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Murray v. Unum Life Insurance Company of America

United States District Court, W.D. Kentucky, Louisville Division

December 20, 2019

ERIN MURRAY, Plaintiff,


          DAVID J. HALE, JUDGE

         Plaintiff Erin Murray began receiving long-term disability benefits from Defendant Unum Life Insurance Company of America when her medical conditions prevented her from working. After learning that Murray had received a settlement from a motor-vehicle accident, Unum began withholding part of Murray's benefits to cover what Unum considers an overpayment. Murray then filed a complaint pursuant to the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq, seeking a judgment that Unum's decision to offset her long-term disability benefits by the amount of her settlement was arbitrary and capricious. (Docket No. 1-2) The matter is before the Court on the parties' cross-motions for judgment on the administrative record. (D.N. 24; D.N. 25) For the reasons set forth below, the Court will deny Murray's motion and grant Unum's motion for judgment on the administrative record.


         Murray held a position as a senior marketing manager with Lexmark International, Inc., for two years. (D.N. 16-1, PageID # 128) Lexmark provided an employee benefit plan to Murray that included a long-term disability (LTD) policy serviced by Unum. (Id.) The policy provides that if Murray qualifies for benefits due to a disability rendering her unable to work, Unum will pay a benefit equal to sixty percent of her pre-disability earnings for as long as her disability lasts, through November 20, 2029. (Id., PageID # 64) The policy also provides that Unum is entitled to offset the LTD benefit by “deductible sources of income” that stem from the claimed disability, including “[t]he amount that you receive from a third party (after subtracting attorney's fees) by judgment, settlement, or otherwise.” (Id., PageID # 154)

         On March 20, 2012, Murray ceased working at Lexmark due to complications from her Meniere's Disease. (Id., PageID # 128) On June 4, 2012, Murray was involved in a car accident in Ohio. (D.N. 16-2, PageID # 821) Murray began claiming disability benefits on July 18, 2012; she stated on her claim forms that her disability stemmed from both Meniere's Disease and “[i]ntervertebral [d]isc [p]rotrusion” caused by an “[a]uto [a]ccident” on June 4, 2012. (D.N. 16-2, PageID # 94) Throughout the claim process, both in interviews and through written submissions, Murray continued to complain of both cervical injuries and Meniere's Disease. (See, e.g., id., PageID # 281; D.N. 16-2, PageID # 818 (“I was in a motor vehicle accident on June 4, 2012 . . . I suffered both back and neck injuries”), 977-79) In a telephonic interview with Unum's claim representative Doris Stout in August 2012, Murray stated that she had not filed suit in connection with the June 4, 2012 car accident and that she was “unsure if one [would] be [filed] regarding her injuries.” (D.N. 16-1, PageID # 284)

         Unum granted Murray's application for benefits in August 2012 and promptly began providing her with monthly checks. (D.N. 16-1, PageID # 454) Unum requested information from Murray regarding the car accident in a letter dated May 15, 2013, informing Murray that

Your Long Term Disability policy offsets for any amount that you receive from a third party by judgment, settlement, or otherwise. As the injuries sustained in the car accident are playing a factor in your inability to continue your Meniere's treatment and subsequently resulting in comorbid restrictions and limitations, we are considering these injuries as contributing to your ongoing disability at this time and any money that you have received as a result, other than for reimbursement of medical expenses and any designated attorney's fees, would be offset. Please advise if you have received any judgment, settlement, monthly payments or distributions from litigation or claims to a third party related to this accident. . . . Please be advised that if you have received any payment, an overpayment may exist on your claim.

(D.N. 16-2, PageID # 808) Murray did not provide any substantive response. (D.N. 24, PageID # 1631) Murray evidently filed suit in Ohio seeking compensation for her and her husband's injuries following the car accident, and in 2015 a court order held the other driver at fault. (D.N. 16-3, PageID # 1417) The parties settled and the driver's insurer paid Murray and her husband $275, 000 in settlement on October 27, 2015. (Id.) Murray maintains that $83, 266.55 was allotted to her individually and the rest to her husband for loss of consortium, although she never provided Unum with a copy of the settlement itself. (Id., PageID # 1411) After Murray began receiving Social Security Disability Income benefits in 2016, Unum offset her LTD benefits by the SSDI benefits as a deductible source of income. (D.N. 24, PageID # 1629; D.N. 16-3, PageID # 1332- 33) In 2017, after repeated requests from Unum, Murray finally submitted documentation of the car accident, evidence of the settlement she received, and additional materials indicating that her settlement would not fully cover her anticipated future medical expenses. (D.N. 16-3, PageID # 1395-1401; 1412)

         Two Unum employees considered Murray's claim and determined that the car accident settlement might not be a deductible source of income, but they suggested seeking the advice of offset specialist Andy Gaither. (Id., PageID # 1454) Gaither concluded that the settlement proceeds Murray received from the car accident constituted a deductible source of income and could be offset against her LTD benefits. (Id., PageID # 1453) Unum adopted Gaither's interpretation, informed Murray of its decision on June 23, 2017, and began reducing Murray's LTD benefits to reflect the value of the settlement offset. (Id., PageID # 1466-68) Murray appealed the decision (id., PageID # 1153-54); her appeal was denied. (Id.) Unum recovered a $22, 636.98 lump sum as reimbursement for the alleged overpayment and continues to offset Murray's LTD benefits. (Id., PageID # 1561-64)

         Murray filed her first amended complaint in Jefferson Circuit Court on January 5, 2018, alleging that Unum's offset decision violated the terms of her policy and seeking return of the lump sum she paid to Unum. (D.N. 1-2, PageID # 11) Unum removed the case to this Court on February 15, 2018, invoking the Court's federal-question jurisdiction because ERISA governs the LTD policy at issue.[1] (D.N. 1, PageID # 2) Magistrate Judge Dave Whalin instructed the parties to file simultaneous dispositive motions. (D.N. 19) In response, Unum filed its “brief, ” seeking judgment on the administrative record that its decisions were not arbitrary and capricious and that it was entitled to retain the lump sum it recovered from Murray and continue to offset Murray's benefits. (D.N. 24) Murray moved for “summary judgment” (D.N. 25), claiming that Unum's interpretation of the policy was arbitrary and capricious, or alternatively that the repayment provision was unenforceable, and that she was entitled to attorney fees and costs; Unum responded to Murray's motion.[2] (D.N. 29)


         The parties agree that ERISA governs the LTD policy at issue here. (See D.N. 22) Although challenges to benefits decisions under ERISA are based upon the administrative record available to the insurer at the time of the final denial, see Killian v. Healthsource Provident Adm'rs, Inc., 152 F.3d 514, 522 (6th Cir. 1998), and are generally reviewed under a de novo standard, see Kalish v. Liberty Mut./Liberty Life Assurance Co. of Boston, 419 F.3d 501, 505-06 (6th Cir. 2005), “[w]hen the plan vests the administrator with discretion to interpret the plan . . . the [C]ourt reviews the benefits denial under the ‘arbitrary and capricious' standard.” Corey v. Sedgwick Claims Mgmt. Servs., Inc., 858 F.3d 1024, 1027 (6th Cir. 2017) (citing Sprangler v. Lockheed Martin Energy Sys., Inc., 313 F.3d 356, 361 (6th Cir. 2002)). This standard is also known as “Firestone deference.” See Clemons v. Norton Healthcare Inc. Ret. Plan, 890 F.3d 254, 267 (6th Cir. 2018). Here, the policy at issue gives Unum “discretionary authority to make benefit determinations, ” including “determining eligibility for benefits and the amount of any benefits, resolving factual disputes, and interpreting and enforcing the provisions” of the policy. (D.N. 16-5, PageID # 1610) The plan thus satisfies the standard for applying Firestone deference as set out in Clemons. See 890 F.3d at 267. Regardless, the parties have already stipulated that the arbitrary-and-capricious standard applies. (See D.N. 22)

         Review under this standard is highly deferential. The Court must uphold a decision by the plan administrator if it was “the result of a deliberate, principled reasoning process” and is “supported by substantial evidence.” Glenn v. MetLife, 461 F.3d 660, 666 (6th Cir. 2006), aff'd, Met. Life Ins. Co. v. Glenn, 554 U.S. 105, 128 (2008). “When it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious.” Shields v. Reader's Digest Ass'n, Inc., 331 F.3d 536, 541 (6th Cir. 2003). Even if the plan administrator's conclusion conflicts with what the Court would have decided, “as long as there is a reasonable basis for the decision, it must be upheld.” Senzarin v. Abbot Severance Pay Plan for Emps. of KOS Pharms., 361 Fed.Appx. 636, 640 (6th Cir. 2011).


         A. Applicability of ...

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