Appeal from the United States District Court for the Middle District of Pennsylvania. (D.C. Civil No. 92-00789).
Before: Mansmann and Lewis, Circuit Judges and McKELVIE, District Judge.*fn*
Frederick Curcio, III, M.D., died in an automobile accident while employed as a full time physician at Harrisburg Hospital, which is owned by Capital Health Systems. Capital Health sought to provide to its employees basic life insurance coverage and basic accidental death and dismemberment coverage through John Hancock Mutual Life Insurance Company. Marita L. Curcio, Frederick's widow, collected $200,000 in life insurance proceeds and $50,000 from the accidental death coverage. Claiming entitlement to an additional $150,000 in accidental death benefits because of representations made by Capital Health in its plan summary document, she brought an action, individually and as executor of Frederick's estate, against Capital Health and John Hancock under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 (1988). The district court granted summary judgment in favor of Mrs. Curcio and Capital Health and against John Hancock. John Hancock appeals and Mrs. Curcio cross-appeals to preserve her rights against Capital Health. We hold that John Hancock is not responsible either for Capital Health's inaccurate representations made to its employees or for any additional recovery under John Hancock's clearly stated policy. We further hold that Capital Health is liable under the alternative theories of breach of fiduciary duty and equitable estoppel.
The historical facts of this case are not in dispute. Since October of 1989,*fn1 John Hancock has provided life insurance and accidental death and dismemberment insurance for all full-time Capital Health employees in an amount equal to the employee's base annual salary to a maximum of $50,000. John Hancock also offered twenty-one senior employees, who had the same basic coverage as the other employees, the opportunity to purchase supplemental coverage, for both life and AD&D, up to the amount they were currently receiving. Because no one could be added to this group of employees, it became known as the frozen group. Dr. Curcio was not a member of this group.*fn2
One year later Capital Health wanted to extend to all employees the opportunity to purchase the same supplemental coverage from John Hancock as offered to the frozen group. Capital Health held group meetings for its employees where it introduced the supplemental coverage through an audio-visual presentation, explaining that supplemental insurance could be purchased in amounts equaling one, two or three times the amount of an employee's base annual salary, not to exceed $150,000. This coverage amount would be in addition to the coverage amount provided by the basic plan. The presentations clearly represented to the employees that this option was available "to increase your life and AD&D insurances significantly." The audiotape, which was accompanied by slides, stated in pertinent part:
Finally, let's look at other important elections you have available under choice plus.
Capital Health provides free group life and accidental death and dismemberment -- or AD&D -- insurance for all full-time and part-time employees scheduled to work at least 16 hours a week. Each of the coverages is equal to:
. One Times Basic Average Earnings up to a Maximum of $50,000 for full-time employees and,
. One Times Basic Average Earnings up to a Maximum of $25,000 for part-time employees.
You also have an opportunity of purchasing additional coverages up to three times basic average earnings subject to the maximums shown on the chart. (Chart on Screen)
The contributions you pay for these coverages are at low group rates and depend on your amount of coverage and your age. An important point: unless you take advantage of increasing your insurance coverages now, you will only be able to "step up" one additional level of coverage per year -- until you reach your coverage limit -- if you want higher levels of coverage in the future. In short, this is a one time offer. You can either take advantage of the current enrollment period to increase your life and AD&D insurances significantly or wait until future years to increase coverages on a slower year to year basis. (Emphasis added.)
The dispute is whether the supplemental insurance offered to all the employees was the same as the coverage offered to the frozen group; specifically, did the supplemental coverage include life and AD&D? John Hancock claims the supplemental coverage only included life insurance, and it points to the differing language in each group's policies to support its position.*fn3
Dr. Curcio's salary made him eligible to purchase the maximum amount of coverage, which he did. Capital Health charged him bi-weekly premiums of $6.00 for this coverage. The record indicates, and the district court so found, that Dr. Curcio believed his coverage to include both life and AD&D insurance. On August 5, 1991, Dr. Curcio died in an automobile accident.
A representative from Capital Health, James Henry, made an inquiry by telephone to John Hancock regarding a determination of benefits due Mrs. Curcio. Then Assistant Sales Manager, Richard Lintner, responded that Dr. Curcio had $400,000 in coverage ($50,000 basic life, $50,000 basic AD&D, $150,000 supplemental life, and $150,000 supplemental AD&D).
Shortly thereafter John Hancock recanted its oral representation of coverage and expressed, before a claim was filed, that its preliminary determination was incorrect and that Dr. Curcio had $150,000 in supplemental life coverage only, giving his beneficiary a total benefits package of $250,000. John Hancock claimed that employees in Dr. Curcio's position never had the opportunity to purchase supplemental AD&D coverage, and even if they did, Dr. Curcio only paid premiums for $150,000 in supplemental life coverage.*fn4
Subsequently, Mrs. Curcio filed a claim with John Hancock for proceeds due. John Hancock tendered a check to her in the amount of $250,000. Mrs. Curcio initiated this lawsuit to recover an additional $150,000 in supplemental AD&D benefits.
The district court concluded that the terms of the policy were ambiguous and, applying the doctrine of contra proferentum, granted summary judgment against John Hancock in favor of Mrs. Curcio.*fn5 John Hancock appeals.
The district court also held that Capital Health was not a proper party under ERISA because it was neither a benefit plan nor a fiduciary, which resulted from the district court's finding of a lack of discretion over the determination of benefits under the plan. Thus the district court granted Capital Health's motion for summary judgment. Mrs. Curcio appeals this order as an alternative theory of recovery.
We have jurisdiction pursuant to 28 U.S.C. § 1291, and our standard of review is plenary. Fischer v. Philadelphia Elec. Co., 994 F.2d 130, 132-33 (3d Cir. 1993). Our task is to determine whether, viewing the evidence in the light most favorable to the non-moving party, there exists a genuine issue of material fact such that a reasonable factfinder could return a verdict for that party.*fn6 Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986)).
We turn first to Mrs. Curcio's claim against John Hancock Mutual Life Insurance Company. The parties concur that the only basis upon which recovery can be had against John Hancock is if there is coverage under the policy that it issued. The district court, utilizing the doctrine of contra proferentum, found coverage to exist. This is a question of law subject to plenary review on appeal. Taylor v. Continental Group, 933 F.2d 1227, 1232 (3d Cir. 1991).
The contra proferentum doctrine holds that ambiguities in an insurance policy are to be resolved in favor of the insured. Heasley v. Belden & Blake Corp., 2 F.3d 1249, 1257 (3d Cir. 1993). We look to the number of reasonable interpretations a given contract, provision, or term may receive in determining ambiguity. Taylor, 933 F.2d at 1232. If we find but one reasonable interpretation, then a fortiori there can be no ambiguity. However, if the language is susceptible to more than one reasonable interpretation, then it will be found to be ambiguous. Stendardo v. Federal Nat'l Mortgage Ass'n, 991 F.2d 1089, 1094 (3d Cir. 1993).
Here the district court held:
In this case, we conclude that reasonable persons reading the plan descriptions for the basic life insurance and the supplemental life insurance could fairly come to either of the following Conclusions: (1) that AD&D coverage is inherent in the phrase "life insurance" such that any supplemental life insurance purchased would automatically include AD&D coverage, or (2) that because AD&D is specifically referred to in the basic plan and not in the supplemental, it was simply not a part of the latter. While our determination that the language is ambiguous hinges on an objective reading of the challenged passage, we find support for this result in the confusion among the defendants in the days and weeks following Dr. Curcio's death.
Slip op. at 11-12. We disagree with the district court's analysis in two respects. First, our review of the policy does not reveal an ambiguity. Capital Health seems to have created the ambiguity. Second, the term "life insurance," when given its fundamental and universally accepted meaning, does not include AD&D coverage. Although our role here is to determine whether there are two possible meanings, were we given the task of interpreting the term, we would hold that the certainty and predictability that a literal construction of the term "life insurance" would provide would better serve the purposes of ERISA. Cf. Rohlman v. Hawkeye-Security Insurance Co., 442 Mich. 520, 502 N.W.2d 310 (Mich 1993)(giving a literal construction to the term "occupant" in interpreting the Michigan no-fault act).
The record reveals that the original policy applicable to Dr. Curcio clearly differentiated between life insurance and AD&D insurance. In the table of contents under the heading of "COVERAGES," there were two entries. Each was discussed separately, the policy set forth two different filing instructions for each respective claim, each had different termination periods, and the payment of benefits to beneficiaries was provided for separately. Most importantly, life insurance benefits were to be paid upon proof of death; however, AD&D benefits were payable in the event of an accident resulting in an enumerated injury or death. The two are mutually exclusive, that is, one could exist without the other. Suggesting that life insurance would include AD&D coverage is inconsistent with their basic definitions.
When Capital Health asked that supplemental insurance be made available to all employees, the policy was amended accordingly. First, an amendment which described the schedule for the supplemental coverage was added to the original policy, which discussed life insurance only. Subsequently a new policy was issued. This policy, similar to the original, had separate entries for life and AD&D coverage. In setting forth ...