United States District Court, E.D. Virginia, Alexandria Division
O'Grady United Stales District Judge.
matter comes before the court on Plaintiff Kenette
Suter's plea for declaratory judgment against UNUM Life
Insurance Company of America ("UNUM") under the
Employee Retirement Income Security Act of 1974
("ERISA") seeking life insurance benefits due to
her, as beneficiary under the terms of her husband Michael
Suter's employee benefit plan. Plaintiff alleges that
Defendant failed to provide benefits under ERISA, failed to
conduct a full and fair review under ERISA, and breached its
fiduciary duty. The parties cross-moved for summary judgment.
For the reasons discussed below, Defendant's Motion for
Summary Judgment, Dkt. No. 17, is DENIED and Plaintiffs
cross-Motion for Summary Judgment, Dkt. No. 20, is GRANTED.
The matter is remanded to the Plan Administrator for a review
consistent with this memorandum opinion.
following factual background, policy information, and
procedural history are taken from the claim folder associated
with the ERISA review process. As discussed in Part II,
Plaintiff disputes some of these factual representations but
the claim folder remains the bedrock of the Court's
analysis in this case. See Williams v. Metro Life Ins.
Co., 609 F.3d 622, 631 (4th Cir. 2010).
Suter was the majority shareholder, president, and CEO of
International Preparedness Associates, Inc.
("IPA"). Mr. Suter formed IPA with Scott Freeman in
June 2007. Plaintiff also worked at IPA, where she was
responsible for payroll. IPA sponsored a group employee
benefit plan that included the life insurance policy at issue
in this case, with an effective date of coverage of October
1, 2009. As of October 1, 2013, Mr. Suter had $250, 000 of
life insurance coverage. Sometime after obtaining coverage,
Mr. Suter contracted laryngeal cancer. By April 2014, Mr.
Suter's illness prevented him from coming into the
office. Mr. Suter attempted, and did continue, to work from
home via email until May 2014. On May 6, 2014, Mr. Suter and
Mr. Freeman emailed one another about a potential sale of
IPA. There is no record of any work-related emails from Mr.
Suter after that date. Pursuant to an agreement with Mr.
Freeman, Mr. Suter continued to collect his normal paycheck
until June 1, 2014. Plaintiff also issued a paycheck to Mr.
Suter for June 1-15, 2014.
the same time that Mr. Suter received his final paycheck from
IPA, Plaintiff inquired with the IPA insurance broker about
accelerating death benefits under Mr. Suter's life
insurance policy. The broker contacted Defendant on June 11,
2014, and Defendant sent the documents required to accelerate
benefits to the broker and to Plaintiff that day. In the same
correspondence, Defendant also advised that Mr. Suter had not
yet filed for short or long-term disability benefits.
Defendant provided the application paperwork for these
benefits along with the accelerated benefit paperwork.
Defendant has no record of a request by Plaintiff or Mr.
Suter to accelerate benefits or apply for short or long term
Suter passed away on July 18, 2014. Plaintiff filed a claim
for benefits with Defendant sometime shortly thereafter.
maintains an employee benefit plan through Defendant that
sponsors a life insurance policy, policy number R0140020
("the Policy"), for its employees. In general, the
Policy provides for life insurance benefits in the event that
an employee passes away while covered by the Policy.
Policy defines the terms necessary for its life insurance
benefits determinations. The Policy states that coverage
"ends on the earliest of: ... [t]he date you no longer
are in an eligible group;... [t]he last day you are in active
employment unless continued due to a covered layoff or leave
of absence or due to an injury or sickness, as described in
this certificate of coverage. The Policy defined "eligible
group" as "[o]wners in active employment in the
United States with the Employer" subject to a minimum
hours requirement of 40 hours a week to maintain coverage.
The policy also provides an exception to active employment
for employees who are "not working due to sickness or
injury" whereby an employee can maintain coverage until
their retirement date so long as premiums are paid for the
Policy also allows an employee to carry on their benefits by
converting them to an individual life insurance policy after
employment terminated. To do so, the employee is required to
apply for the coverage and pay the first premium within 31
days of termination. The Policy also allowed for coverage to
continue in the event of disability claims by policy holders
less than 60 years of age. Finally, the Policy allowed for
the acceleration of death benefits for terminally ill
patients where: (a) an election for such benefit was made
"in writing, on a form acceptable to UNUM, " (b)
the participant was terminally ill; (c) a physician
certification of life expectancy less than twelve months; and
(d) UNUM approved the certification. The employee and the
employer are each required to complete separate sections of
the accelerated benefit claim form in order for UNUM to
process the claim. The policy defines terminal illness as one
which reduces life expectancy to less than 12 months.
is responsible for administering the plan and making any
benefits determinations under the plan. The Policy explicitly
disclaims an agency relationship between the participant and
the Defendant, by and through the employer.
receiving notice of Mr. Suter's passing, Defendant
submitted a claim to IP A seeking information necessary to
assess the benefits claim. IPA's finance director,
Brittany Berry, completed the claim form on August 26, 2014.
Ms. Berry stated on the form that Mr. Suter's employment
had "terminated" on June 15, 2014 and that Mr.
Suter's last day physically present in the office was
April 28, 2014. In response to the question: "was this
employee terminated", Ms. Berry responded
also called Ms. Berry on September 3, 2014 to confirm the
information provided on the claim form. Ms. Berry directed
Defendant to speak with Mr. Freeman who confirmed that Mr.
Suter was terminated on June 1, 2014 but paid until June 15,
2014. Mr. Freeman also emailed Defendant two days later to
explain that he and Mr. Suter were co-owners of IP A and
recounted that Mr. Suter had become too ill to work in the
office in April 2014, continued to correspond via email until
sometime in May 2014, and that it was agreed that he would
receive a salary until June 1, 2014; though Mr. Freeman
acknowledged that a final paycheck was actually issued on
June 15, 2014. This email exchange with Defendant led to a
second phone call the same day whereupon Mr. Freeman
clarified that Mr. Suter was not fired, and therefore he did
not prefer to describe him as "terminated" but that
he had ceased to be an employee as of June 1, 2014.
of the diligence process, Defendant also reviewed its own
records to confirm that Mr. Suter had not sought short or
long term disability benefits and had not attempted to
convert his group policy to individual coverage. There is no
evidence in the record that Defendant followed up with
Plaintiff or IP A regarding the acceleration of benefits
claim form which was sent to Plaintiff, upon her request, on
June 11, 2014. Defendant also discovered that premiums on the
policy had been paid through August 1, 2014. Upon discovering
this, Defendant credited IPA's bill for all premiums paid
on Mr. Suter's behalf after June 1, 2014.
basis of the foregoing diligence, Defendant determined that
Mr. Suter was no longer an employee of IP A at the time of
his death and was therefore not covered by the Policy.
Defendant issued a denial of benefits letter and summary of
findings to Plaintiff on September 11, 2014.
through counsel, appealed Defendant's decision on
December 9, 2014. Plaintiff argued on appeal that Mr.
Suter's employment had not ended on June 1, 2014 because
Mr. Freeman did not tell Defendant that Mr. Suter's
employment had ended. Plaintiff offered as evidence a May 6,
2014 email exchange between Mr. Freeman and Mr. Suter
regarding the sale of IPA. Plaintiff also contended that Mr.
Suter was still the owner of IP A at the time of his death.
Defendant upheld its denial on January 30, 2015. In the