Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca6-14-05332/USCOURTS-ca6-14-05332-0/pdf.json

Parties Involved:
Life Insurance Company of North America
Appellee
Edward Sanford
Appellant

Document Text:

NOT RECOMMENDED FOR PUBLICATION

File Name: 15a0131n.06

No. 14-5332

UNITED STATES COURTS OF APPEALS

FOR THE SIXTH CIRCUIT

EDWARD SANFORD,

Plaintiff-Appellant,

v.

LIFE INSURANCE COMPANY OF NORTH 

AMERICA,

Defendant-Appellee.

)

)

)

)

)

)

)

)

)

)

)

ON APPEAL FROM THE 

UNITED STATES DISTRICT 

COURT FOR THE MIDDLE 

DISTRICT OF TENNESSEE

BEFORE: NORRIS, ROGERS, and WHITE, Circuit Judges.

ROGERS, Circuit Judge. On November 3, 2010, Edward Sanford retired from his job 

as an executive at LifePoint Hospitals, Inc. Five days later he injured his back while deplaning 

from his private aircraft. Sanford sought short- and long-term disability coverage from 

LifePoint’s insurer, Life Insurance Company of North America, which denied coverage on the 

ground that Sanford’s alleged disability began after his employment at LifePoint had ended. The 

district court affirmed the denial of benefits, concluding that, because Sanford was not in “Active 

Service” when the injury occurred, he was not eligible for benefits. Sanford appeals that 

decision. Because he was not in “Active Service” at the time of his injury, however, and because 

“Active Service” is a prerequisite for coverage under the relevant plans, Sanford was not entitled 

to benefits.

 Case: 14-5332 Document: 28-2 Filed: 02/13/2015 Page: 1
No. 14-5332

Sanford v. LINA

-2-

Sanford was the CEO/Administrator for LifePoint. On October 4, 2010, he notified 

LifePoint in writing that he was resigning from the company effective November 3, 2010.

Sanford v. LINA, Case No. 2:12-cv-56, doc. # 19-2, PageID 86. On the date of his retirement, he 

had accrued four weeks of paid time off (“PTO”), which LifePoint continued to pay through 

November 27, 2010. 

On November 8, 2010, Sanford flew his private plane to Louisiana. While deplaning, he 

fractured his back. He was subsequently diagnosed with multiple myeloma.

In April 2011, Sanford applied to LifePoint’s insurer, Life Insurance Company of North 

America (“LINA”), for short- and long-term disability benefits. LINA denied both claims on the 

ground that Sanford was not a LifePoint employee at the onset of his alleged disability, so that he 

was ineligible for coverage under the relevant policies (“the Plans”). A.R. 240-42, 246. 

Sanford used LINA’s internal appeals process to challenge the denials. LINA 

investigated Sanford’s claims by contacting LifePoint to confirm that Sanford’s last day of 

employment had been November 3, 2010. LifePoint confirmed as much, even double-checking 

with the current CEO of the facility where Sanford had worked. Id. at 159. After receiving 

confirmation from LifePoint that Sanford was retired at the time of his injury, LINA affirmed its 

denials on the ground that Sanford was not in “Active Service” at the time of his injury, 

meaning, under the Plans, that he was not eligible for benefits. Id. at 230-32, 254.

Several months later, Sanford filed this action for wrongful denial of short- and long-term 

disability benefits. Both parties moved for judgment on the pleadings and the district court 

ultimately granted LINA’s motion for judgment on the administrative record. Sanford v. Life Ins. 

Co. of N. Am., 1 F. Supp. 3d 829 (M.D. Tenn. 2014). The district court concluded that LINA had 

not acted arbitrarily or capriciously in concluding that Sanford was ineligible for benefits 

 Case: 14-5332 Document: 28-2 Filed: 02/13/2015 Page: 2
No. 14-5332

Sanford v. LINA

-3-

because Sanford was retired when the injury occurred. The Plans provided that a participant’s 

coverage would terminate in the event that the participant: (1) ceased to be in “Active Service”; 

or (2) was no longer a member of an “eligible class.” A.R. 275. The district court held that 

LINA’s decision was rational because, at the time of the injury, Sanford was neither a member of 

an “eligible class,” nor in “Active Service,” and was also not entitled to invoke the Continuation 

of Insurance Provision in the Plans. Sanford, 1 F. Supp. 3d at 835. Sanford appeals that 

decision.

To prevail on appeal, Sanford must demonstrate that LINA’s conclusion—that he was not 

“in Active Service” at the onset of his alleged disability—was arbitrary or capricious. See 

Firestone Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). According to the Plans:

An employee is in Active Service on a day which is one of the Employer’s scheduled 

work days if either of the following conditions are [sic] met.

1. The Employee is performing his or her regular occupation for the Employer 

on a full-time basis. He or she must be working at one of the Employer’s usual 

places of business or at some location to which the employer’s business 

requires an Employee to travel.

2. The day is a scheduled holiday or vacation day and the Employee was 

performing his or her regular occupation on the preceding scheduled work 

day.

An Employee is in Active Service on a day which is not one of the Employer’s 

scheduled work days only if he or she was in Active Service on the preceding 

scheduled work day.

A.R. 286. Sanford does not meet the first condition because he was not “performing his . . . 

regular occupation for [LifePoint] on a full time basis” at the onset of his alleged disability. Id.

Thus, he is only eligible for coverage under the Plans if he met the second condition.

LINA’s conclusion that Sanford did not meet the second condition was neither arbitrary 

nor capricious because LINA could reasonably have determined that Sanford was not on a 

“vacation day” when he injured himself, but rather retired. The Plans do not define “vacation,” 

 Case: 14-5332 Document: 28-2 Filed: 02/13/2015 Page: 3
No. 14-5332

Sanford v. LINA

-4-

so LINA was required by law to interpret that term according to its ordinary meaning. Morgan 

v. SKF USA, Inc., 385 F.3d 989, 992 (6th Cir. 2004). A “vacation,” LINA could reason, must be 

from something—be it inclement weather, the monotony of one’s daily routine, or, as is 

frequently the case, job responsibilities. See, e.g., WEBSTER’S II NEW COLLEGE DICTIONARY 

1217 (2001) (defining “vacation”). Particularly in the context of an employer’s disability plan, it 

is reasonable—and not arbitrary or capricious—to read “vacation” to mean “vacation from the 

Plan participant’s job responsibilities.” On this reading, Sanford could not “vacation” from his 

job responsibilities because, having retired, he had no job responsibilities whatsoever. Thus, 

LINA could reasonably conclude that Sanford was not on “vacation” when the injury occurred, 

meaning he would not have been “in Active Service” for purposes of receiving benefits under the 

Plans.

Sanford argues that LINA’s interpretation of “vacation” is artificially narrow, but 

language in the Plans suggests otherwise. Specifically, the Continuation of Insurance provision 

in the Plans states that, “if an Employee’s Active Service ends due to layoff, termination of 

employment, or any other termination of the employment relationship, insurance will terminate 

and Continuation of Insurance under this provision will not apply.” A.R. 307. The clear 

implication is that “an Employee’s Active Service ends” upon “any [] termination of the 

employment relationship.” LINA’s conclusion—that Sanford was not “in Active Service” at the 

onset of his disability—is in keeping with the Continuation of Insurance provision, whereas 

Sanford’s proffered interpretation of “Active Service” is not. That, too, undermines Sanford’s 

argument that LINA’s decision in this matter was arbitrary or capricious.

Sanford makes a few other arguments, none of which is compelling. First, he points out 

that, at the time of the injury, his former employer was still deducting insurance premiums from 

 Case: 14-5332 Document: 28-2 Filed: 02/13/2015 Page: 4
No. 14-5332

Sanford v. LINA

-5-

his payouts. But an otherwise ineligible employee does not somehow become eligible for 

coverage simply because he continued to pay premiums. Moss v. Unum Life Ins. Co., 495 F. 

App’x 583, 594 (6th Cir. 2012). Sanford also cites a number of cases for the proposition “that 

unused vacation time at the end of the employment relationship may extend the period of 

employment for purposes of benefit eligibility and/or calculation.” He did the same thing at the 

district court and the district court persuasively explained why each case cited by Sanford was 

inapposite. Sanford, 1 F. Supp. 3d at 836–37.

The judgment of the district court is AFFIRMED.

 Case: 14-5332 Document: 28-2 Filed: 02/13/2015 Page: 5