United States District Court, M.D. Pennsylvania
SANDRA A. MRAZ, Plaintiff,
AETNA LIFE INSURANCE COMPANY, Defendant.
RICHARD P. CONABOY, District Judge.
We consider here competing Motions for Summary Judgment (Docs. 46 and 47) filed by Plaintiff Sandra A. Mraz ("Plaintiff" or "Mraz") and Defendant Aetna Life Insurance Company ("Aetna"). These motions have been fully briefed (Docs. 49, 52, 59, 60, 62 and 63) by the parties and are now ripe for our consideration.
I. Procedural Background.
This case originated in the Lackawanna County Court of Common Pleas and was removed to this Court on April 20, 2012 by Aetna due to the fact that the case is a dispute concerning insurance benefits under a federal statute, 29 U.S.C. § 1001 et. seq. ("ERISA") (Doc. 1). After initial sparring over the propriety of some of Plaintiff's claims, Plaintiff filed an Amended Complaint (Doc. 9) seeking recovery of wrongfully denied benefits pursuant to ERISA § 1132 (a) (1) (B), breach of fiduciary duties pursuant to ERISA § 1132 (a) (2), failure to comply with plan terms pursuant to ERISA § 1132 (a) (3), and reasonable attorneys fees. (Doc. 51, ¶ 7; Doc. 64, ¶ 7).
Aetna failed to produce an Administrative Record and to file its Answer to Plaintiff's Amended Complaint within the discovery deadline established by the Court. (Doc. 6). Nevertheless, the court entered an Order (Doc. 35) on April 15, 2013 that sanctioned Aetna's late submitted Administrative Record as the definitive Administrative Record in this case. The Court's Order of April 15, 2013 also granted the Plaintiff's attorneys additional time to conduct further discover if, after reviewing the Administrative Record, they determined that it was insufficient to place all relevant information before the Court. Plaintiff did propound discovery requests upon Aetna to which Aetna responded after the parties entered a Confidentiality Agreement. This material resulted in a supplement to the Administrative Record that was filed under seal and has also been considered by this Court.
II. Factual Background.
Plaintiff's decedent, David Mraz, was killed in an accident on September 13, 2009. (Doc. 9 at ¶ 15). Mr. Mraz had been employed since May 21, 2007 by General Dynamics Corporation. ( Id., ¶ 9). Mr. Mraz was covered by an ERISA Plan (the "Plan") that offered both basic and supplemental life insurance coverage. ( Id., ¶ 8). The Plan was underwritten by Defendant Aetna. (Doc. 48, ¶ 22; Doc. 64, ¶¶ 20-25).
After Mr. Mraz's death, Plaintiff requested payment of insurance benefits pursuant to the Plan and was paid $64, 900.00 in recognition of Mr. Mraz's basic life insurance benefit under the Plan. (Doc. 51, ¶ 56; Doc. 61, ¶ 56). Despite the fact that a "Proof of Death" form (Doc. 9-2) prepared by Aetna indicated that $129, 800.00 in supplemental life insurance was "in force" at the time of Mr. Mraz's death, Aetna declined to pay that additional sum and requested Mr. Mraz's medical records. (Docs. 51, ¶¶ 49 and 56; Doc. 61, ¶¶ 49 and 56). Plaintiff complied with Aetna's requests for decedent's medical records whereupon Aetna received decedent's treatment records from Dr. Linda Thomas Hemack and Dr. Matthew Berger. (Docs. 51, ¶ 57; Doc. 61, ¶ 57). After reviewing Mr. Mraz's medical records, Aetna concluded that Mr. Mraz had made material misstatements on his Evidence of Insurability Statement ("EOI") which had been submitted with his application for supplemental life insurance benefits. (Doc. 9, ¶¶ 19-22; Doc. 19. ¶¶ 19-22). Aetna ultimately denied payment of the supplemental insurance benefits for which Plaintiff had applied by letter (Doc. 9-4) dated May 11, 2010. (Doc. 9, ¶ 20; Doc. 19, ¶ 20).
Aetna's denial letter of May 11, 2010 provided its explanation of why it had paid basic life insurance benefits in the amount of $64, 500.00 but would not pay an additional supplemental benefit of $129.800.00. Aetna's letter explained that, because Mr. Mraz had not applied for supplemental benefits within 31 days of his "eligibility date" as required by the Plan, coverage could not take effect until he submitted "evidence of good health acceptable to Aetna." A review of the Summary of Coverage Section of the policy (Doc. 9-1 at 1) discloses that one's "eligibility date" under the Plan is defined as "the later of the effective date of the policy (in this case March 1, 2003) or the date one actively commences work for the employer." The parties do not dispute that Mr. Mraz began work at General Dynamics on May 21, 2007. (Doc. 9 at ¶ 9; Doc. 19 at ¶ 9). Thus, Mr. Mraz's "eligibility date" under the Plan was May 21, 2007.
Aetna's letter of May 11, 2010 (Doc. 9-4) also advised Plaintiff that its review of Mr. Mraz's medical records indicated that he had made a material misstatement at the time he submitted his EOI and, as a result, he did not have supplemental insurance coverage at the time of his death. Aetna called Plaintiff's attention to the "Misstatement" section of the Plan (Doc. 9-1 at 27) which states:
If any fact as to a person to whom the insurance relates is found to have been misstated, a fair change in premium will be made. If the misstatement affects the existence or amount of insurance, the true facts will be used to decide if insurance is in force and its amount.
Aetna identified Mr. Mraz's misstatement as his failure to acknowledge on his EOI that he had been treated for bipolar disorder, a condition that Aetna stated should have resulted in a denial of supplemental coverage according to its "Medical Underwriting Guidelines".
Aetna's letter to Plaintiff of May 11, 2010 also advised Plaintiff that she had a right to make an administrative appeal of its decision and, if the denial was upheld on administrative appeal, to file a civil action in federal court. Plaintiff was also advised that Aetna would consider "any other claim information or documentation you believe would assist us in reviewing your claim."
After receiving Aetna's letter, Plaintiff retained counsel who submitted additional medical records concerning Mr. Mraz. By letter dated March 24, 2011 (Doc. 9-5), Aetna advised Plaintiff's counsel that its Medical Underwriting Consultant had reviewed the additional medical information and had concluded that it corroborated Aetna's previous conclusion that Mr. Mraz had been treating for bipolar disorder as diagnosed by ...