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Sexton v. Group Long Term Disability Plan for Employees of Inmar Enterprises

March 7, 2006


The opinion of the court was delivered by: Judge Munley


Before the court for disposition is the defendants' motion for summary judgment in this action seeking long term disability benefits under a group insurance plan. Plaintiff is Dwight Sexton a former employee of Inmar Enterprises. The defendants are Group Long Term Disability Plan for Employees of Inmar Enterprises, Inc., and Reliance Standard Life Insurance Company ("Reliance"). The matter has been fully briefed and is ripe for disposition.


Inmar Enterprises hired plaintiff on June 12, 1995 (R. 138).*fn1 Several years later he became disabled from working due to a back injury. At the time of the onset of his disability, he served as an Assistant Manager of Sorting, Packing, Shipping and Receiving. (R. 221). He stopped working on March 5, 2001. (R. 140, 221).

Plaintiff applied for, and initially received, long-term disability benefits under the Group Long Term Disability Plan for Employees of Inmar Enterprises, Inc. (hereinafter "Plan"). Reliance, the insurer and the administrator of the Plan, awarded benefits on July 26, 2001. (R. 67). Approximately two years later, on October 15, 2003, Reliance informed plaintiff that he no longer met the policy definition of "Total Disability" and terminated his benefits. (R. 30). On November 13, 2003, plaintiff appealed the termination of benefits. (R. 15). Reliance reviewed the documentation and concluded that continued benefits were not warranted. (R. 6).

Plaintiff also received Social Security Disability Benefits. Under the Reliance policy, it is entitled to reduce the benefit amount it pays to the claimant by the amount paid in Social Security benefits. (R. 111). Reliance asserts that based upon the Social Security benefits paid, it - Reliance- overpaid the plaintiff by $19,064.00. (R. 4).

Plaintiff filed the instant case under the Employee Retirement Income Security Act of 1974 (hereinafter "ERISA"), 29 U.S.C. § 1001, et seq.. He seeks to have the court order defendants to pay all benefits due under the Plan from October 15, 2003 to the present, plus attorney fees. (Doc. 1, Compl.) The defendants filed a counterclaim for the $19,064.00 that they assert they overpaid. (Doc. 3, Answer/Counterclaim). After the close of discovery, defendants filed the instant motion for summary judgment. Although, plaintiff did not file a motion for summary judgment, in his brief he asks for judgment in his favor and against the defendants. (Plaintiff's Brief, Doc. 12 at 10). Accordingly, we will treat the case as if cross-motions for summary judgment were filed.


It is undisputed that this case arises under a federal statute, ERISA. Thus, we have jurisdiction pursuant to 28 U.S.C. § 1331 ("The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.")

Standard of Review

Granting summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. See Knabe v. Boury, 114 F.3d 407, 410 n.4 (3d Cir. 1997) (citing FED. R. CIV. P. 56(c)). "[T]his standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original).

In considering a motion for summary judgment, the court must examine the facts in the light most favorable to the party opposing the motion. International Raw Materials, Ltd. v. Stauffer Chemical Co., 898 F.2d 946, 949 (3d Cir. 1990). The burden is on the moving party to demonstrate that the evidence is such that a reasonable jury could not return a verdict for the non-moving party. Anderson, 477 U.S. at 248 (1986). A fact is material when it might affect the outcome of the suit under the governing law. Id. Where the non-moving party will bear the burden of proof at trial, the party moving for summary judgment may meet its burden by showing that the evidentiary materials of record, if reduced to admissible evidence, would be insufficient to carry the non-movant's burden of proof at trial. Celotex v. Catrett, 477 U.S. 317, 322 (1986). Once the moving party satisfies its burden, the burden shifts to the nonmoving party, who must go beyond its pleadings, and designate specific facts by the use of affidavits, depositions, admissions, or answers to interrogatories showing that there is a genuine issue for trial. Id. at 324.

The standard of review for an action brought for review of a denial of disability benefits under ERISA is not set forth in the statute. The United States Supreme Court has held that courts should ordinarily apply a de novo standard of review in assessing a plan administrator's denial of ERISA benefits. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Where the ERISA plan commits discretion to the plan administrator, however, the reviewing court applies an arbitrary and capricious standard. Skretvedt v. E.I. DuPont de Nemours and Co., 268 F.3d 167, 173 (3d Cir. 2001). Under the "arbitrary and capricious" standard, a reviewing court must defer to the plan administrator unless its decision was without reason, unsupported by substantial evidence, or erroneous as a matter of law. Id. at 173-4.

Where the plan administrator is a acting under a conflict of interest, that conflict of interest must be weighed as a factor in determining if its decision is arbitrary and capricious. Firestone, 489 U.S. at 115. The Third Circuit Court of Appeals has identified two instances where a special danger of conflict of interest warrants the application of a "heightened arbitrary and capricious" standard of review. These two instances are: 1) where the pension plan is unfunded, in other words, where the employer funds the pension plan on a claim-by-claim basis as opposed to the employer making fixed contributions to the pension fund; and 2) where the plan is administered by an entity outside of the employing company, for example, an insurance company, that does not ...

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