, pp. 2');">p. 2');">p. 2');">p. 2-3] Specifically, Hartford acknowledged that “[b]enefits for the LTD claim became payable on 8/2/2001');">1');">1');">1, after the Elimination Period (the end of the [short term disability] payment period.)”. Id. at p. 2');">p. 2');">p. 2');">p. 2. Regarding future LTD payments, Hartford noted that “we will make requests to update [Smith's] claim concerning her medical condition(s), its treatment and its functional impact to confirm she remains Disabled as defined by the policy.” Id. at p. 3.

         Hartford conducted periodic evaluations of Smith's “disabled” status over the following ten or more years. The record notably indicates that Hartford marked interactions with Smith's healthcare providers from 201');">1');">1');">14 to December 1');">1');">1');">18');">1');">1');">1');">18, 201');">1');">1');">17, using a single Claim Event I.D. Number: 1');">1');">1');">108401');">1');">1');">139. [Record Nos. 1');">1');">1');">18');">1');">1');">1');">18, p. 2');">p. 2');">p. 2');">p. 265 and 1');">1');">1');">18');">1');">1');">1');">18-1');">1');">1');">1, pp. 89, 93, 95, 97, 98, 387] The later 201');">1');">1');">17 interactions with healthcare providers directly concerned the evaluation that led to the issue in this case: Hartford's April 6, 201');">1');">1');">18');">1');">1');">1');">18, denial of Smith's claim for LTD benefits. [Record No. 1');">1');">1');">18');">1');">1');">1');">18, pp. 284-90]

         Smith appealed the April 6 denial on September 1');">1');">1');">13, 201');">1');">1');">18');">1');">1');">1');">18, pursuant to the Plan. [Record Nos. 1');">1');">1');">18');">1');">1');">1');">18-1');">1');">1');">1, pp. 1');">1');">1');">1099-1');">1');">1');">11');">1');">1');">101');">1');">1');">1 and 1');">1');">1');">18');">1');">1');">1');">18-2, pp. 2-1');">1');">1');">10] The record indicates that Hartford received a facsimile of the appeal on September 1');">1');">1');">13. [Record No. 1');">1');">1');">18');">1');">1');">1');">18-1');">1');">1');">1, p. 1');">1');">1');">1098] The company wrote to Smith on November 1');">1');">1');">1, 201');">1');">1');">18');">1');">1');">1');">18, stating that, pursuant to ERISA, it would extend the appeal review period by forty-five days because it “determined that a comprehensive medical review [w]as necessary of all the medical evidence contained in the claim file.” [Record No. 1');">1');">1');">18');">1');">1');">1');">18, p. 2');">p. 2');">p. 2');">p. 298] By letter dated November 2, 201');">1');">1');">18');">1');">1');">1');">18, Smith objected on the grounds that: (1');">1');">1');">1) Hartford's notice regarding the extension of the appeals period was late under the relevant ERISA-related regulation; and (2) the notice was defective because it did not sufficiently account for “special circumstances” warranting an extension. [Record No. 1');">1');">1');">18');">1');">1');">1');">18-2, pp. 708-09] Hartford rejected the appeal on December 4, 201');">1');">1');">18');">1');">1');">1');">18, upholding its initial April 6 denial of Smith's benefits. [Record No. 1');">1');">1');">18');">1');">1');">1');">18, pp. 2');">p. 2');">p. 2');">p. 299-303]

         Smith filed this action on February 21');">1');">1');">1, 201');">1');">1');">19, pursuant to section 502(a)(1');">1');">1');">1)(B). [Record No. 1');">1');">1');">1] She claims that she continues to qualify for LTD benefits under the Plan and is entitled to attorneys' fees under 29 U.S.C. § 1');">1');">1');">11');">1');">1');">132(g)(1');">1');">1');">1). Id. at pp. 7-8.

         II.

...


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