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Neal v. Life Insurance Co. of North America

United States District Court, W.D. Pennsylvania

January 23, 2017

JAMES NEAL, Plaintiff,
v.
LIFE INSURANCE COMPANY OF NORTH AMERICA, et al., Defendants.

          MEMORANDUMANDORDER

          Cathy Bissoon, United States District Judge

         In his Complaint, Plaintiff James Neal challenges Life Insurance Company of North America (“LINA”)'s denial of his claim for long term disability benefits under a Group Policy (the “Plan”) administered by LINA on behalf of Defendant Diebold Inc. (Compl. (Doc. 1)). At the initial case management conference held on January 4, 2017, the parties reported two disputes to the Court. First, counsel expressed disagreement as to the appropriate standard of review in this case. Plaintiff's counsel argued that the Court should review LINA's denial of benefits to Plaintiff under a de novo standard of review, whereas defense counsel argued that an abuse of discretion standard should apply. Second, the parties disagreed as to whether discovery beyond the administrative record is warranted.

         Following the initial case management conference, on January 4, 2017, the Court ordered the parties to file cross-briefing addressing the appropriate standard of review and scope of discovery in this case. (Doc. 18). The parties filed their respective briefs on January 18, 2017. (Docs. 21 and 22). After reviewing the parties' briefing, for the reasons discussed in further detail below, the Court agrees with Defendants that the abuse of discretion standard is the appropriate standard of review in this case, and that no additional discovery beyond the administrative record is warranted.

         I. MEMORANDUM

         A. The Standard of Review

         The Court turns first to the parties' arguments as to the proper standard of review in this case. The parties seem to agree that, if the Plan grants discretionary authority to LINA to determine eligibility for benefits, the standard of review is one of abuse of discretion. (See Defendants' Brief (Doc. 21) at 3 (“Where a plan grants discretionary authority to the administrator to determine eligibility for benefits, a deferential arbitrary and capricious review, also known as the abuse of discretion standard, is appropriate ‘across the board.'”) (citing Estate of Schwing v. The Lilly Health Plan, 562 F.3d 522, 525 (3d Cir. 2009)); Plaintiff's Brief (Doc. 22) (“The denial of benefits under 1132(a)(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.”) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). The parties disagree, however, as to whether the Plan in this case grants LINA such discretionary authority. (Contrast Doc 21 at 3 (“Here, the Plan grants such discretion to LINA in a number of governing Plan documents.”) with Doc. 22 at 1 (“[T]he Group Plan does not contain any grant of discretionary authority.”)).

         In reviewing the Plan documents, the Court agrees with Defendants that the Plan in this case unambiguously provides that LINA has discretionary authority to determine a claimant's eligibility for benefits. As Defendants note in their briefing, the policy itself states that LINA has been “appointed . . . as the named fiduciary for deciding claims for benefits under the Plan, and for deciding any appeals of denied claims.” (Doc. 21, Ex. C at 19). Although this language alone may be insufficient to confer the requisite discretion to LINA, other Plan documents consistently and unambiguously provide for such discretion. Specifically, the Group Long-Term Disability Insurance Certificate states, in relevant part:

The Plan Administrator [Diebold] has appointed the Insurance Company [LINA] as the named fiduciary for adjudicating claims for benefits under the Plan, and for deciding any appeals of denied claims. The Insurance Company shall have the authority, in its discretion, to interpret the terms of the Plan, decide questions of eligibility for coverage or benefits under the Plan, and to make any related findings of fact. All decisions made by the Insurance Company shall be final and binding on Participants and Beneficiaries to the full extent permitted by law.

(Doc. 21, Ex. B at 17) (emphasis added).

         Likewise, the Plan documents include an “Appointment of Claim Fiduciary” form (“ACF”), which reiterates the grant of discretionary authority to LINA as follows:

Claim Fiduciary shall have the authority, in its discretion, to interpret the terms of the Plan, including the Policies; to decide questions of eligibility for coverage or benefits under the Plan; and to make any related findings of fact.

(Doc. 21, Ex. D).

         Plaintiff argues that the Court should not consider the ACF in determining whether the Plan provides discretionary authority to LINA, citing to a decision from the district court for the Middle District of Pennsylvania, Moran v. Life Ins. Co. of N. Am. Misericordia Univ., 2014 WL 4251604, at *4 (M.D. Pa. Aug. 27, 2014). However, the Moran decision is not binding on this Court, and the Court finds more persuasive those decisions reaching the opposite conclusion, i.e., that language in an ACF granting discretionary authority to an insurer should be considered for purposes of determining the proper standard of review in an ERISA case. See, e.g., Gailey v. Life Ins. Co. of N. Am., 2016 WL 6082112, at *4 (M.D. Pa. Oct. 17, 2016) (finding that language in an ACF stating that the insurer has “authority, in its discretion, to interpret the terms of the Plan, including the Policies; to decide questions of eligibility for coverage or benefits under the Plan; and to make any related findings of fact . . . is exactly [the type of delegation of discretionary power that] the Supreme Court contemplated in Firestone.”); accord Raybourne v. CIGNA Life Ins. Co. of N.Y., 576 F.3d 444 (7th Cir. 2009); Lawrence v. Life Ins. Co. of N. Am., 2007 WL 2410180, at *5 (N.D. Ill. Aug. 20, 2007) (“[U]nambiguous discretionary language in the . . . [ACF] form renders the arbitrary and capricious standard of review appropriate”).

         In short, the Court finds that the Plan documents, including the policy itself, the Group Long-Term Disability Insurance Certificate and the ACF, plainly grant LINA discretionary authority to determine plan eligibility. Accordingly, the Court will review LINA's benefits decision in ...


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