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UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF TEXAS

AUSTIN DIVISION

TAYAUN MESSER,

Plaintiff

v.

THE LINCOLN NATIONAL LIFE 

INSURANCE COMPANY,

Defendant

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Case No. 1:20-CV-00125-LY

REPORT AND RECOMMENDATION

OF THE UNITED STATES MAGISTRATE JUDGE

TO: THE HONORABLE LEE YEAKEL

UNITED STATES DISTRICT JUDGE

Before the Court are Defendant’s Motion for Summary Judgment, filed December 11, 2020 

(Dkt. 14); Plaintiff’s Response to Defendant’s Motion for Summary Judgment and Cross-Motion 

for Summary Judgment, filed January 15, 2021 (Dkt. 17); and the associated response and reply 

briefs. On March 15, 2021, the District Court referred the motions to the undersigned 

Magistrate Judge for Report and Recommendation, pursuant to 28 U.S.C. § 636(b)(1)(B), Federal 

Rule of Civil Procedure 72, and Rule 1(d) of Appendix C of the Local Rules of the United States 

District Court for the Western District of Texas. Dkt. 22.

I. Background

Plaintiff Tayaun Messer, a citizen of Georgia, brings this lawsuit under the Employee 

Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001-1461 (“ERISA”). 

Messer seeks to recover benefits under her employer-provided long-term disability (“LTD”) 

insurance policy. 

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On October 28, 2013, Plaintiff began her employment with Alliance for Cooperative Energy 

Services Power Marketing, LLC (“ACES”), a nationwide energy management company

headquartered in Carmel, Indiana, as a Manager of Regulatory and Market Affairs. As part of her 

employee benefits, Plaintiff was provided LTD insurance under ACES’s ERISA-governed 

employee welfare benefit plan (the “Policy” or the “Plan”). The Plan was issued and administered 

by Defendant Lincoln National Life Insurance Company (“Lincoln”), an Indiana company with its 

principal place of business in Fort Wayne, Indiana. The Policy provides an insured with monthly 

disability benefits if the insured becomes “Totally Disabled.” Dkt. 12-1 at 234. The amount of the 

monthly disability benefit is calculated based on the insured’s basic monthly income from the 

calendar year before the disability date. Id. at 215. 

In January 2014, Plaintiff fell at her home and seriously injured her hip. On November 19, 

2014, Plaintiff stopped working “due to a diagnosis of a closed fracture of the neck of her femur, 

avascular necrosis and a labral tear.” Dkt. 1 ¶ 6. Plaintiff continued to have discomfort in her hip 

and underwent two hip surgeries (including a hip replacement) and multiple injections, and also

received physical therapy. 

On April 16, 2015, Plaintiff filed a claim under the Policy for LTD benefits, alleging that her 

injuries precluded her from performing her job because she had difficulty sitting, standing, 

walking, and using stairs. Lincoln approved Plaintiff’s claim and began paying her monthly 

benefits of $7,760.18 for the disability period from May 18, 2015 to June 18, 2015. The Policy 

provided that benefits would continue for 24 months “as long as you are unable to perform the 

main duties of your Own Occupation.” Dkt. 12-1 at 3992. However, on November 21, 2016, 

Lincoln terminated Plaintiff’s benefits because it found that Plaintiff no longer met the Policy’s 

definition of “Total Disability” from performing her Own Occupation. Id. at 3452. Plaintiff 

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appealed and, on August 14, 2017, Lincoln reversed its decision, reinstated Plaintiff’s benefits,

and paid Plaintiff $79,686.14 in back benefits. Id. at 1197, 1431-32.

Lincoln no longer disputes that Plaintiff is entitled to LTD benefits under the Policy. The 

parties, however, dispute the amount of monthly benefits Plaintiff is entitled to receive. Plaintiff 

complains that Lincoln miscalculated her pre-disability income and underpaid her benefits as a 

result. Specifically, Plaintiff argues that Lincoln should have included a $7,970 bonus she received 

in 2014 in determining the amount of her monthly disability benefits. Thus, Plaintiff contends that 

she should be receiving $9,533.52 in monthly disability benefits instead of the $7,291.98 she 

currently receives. 

After exhausting her administrative remedies, Plaintiff filed suit under 29 U.S.C. 

§ 1132(a)(1)(B), alleging that Lincoln has underpaid her $159,000 in benefits owed under the 

Policy. In its Motion for Summary Judgment, Lincoln argues that its calculation of Plaintiff’s 

monthly benefits is reasonable and supported by substantial evidence. In her Cross-Motion for 

Summary Judgment, Plaintiff argues that she is entitled to summary judgment because Lincoln’s 

calculation of her monthly benefits is erroneous. 

II. Legal Standards

A. Summary Judgment 

Summary judgment shall be rendered when the pleadings, the discovery and disclosure 

materials, and any affidavits on file show that there is no genuine dispute as to any material fact 

and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a); Celotex 

Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Washburn v. Harvey, 504 F.3d 505, 508 (5th Cir. 

2007). A dispute regarding a material fact is “genuine” if the evidence is such that a reasonable 

jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 

U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to 

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view all inferences drawn from the factual record in the light most favorable to the nonmoving 

party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Washburn, 504 F.3d 

at 508. A court “may not make credibility determinations or weigh the evidence” in ruling on a 

motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 

(2000); see also Anderson, 477 U.S. at 254-55.

Once the moving party has made an initial showing that there is no evidence to support the 

nonmoving party’s case, the party opposing the motion must come forward with competent 

summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. 

Mere conclusory allegations are not competent summary judgment evidence, and thus are 

insufficient to defeat a motion for summary judgment. Turner v. Baylor Richardson Med. Ctr., 

476 F.3d 337, 343 (5th Cir. 2007). Unsubstantiated assertions, improbable inferences, and 

unsupported speculation also are not competent summary judgment evidence. Id. The party 

opposing summary judgment is required to identify specific evidence in the record and to articulate

the precise manner in which that evidence supports its claim. Adams v. Travelers Indem. Co. of 

Conn., 465 F.3d 156, 164 (5th Cir. 2006). If the nonmoving party fails to make a showing sufficient 

to establish the existence of an element essential to its case and on which it will bear the burden of 

proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.

On cross-motions for summary judgment, the Court reviews each party’s motion 

independently, in the light most favorable to the non-moving party. Amerisure Ins. Co. v. 

Navigators Ins. Co., 611 F.3d 299, 304 (5th Cir. 2010).

B. ERISA

ERISA “permits a person denied benefits under an employee benefit plan to challenge that 

denial in federal court.” Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 108 (2008). To bring a 

successful claim under 29 U.S.C. § 1132(a)(1)(B), the claimant must show by a preponderance of 

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the evidence that he or she qualifies for the benefits provided in that plan. Singletary v. United 

Parcel Serv., Inc., 828 F.3d 342, 348 (5th Cir. 2016).

“When an ERISA plan lawfully delegates discretionary authority to the plan administrator, a 

court reviewing the denial of a claim is limited to assessing whether the administrator abused that 

discretion.” Ariana M. v. Humana Health Plan of Tex., Inc., 884 F.3d 246, 247 (5th Cir. 2018) 

(en banc). For plans that do not have valid delegation clauses, the Supreme Court has held that “a 

denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard.” 

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989).

III. Analysis

The Motions for Summary Judgment hinge on a narrow issue: whether the bonus Plaintiff 

received in 2014 should have been included in the calculation of her “Basic Monthly Earnings” 

under the Policy. See Dkt. 17 at 8 (“As stated earlier, this case hinges on whether the bonus that 

Ms. Messer earned in 2013, and included in her offer letter prior to beginning employment, is 

included in the calculation of Basic Monthly Earnings (“BME”).”); Dkt. 20 at 1 (“The core 

question before the Court is whether a bonus, paid almost three months after the calendar year 

ended, is considered Basic Monthly Earnings for the prior calendar year under the express terms 

of the Policy.”). Before addressing this ultimate issue, the Court first must determine what standard 

of review applies in this ERISA-governed suit.

A. The Abuse of Discretion Standard Applies

As stated above, when an ERISA plan lawfully delegates discretionary authority to the plan 

administrator, a court reviewing the denial of a claim is limited to assessing whether the 

administrator abused that discretion. Ariana M., 884 F.3d at 247 (citing Firestone Tire, 489 U.S. 

at 115); accord Rittinger v. Healthy All. Life Ins. Co., 914 F.3d 952, 955 (5th Cir. 2019). When a 

plan does not delegate discretion to a plan administrator validly, a court reviews denial of benefits 

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de novo. Id. at 255-56 (adopting de novo review for a denial of benefits on any ground unless the 

benefit plan gives the administrator discretionary authority). The parties dispute which standard 

applies here. 

The Policy contains the following delegation clause: 

Except for the functions that this Policy clearly reserves to the Policyholder 

or Employer, the Company has the authority to manage this Policy, interpret 

its provisions, administer claims and resolve questions arising under it. The 

Company’s authority includes (but is not limited to) the right to:

1. establish administrative procedures, determine eligibility and 

resolve claims questions;

2. determine what information the Company reasonably requires to 

make such decisions; and

3. resolve all matters when an internal claim review is requested.

Any decision the Company makes in the exercise of its authority shall be 

conclusive and binding; subject to the Insured Employee’s rights to request 

a state insurance department review or to bring legal action. This provision 

does not apply to residents of California. 

Dkt. 12-1 at 228. Lincoln argues that this provision controls and that the Court must review the 

claim determination for abuse of discretion. Plaintiff argues that the delegation clause is invalid 

because Texas prohibits discretionary clauses in insurance policies. See TEX. INS. CODE

§ 1701.062(a).1

While Plaintiff is correct that Texas law bans discretionary clauses in insurance policies, her 

argument is misplaced because Indiana law, not Texas law, applies in this case. Cf. Rittinger, 914 

F.3d at 955 (“[E]ven though Texas Insurance Code § 1701.062 bans insurers’ use of delegation 

clauses in Texas, Missouri law governs this case.”). Here, the Policy contains an Indiana choice of 

law provision. Dkt. 12-1 at 211 (“This Policy is delivered in the state of Indiana and subject to the 

laws of that jurisdiction.”). In addition, the Policy was issued by an Indiana company to an Indiana 

1 The Texas Insurance Code provides that “[a]n insurer may not use a document described by Section 

1701.002 in this state if the document contains a discretionary clause.” TEX. INS. CODE § 1701.062(a). 

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employer in the State of Indiana. See Rittinger, 914 F.3d at 955 (holding that Texas Insurance 

Code’s ban on insurers’ use of delegation clauses did not apply where the policy was sold in 

Missouri by a Missouri insurer to a Missouri employer containing a Missouri choice of law 

provision); Burrell v. Metro. Life Ins. Co., No. 1:18-CV-174-RP, 2020 WL 532934, at *6 (W.D. 

Tex. Feb. 3, 2020) (holding that Texas’ ban on delegation clauses in insurance policies did not 

apply where policy issued in Connecticut contained a New York choice of law provision).

Accordingly, the Court finds that Indiana law controls in this case. See Rittinger, 914 F.3d at 955.

Plaintiff fails to identify any Indiana law banning discretionary clauses in insurance policies.

See Grimmett v. Anthem Ins. Cos., No. 2:11-CV-12623, 2012 WL 4477218, at *7 (E.D. Mich. 

Sept. 27, 2012) (holding that Michigan’s ban on discretionary clauses did not apply where policy 

contained a choice of law clause requiring the application of Indiana law). Thus, the Policy validly 

delegates discretion to Lincoln, and the Court reviews Lincoln’s calculation of benefits 

deferentially for abuse of discretion. See Burrell, 2020 WL 532934, at *6 (“The Court concludes 

that because the parties’ choice of law is either New York or Connecticut and neither bans 

discretionary clauses, the LTD Plan validly delegates discretion to MetLife.”).

An ERISA claimant bears the burden to show that the administrator abused its discretion. 

Nichols v. Reliance Standard Life Ins. Co., 924 F.3d 802, 808 (5th Cir.), cert. denied, 140 S. Ct. 

186 (2019). The Fifth Circuit Court of Appeals has explained that a plan administrator 

abuses its discretion where the decision is not based on evidence, even 

if disputable, that clearly supports the basis for its denial. If the plan 

fiduciary’s decision is supported by substantial evidence and is not 

arbitrary and capricious, it must prevail. Substantial evidence is more 

than a scintilla, less than a preponderance, and is such relevant evidence 

as a reasonable mind might accept as adequate to support a conclusion.

A decision is arbitrary only if made without a rational connection 

between the known facts and the decision or between the found facts 

and the evidence. In other words, we must uphold the determination if 

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our review assures that the administrator’s decision falls somewhere on 

a continuum of reasonableness—even if on the low end.

Id. 

B. Calculation of Plaintiff’s BME 

Federal common law governs rights and obligations stemming from ERISA-regulated plans, 

including the interpretation of policy provisions at the heart of this dispute. Green v. Life Ins. Co. 

of N. Am., 754 F.3d 324, 331 (5th Cir. 2014). 

When construing ERISA plan provisions, courts are to give the 

language of an insurance contract its ordinary and generally 

accepted meaning if such a meaning exists. We interpret the contract 

language in an ordinary and popular sense as would a person of 

average intelligence and experience, such that the language is given 

its generally accepted meaning if there is one. Only if the plan terms 

remain ambiguous after applying ordinary principles of contract 

interpretation are we compelled to apply the rule of contra 

proferentum and construe the terms strictly in favor of the insured.

Id. (cleaned up).

The Policy provides that Lincoln will pay “a Total Disability Monthly Benefit to an Insured 

Employee” if that employee becomes “Totally Disabled.” Dkt. 12-1 at 234. The amount of the 

Total Disability Monthly Benefit equals “the Insured Employee’s Basic Monthly Earnings 

multiplied by the Benefit Percentage [60%] . . . minus Other Income Benefits.” Id. at 214, 234.

The Policy defines Basic Monthly Earnings (“BME”), in relevant part, as:

1/12th of the Insured Employee’s annual gross earnings from the 

Employer during the calendar year just prior to the Determination 

Date. The “Determination Date” is the last day worked just prior to 

the date the Disability begins. 

It is figured from the income box on the Insured Employee’s W-2 

form, which reports wages, tips and other compensation from the 

Employer for federal income tax purposes. It includes the Insured 

Employee’s income before taxes and any deductions for pre-tax 

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contributions to a Section 125 Plan, flexible spending account, 

Section 401K Plan or qualified deferred compensation plan.2

***

For an Insured Employee who did not receive a W-2 form from the

Employer prior to the Determination Date, it is figured by averaging 

the monthly gross earnings received during the actual period of 

employment, as shown in the Employer’s financial records. 

Dkt. 12-1 at 215. In other words, BME is calculated based on the Insured’s Employee’s W-2 form 

from the calendar year prior to the last day the insured worked. 

Plaintiff began working at ACES on October 28, 2013, and received a $7,970 bonus in 2014. 

It is undisputed that the last day Plaintiff worked at ACES before taking disability leave was 

November 18, 2014. Dkt. 17 at 8. Thus, under the terms of the Policy, Plaintiff’s BME should 

have been calculated based on the income box on Plaintiff’s W-2 Form from calendar year 2013.

Applying this language, Lincoln calculated Plaintiff’s BME based on her 2013 W-2 Form.

Plaintiff complains that this was error because her 2013 W-2 Form did not include the $7,970 

bonus “that Ms. Messer earned in 2013.” Dkt. 17 at 8. Plaintiff argues that because the Policy does 

not define the term “annual gross earnings,” the bonus she earned in 2013 should be part of her 

gross earnings. 

Although it does not define annual gross earnings, the Policy clearly and unambiguously states 

that BME “is figured from the income box on the Insured Employee’s W-2 form,” from “the

calendar year just prior to the Determination Date” which in this case would be calendar year 2013. 

Dkt. 12-2 at 215. Plaintiff may have earned the bonus in 2013, but she did not actually receive the 

bonus until calendar year 2014. Thus, the 2014 bonus was not reported as paid income on 

Plaintiff’s 2013 W-2 Form. As Lincoln explained to Plaintiff in a letter denying her appeal:

2 BME does not include “(1) any Employer contributions to a deferred compensation plan; (2) income 

received from any car, housing or moving allowance; or (3) income from a source other than the Employer.”

Dkt. 12-1 at 215. 

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While your client was issued a bonus in 2014, this was for the tax 

year of 2014 and would be on the corresponding W-2 and not her 

2013 W-2. Your client may have earned a bonus for her performance 

in 2013, but it was not paid/income in 2013, it was paid in 2014, 

thus would not be reflective on her 2013 W-2. Furthermore, your 

client’s employer confirmed she had no other income in 2013. So, 

based on the policy, we would use the W-2 from 2013 to calculate

Ms. Messer’s BME.

Dkt. 12-1 at 579. 

Lincoln’s interpretation of the Policy was reasonable and is supported by Fifth Circuit case 

law. The Fifth Circuit addressed a similar issue In Dunn v. GE Grp. Life Assur. Co., 289 F. App’x 

778, 779 (5th Cir. 2008), abrogated on other grounds by Holland v. Int’l Paper Co. Ret. Plan, 576 

F.3d 240, 247 n.3 (5th Cir. 2009). In Dunn, the insured argued that his BME should be adjusted to 

account for $9,600 in commissions he earned prior to his stroke, even though those commissions 

were not paid by his employer until after his stroke. The policy defined BME as “your gross 

monthly compensation from your employer including the gross monthly rate of commissions and 

Bonus pay during the calendar year(s) prior to your Period of Disability.” Id. at 782. Although the 

policy did not explain whether “commissions” were “commissions paid” or “commissions 

earned,” the Fifth Circuit held that it was reasonable for the insurer to interpret the policy to include 

only those commissions actually paid to the insured in the BME calculation. Id. The Court 

similarly finds that Lincoln’s interpretation of the Policy was reasonable here. 

The Internal Revenue Service’s (“IRS”) policy statements also support Lincoln’s interpretation 

of the Policy. In 2019, the IRS explained that bonuses and awards are not taxable until the 

employee actually receives those bonuses and awards: 

Bonuses or awards you receive for outstanding work are included in 

your income and should be shown on your Form W-2. . . . However, 

if your employer merely promises to pay you a bonus or award some 

future time, it isn’t taxable until you receive it or it’s made available 

to you.

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IRS PUBL’N 525, CAT. NO. 15047D, TAXABLE AND NONTAXABLE INCOME (2019) (Dkt. 20-1 at 4).

Because Plaintiff did not receive the bonus until 2014 and it did not appear on her 2013 W-2 Form, 

it was reasonable for Lincoln to exclude it from Plaintiff’s BME for calendar year 2013.

Plaintiff next argues that Lincoln should have included the 2014 bonus in its calculation of 

Plaintiff’s BME because “Ms. Messer did not receive her 2014 W-2 from ACES prior to the 

Determination Date.” Dkt. 17 at 9. Plaintiff attempts to rely on the Policy provision applicable to 

cases in which the insured did not receive any W-2 form prior to the Determination Date. The 

Policy provides that where the insured “did not receive a W-2 form from the Employer prior to the 

Determination Date, [BME] is figured by averaging the monthly gross earnings received during 

the actual period of employment, as shown in the Employer’s financial records.” Dkt. 12-1 at 215.

This provision, however, is inapplicable here because Plaintiff did receive a W-2 Form prior to her 

Determination Date—the 2013 W-2 Form. Accordingly, this provision is of no help to Plaintiff. 

Because the $7,970 bonus Plaintiff received in 2014 was not reported as paid income on 

Plaintiff’s 2013 W-2 Form, it was reasonable for Lincoln to exclude that amount when it calculated 

Plaintiff’s BME for calendar year 2013. As Lincoln’s interpretation of the Policy was reasonable, 

it did not abuse its discretion in calculating Plaintiff’s BME. See Matassarin v. Lynch, 174 F.3d 

549, 563 (5th Cir. 1999) (“When a plan gives such discretion, a district court will overrule the plan 

administrator’s interpretation of plan terms only if the interpretation is ‘arbitrary and capricious.’”) 

(quoting Firestone Tire, 489 U.S. at 115); Silvertooth v. UNUM Life Ins. Co. of Am., No. 3:99-

CV-0519-M, 2001 WL 21262, at *5 (N.D. Tex. Jan. 8, 2001) (“Since the administrative record 

creates a reasonable basis for UNUM’s determination that the rent concession was ‘extra 

compensation’ and not part of Silvertooth’s ‘basic monthly earnings,’ summary judgment is 

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appropriately granted in favor of UNUM on Silvertooth’s ERISA claim.”). Accordingly, Lincoln 

is entitled to summary judgment.

IV. Recommendation

Based on the foregoing, the undersigned Magistrate Judge RECOMMENDS that the District 

Court GRANT Defendant Lincoln National Life Insurance Company’s Motion for Summary 

Judgment (Dkt. 14), DENY Plaintiff Tayaun Messer’s Cross-Motion for Summary Judgment 

(Dkt. 17), and enter judgment for Defendant Lincoln National Life Insurance Company.

IT IS ORDERED that this case be removed from the Magistrate Court’s docket and returned 

to the docket of the Honorable Lee Yeakel.

V. Warnings

The parties may file objections to this Report and Recommendation. A party filing objections 

must specifically identify those findings or recommendations to which objections are being made. 

The District Court need not consider frivolous, conclusive, or general objections. See Battle v. 

United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987). A party’s failure to file written 

objections to the proposed findings and recommendations contained in this Report within fourteen 

(14) days after the party is served with a copy of the Report shall bar that party from de novo 

review by the District Court of the proposed findings and recommendations in the Report and, 

except on grounds of plain error, shall bar the party from appellate review of unobjected-to 

proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. 

§ 636(b)(1)(c); Thomas v. Arn, 474 U.S. 140, 150-53 (1985).

SIGNED on July 16, 2021.

SUSAN HIGHTOWER

UNITED STATES MAGISTRATE JUDGE

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