United States District Court, D. Rhode Island
MEMORANDUM AND ORDER
J. MCCONNELL, JR. UNITED STATES DISTRICT JUDGE.
Coastal Medical, Inc., ("Coastal") and Joanne
Carnevale have brought this action against Reliance Standard
Life Insurance Company ("Reliance"), alleging that
Reliance improperly denied benefits under a life insurance
plan governed by the Employment Retirement Income Security
Act of 1974 (ERISA). The parties have filed Cross Motions for
Summary Judgment pursuant to Fed.R.Civ.P. 56. ECF Nos. 36
& 43. Reliance argues that Dr. Robert Carnevale's
policy lapsed and, therefore, benefits were properly denied.
The Plaintiffs do not dispute the lapse but instead claim
that Reliance forfeited its right to deny coverage for a
myriad of reasons, including statutory violations, waiver,
estoppel, and breach of fiduciary duties. Because the Court
finds that Reliance has shown that there is no genuine issue
as to any material fact such that a jury could find in the
Plaintiffs' favor, Reliance's Motion for Summary
Judgment is GRANTED, and the Plaintiffs' Motion for
Summary Judgment is DENIED.
Carnevale was a physician, founding shareholder, and employee
of Coastal until his death on June 27, 2015. As part of his
employment with Coastal, he participated in a group life
insurance plan, which operated as a funding mechanism for the
employer to buy back shares upon the death of a shareholder.
This life insurance policy ("Policy") was insured
by Reliance and governed pursuant to the agreed upon plan
("Plan"). Up until Dr. Carnevale's death in
2015, the premiums under the Policy were paid, but coverage
had actually lapsed on November 1, 2014.
to the Policy with Reliance, Coastal had a life insurance
policy with the Standard Life Insurance Company
("Standard"). In 2010, Coastal began negotiations
with Reliance as Coastal contemplated replacing Standard as
its insurer. In September of that year, Reliance represented
in a telephone conference with the Chief Operating Officer of
Coastal and the Vice President of Organizational Support and
Compliance for Coastal that it would match or enhance all
benefits for Coastal shareholders and employees. Later that
month, Reliance confirmed these representations in writing.
sent a contract comparison examining the benefits included in
Standard's plan and Reliance's proposed plan to
ensure that there would be no degradation of life insurance
or disability insurance upon the carrier change. This chart
detailed the benefits offered by Reliance but not all of the
terms of the Plan.
was a relevant difference-coverage. The Standard plan
continued coverage of all participants unless the
participant's employment was terminated or the
participant failed to pay the premium. Under the Reliance
plan, participants were required to be active employees and
working at least twenty hours a week at the time of their
death. This difference in coverage was not indicated in the
fall of 2010, Coastal entered into contracts with Reliance
for group life insurance and long-term disability insurance.
Under the Policy at issue, Coastal obtained $600, 000 of life
insurance coverage for Dr. Carnevale. Coastal also obtained a
second life insurance policy, a voluntary group life
insurance policy, in the amount of $30, 000 for Dr.
Carnevale. And in addition to the two life insurance
policies, Dr. Carnevale was also insured under a long-term
to the Plan, when a participant becomes ineligible, insurance
coverage lapses on the first day of the following month. An
ineligible participant is, however, granted two ways to
extend coverage. One, under the "Continuation of
Individual Insurance" provision, an employee's
coverage could continue for up to twelve additional months if
illness or disability caused the ineligibility. Under this
scenario, the plan administrator must simply pay the premiums
for the twelve months in order for the employee to remain
insured. This option was frequently used when employees
intended to return to work within a year. Two, under the
"Conversion Privilege, " the employee could convert
his or her group coverage into an individual insurance plan.
In order to utilize this privilege, "a written
application for the policy must be made by the insured within
thirty-one (31) days after he or she terminates."
Plan, Coastal delegated discretion to Reliance to interpret
the terms of the Policy and make claim determinations.
Carnevale remained an active, full-time employee of Coastal
and remained insured under the Policy for three years.
However, on October 11, 2013, Dr. Carnevale became totally
disabled and stopped working. Thus, because Dr. Carnevale was
no longer an active, full-time employee, his eligibility for
coverage terminated on the first day of the following
month-November 1, 2013. Instead of offering Dr. Carnevale the
right to convert his coverage pursuant to the Conversion
Privilege, Coastal simply continued to pay the premiums for
March 2014, Reliance sent Dr. Carnevale a letter advising him
of his possible eligibility for a total waiver of premium
under the Plan, and a few months later, Coastal sent an email
to Reliance inquiring about Dr. Carnevale's eligibility
for this waiver. The Plan included a waiver of premium in the
event of a disability, which allows coverage to remain in
effect without the need to pay premiums if the insured is
totally disabled. But in order to be eligible for the waiver,
the participant's disability must have occurred before
the participant reached the age of 60. So in response to the
inquiry, Reliance sent an email indicating that Dr. Carnevale
was not eligible, explaining that, in order to obtain the
waiver, the "disability" had to occur before the
age of 60. Because Dr. Carnevale's cancer diagnosis
occurred after the age of 60, he was not eligible. Thus,
Reliance advised Coastal that it needed to continue paying
premiums in order for Dr. Carnevale to remain insured and
told Coastal to let it know if it needed any additional
November 1, 2014, Dr. Carnevale's coverage lapsed because
the continuation of coverage provision that allowed him to
remain insured was only available for twelve months.
Nevertheless, Coastal, as the plan administrator, continued
to pay premiums, and Reliance accepted the premiums until Dr.
Carnevale's death on June 27, 2015. After Dr.
Carnevale's death, Coastal filed a claim for benefits. In
a letter dated July 20, 2015, Reliance determined that Dr.
Carnevale was not insured at the time of his death and,
therefore, denied Coastal's claim. The Plaintiffs'
then appealed, and on October 6, 2015, Reliance upheld its
denial. As a result of this denial, the Plaintiffs brought
the instant action.
motion for summary judgment should be granted if the
pleadings, discovery, disclosure materials on file, and any
affidavits "show that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a
matter of law." Fed.R.Civ.P. 56(a). A
"'genuine' issue is one that could be resolved
in favor of either party, and a 'material fact' is
one that has the potential of affecting the outcome of the
case." CalewCerezo v. U.S. Dep't of
Justice, 355 F.3d 6, 19 (1st Cir. 2004) (quoting
Anderson v. Liberty Lobby, Inc., 471 U.S. 242,
moving party bears the burden of establishing that no genuine
issues of material fact exist. Flovac, Inc. v. Airvac,
Inc., 817 F.3d 849, 853 (1st Cir. 2016). Once the moving
party has made the requisite showing, the non-moving party
may not merely rely on allegations or denials in its own
pleading; rather, its response must-by affidavits or as
otherwise provided in the rule-set out specific facts showing
a genuine issue for trial. Braga v. Hodgson, 605
F.3d 58, 60 (1st Cir. 2010). In applying this standard, the
Court views the record in the light most favorable to the
non-moving party, accepting all reasonable inferences
favoring that party. Cont'l Cas. Co. v, Canadian
Universal Ins. Co., 924 F.2d 370, 373 (1st Cir. 1991).
"This standard applies even where . . . the district
court is faced with summary judgment motions from all
agreed by all the parties, the Court reviews the issues
herein de novo because ...