UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

FORT WAYNE DIVISION

CHARLES GRISE, )

)

Plaintiff, )

)

v. ) CAUSE NO. 1:12-CV-422

)

FLAIR INTERIORS, INC. EMPLOYEE )

BENEFIT PLAN and FLAIR INTERIORS, )

INC., )

)

Defendants. )

OPINION AND ORDER

I. INTRODUCTION

On July 31, 2012, Charles Grise was cleaning a building he owned—part of which

housed his small welding business—when he fell either through a false ceiling or an opening, to

the floor below, breaking his neck and necessitating extensive medical treatment. Grise’s

medical providers submitted their bills to his health insurance, a self-insured employee benefit

plan entitled Flair Interiors, Inc. Employee Benefit Plan (the “Plan”), sponsored and

administered by his wife’s employer, Flair Interiors, Inc. (“Flair”). 

The Plan, however, denied Grise benefits based on an exclusion in the policy. Grise then

brought this lawsuit against the Plan and Flair under 29 U.S.C. § 1132(a)(1)(A) and (B), better

known as § 502(a)(1)(A) and (B) of the Employee Retirement Income Security Act (“ERISA”),

alleging that the Plan’s denial was arbitrary and capricious.1

1 Accordingly, subject matter jurisdiction arises under 28 U.S.C. § 1331. Jurisdiction of the undersigned

Magistrate Judge is based on 28 U.S.C. § 636(c), all parties consenting. (See Docket # 30.)

1
Both Grise and Defendants have now moved for summary judgment. (Docket # 27, 34.) 

The primary issue before the Court is whether the Plan was arbitrary and capricious when it

denied Grise benefits because his accident purportedly came under the Plan’s “employmentrelated conditions/workers’ compensation” exclusion. In short, the Plan maintains that Grise is

not entitled to benefits under the plan because his accident occurred while he was either

employed or covered under workers’ compensation. For the following reasons, the Court finds

that the Plan’s determination was arbitrary and capricious; thus, Grise’s motion will be

GRANTED and Defendants’ motion will be DENIED as it pertains to the Plan.2

II. FACTUAL BACKGROUND

Grise operates a little welding business, Alum A Craft, Inc., in part of a building he owns

in Elkhart, Indiana.3 (See AR 36, 38.) On July 31, 2012, while cleaning the building’s second

floor, he either fell through an opening or a false ceiling, breaking his neck and causing

paralysis. (AR 8; Compl. ¶¶ 1, 7.) Grise is a beneficiary of a self-insured employee benefit plan

for health care sponsored by his wife’s employer, Flair. (Compl. ¶ 1.) Flair, as the Plan

Administrator, delegated certain ministerial duties, including claim processing, to a third-party

administrator, North America Administrators, L.P. (“NAA”). (Defs.’ Ex. 1 at 42.)

2 Defendants argue that Flair, as opposed to the Plan, is not a proper defendant in this action and that, as

such, summary judgment should be entered in its favor. (Defs.’ Mem. in Supp. of Cross Mots. for Summ. J. (“Defs.’

Cross Mot. Mem.”) 1 n.1 (citing Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1490 (7th Cir. 1996).) 

Grise concedes this point (Pl.’s Reply in Supp. of Mot. for Summ. J. & Resp. to Defs.’ Cross Mot. for Summ. J.

(“Pl.’s Reply”) 2-3), and, accordingly, the cross-motion for summary judgment is GRANTED as to Flair. 

3 The administrative record will be referred to throughout this Opinion and Order as “AR __.” The

administrative record is attached as Exhibits 1 through 4 of Grise’s memorandum in support of his summary

judgment motion. (Docket # 31-1, 31-2, 31-3, 31-4.) The parties stipulated that the support for their summary

judgment motions would be limited to the administrative record (Defs.’ Cross Mot. Mem. 5), which also includes the

plan document (Defs.’ Ex. 1), but disagree as to what constitutes the administrative record, an issue resolved at

footnote 6.

2
It was not long afterward that NAA started receiving bills from Grise’s health care

providers for his rapidly mounting medical expenses. (See AR 59-72, 80-87, 92-97, 101-12.) 

Notably, almost all of these claims reported that Grise’s condition was not related to any

employment. (AR 59-65, 68-70, 72, 80-84, 86, 92-97, 101-12.) Nonetheless, inexplicably, NAA

almost immediately started issuing Explanation of Benefit (“EOB”) notices to Grise’s wife—first

on August 23, again on August 30, and finally on September 13, 2012—cryptically indicating

that the charges were ineligible for medical coverage because they were “for workers comp.” 

(AR 91, 100, 117.) 

On September 13, 2012, Mrs. Grise wrote a letter to the Plan on behalf of her husband

appealing the denial of health insurance coverage, stating that while Alum A Craft, “is still

viable on paper,” it produces little income and Grise kept it going to offset the cost of the

building he occupies.4

 (AR 36.) Describing the building as mostly a warehouse, Mrs. Grise said

Grise would go there to feel useful. (AR 36.) Although Grise owned the building—and was

there almost every day for that reason—Mrs. Grise said that very little welding was actually

performed there and a workers’ compensation policy was not in place because, according to Mrs.

Grise, the market did not offer an affordable policy for sole proprietors. (AR 36.) 

Commenting on the denial of health insurance coverage, Mrs. Grise indicated that “an

outside source” told her that a newspaper article in The Goshen News on August 12, 2012, “was

the factor in changing the course of Chuck’s medical claim.”5 (AR 36.) She then expressed that

4

 By September 13, 2012, Grise had not received any written explanation for why his medical claims fell

under “workers comp,” but apparently someone either told Mrs. Grise it was because of his involvement with Alum

A Craft or she simply presumed that was the case.

5 This newspaper article is not in the administrative record.

3
the article was “for the most part bogus.” (AR 36.) Mrs. Grise further asserted that no one

representing the insurance company contacted her or Grise to obtain any information before

denying Grise’s claims. (AR 36.) 

Mrs. Grise’s appeal spawned a request from NAA for more information about Grise’s

claims. (See AR 8.) In response, Mrs. Grise sent a second letter to NAA on September 20,

2012, in which she reported that, at the time of the accident, Grise was in a commercial building

that he owned with his father and “was doing some maintenance work on the building as an

owner,” when he lost his balance and fell through an opening. (AR 8.) She reiterated that,

although there is a space in the building for Grise’s small welding business, the accident

happened in a different area; she further reported that Grise was not working on the welding

business at the time of the accident. (AR 8.) Mrs. Grise also observed that since Grise was not

working for the welding business at the time of the accident, workers’ compensation coverage

would not apply. (AR 8.) 

NAA sent a letter to Mrs. Grise on September 25, 2012, informing her that it had

received her appeal letter and had referred her file to the Plan Administrator for an appeal. (AR

7.) That same day, NAA forwarded a copy of the Grises’ appeal to Flair, the Plan Administrator. 

(AR 5-6.) The Plan grants the Plan Administrator discretion to, among other things, interpret

and apply all of the Plan’s provisions, including eligibility provisions, and make factual

determinations about claim coverage. (Defs.’ Ex. 1 at 42.) The letter referring the appeal to

Flair as Plan Administrator—which NAA described as Mrs. Grise “requesting [ ] an

exception”—recited the Plan’s exclusion language for “employment-related conditions/workers’

compensation” (AR 5-6), as follows:

4
16. Employment-Related Conditions/Workers’ Compensation - Charges

incurred as the result of or in connection with any activity pertaining to any act of

employment for profit, gain, or compensation for which you receive a W-2 or 1099

from an Employer, or for which you file a self-employment schedule for federal

income taxes; or charges incurred as the result of a disease, illness, or condition for

which benefits are payable under any Workers’ Compensation Act, any Occupational

Diseases Act or any other similar such benefit program. 

(Defs.’ Ex. 1 at 17.) The letter to Flair then explained that Grise’s claims were denied because

they were “considered as in connection with activity pertaining to an act of employment.” (AR

5.) 

On October 3, 2012, the Plan Administrator upheld the initial decision denying Grise’s

claims based on this exclusion. (AR 3-4.) NAA notified Mrs. Grise of the Plan’s final decision

on November 2, 2012, providing the full language of the exclusion and explaining that

“[b]ecause the charges were considered as in connection with an activity pertaining to an act of

employment, the claims were denied by the Plan and no further benefits are payable.”6

 (AR 2.) 

III. SUMMARY JUDGMENT STANDARD

Summary judgment may be granted only if there are no disputed genuine issues of

material fact. Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003). When ruling on a motion for

summary judgment, a court “may not make credibility determinations, weigh the evidence, or

6

 On October 31, 2012, after the appeal was denied, but before NAA notified Grise, his attorney sent a letter

to NAA appealing the initial denial along with the Grises’ tax returns for 2010 and 2011. (AR 119-51.) The parties

initially disputed whether the letter and tax returns were part of the administrative record. 

Under an arbitrary and capricious standard—which, as explained later, is applicable here—the Court “may

consider only evidence that was before the administrator in deciding whether [its] decision passes muster.” Gutta v.

Standard Select Trust Ins. Plans, 530 F.3d 614, 619 (7th Cir. 2008) (citation omitted). Accordingly, the appeal letter

and tax returns, submitted on October 31, 2012, were clearly not before the Plan Administrator when it made its

decision to uphold the denial of Grise’s claims on October 3, 2012. (See AR 3-4.) Moreover, although the Plan

initially asserted that the tax returns were submitted earlier, and thus a part of the administrative record, it now

concedes that the Court should not consider the returns or any of its arguments relying on them. (Defs.’ Sur-Reply

in Supp. of Cross Mots. for Summ. J. ¶ 2.) As such, the Court cannot consider either the October 31st letter or the

Grise’s 2010 and 2011 tax returns in evaluating the Plan’s decision under the arbitrary and capricious standard. 

5
decide which inferences to draw from the facts; these are jobs for a factfinder.” Id. The only

task in ruling on a motion for summary judgment is “to decide, based on the evidence of record,

whether there is any material dispute of fact that requires a trial.” Kodish v. Oakbrook Terrace

Fire Prot. Dist., 604 F.3d 490, 507 (7th Cir. 2010) (quoting Waldridge v. Am. Hoechst Corp., 24

F.3d 918, 920 (7th Cir. 1994)). If the evidence is such that a reasonable factfinder could return a

verdict in favor of the nonmoving party, summary judgment may not be granted. Payne, 337

F.3d at 770. A court must construe the record in the light most favorable to the nonmoving party

and avoid “the temptation to decide which party’s version of the facts is more likely true,” as

“summary judgment cannot be used to resolve swearing contests between litigants.” Id. 

However, “a party opposing summary judgment may not rest on the pleadings, but must

affirmatively demonstrate that there is a genuine issue of material fact for trial.” Id. at 771.

“When cross-motions for summary judgment are filed, ‘courts look to the burden of proof

that each party would bear on an issue of trial; [courts] then require that party to go beyond the

pleadings and affirmatively to establish a genuine issue of material fact.’” M.O. v. Ind. Dep’t of

Educ., 635 F. Supp. 2d 847, 850 (N.D. Ind. 2009) (alteration in original) (quoting Santaella v.

Metro. Life Ins. Co., 123 F.3d 456, 461 (7th Cir. 1997)). For claims seeking benefits under an

ERISA plan, the plaintiff bears the burden of proving the claimant’s entitlement to the benefits

of insurance coverage, while the defendant insurer bears the burden of establishing the

claimant’s lack of entitlement. Diaz v. Prudential Ins. Co. of Am., 499 F.3d 640, 643 (7th Cir.

2007).

“The contention of one party that there are no issues of material fact sufficient to prevent

the entry of judgment in its favor does not bar that party from asserting that there are issues of

6
material fact sufficient to prevent the entry of judgment as a matter of law against it.” M.O., 635

F. Supp. 2d at 850 (citation omitted); see Zook v. Brown, 748 F.2d 1161, 1166 (7th Cir. 1984). 

“[C]ross-motions for summary judgment do . . . not alter the respective burdens on cross-motions

for summary judgment—more particularly here, the responsive burden of a plaintiff who moves

for summary judgment and is confronted with a cross-motion for summary judgment. The

motions are treated separately.” McKinney v. Cadleway Props., Inc., 548 F.3d 496, 504 (7th Cir.

2008) (citations omitted); M.O., 635 F. Supp. 2d at 850. 

IV. DISCUSSION

A. The Plan’s Decision Cannot Be Overturned Unless It Was Arbitrary and Capricious

Grise’s claim arises under ERISA § 502(a)(1)(B), which enables a beneficiary in an

employee benefit plan “to recover benefits due to him under the terms of the plan, to enforce his

rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the

plan.”7

 29 U.S.C. § 1132(a)(1)(B). “Judicial review of a plan administrator’s benefits

determination is de novo unless the plan grants the administrator discretionary authority to

determine eligibility for benefits or to construe the terms of the plan.” Holmstrom v. Metro. Life

Ins. Co., 615 F.3d 758, 766 (7th Cir. 2010) (citing Firestone Tire & Rubber Co. v. Bruch, 489

U.S. 101, 115 (1989)). When the administrator has such discretion, “the court applies a more

deferential standard, seeking to determine only whether the administrator’s decision was

7

 Grise also brings his claims under § 502(a)(1)(A) (Compl. § 1), which allows a participant to obtain civil

penalties against plan administrators for failing to provide beneficiaries information when requested. 29 U.S.C. §§

1132(a)(1)(A), 1132(c); see Gassner v. Int’l Bus. Machs. Corp., No. 02 C 5982, 2004 WL 2066887, at *10 (N.D. Ill.

Sept. 9, 2004). Although Grise reiterates in his summary judgment motion that he is suing to redress violations

under both ERISA § 502(a)(1)(A) and (B) (Pl.’s Mem. in Supp of Mot. for Summ. J. (“Pl.’s Mem. in Supp.”) 1), he

focuses solely on recovering benefits under § 502(a)(1)(B) and does not argue that civil penalties should be imposed

against the Plan under § 502(a)(1)(A). Such underdeveloped arguments are deemed waived, see Trentadue v.

Redmon, 619 F.3d 648, 654 (7th Cir. 2010); thus, the Court addresses only Grise’s claim under § 502(a)(1)(B). 

7
‘arbitrary and capricious.’” Id. (citations omitted). The same standard of review applies to both

the plan administrator’s factual determinations and its interpretation of the plan’s provisions. 

See Ramsey v. Hercules Inc., 77 F.3d 199, 204 (7th Cir. 1996). 

Here, the Plan plainly grants the Plan Administrator discretion to determine eligibility for

benefits and to construe its terms. (See Defs.’ Ex. 1 at 42 (granting the Plan Administrator the

discretion to, among other things, interpret and apply all the Plan’s provisions and make factual

determinations with respect to whether the Plan covers a claim).) Indeed, Grise does not dispute

the point and, thus, the arbitrary-and-capricious standard applies to this Court’s review of the

Plan’s determinations and its interpretation of the plan language. See Ramsey, 77 F.3d at 204. 

Although review under this standard is deferential, it is not a mere rubber stamp. 

Holmstrom, 615 F.3d at 766. The Seventh Circuit Court of Appeals has explained that

“arbitrary-and-capricious review turns on whether the plan administrator communicated ‘specific

reasons’ for its determination to the claimant, whether the plan administrator afforded the

claimant ‘an opportunity for full and fair review,’ and ‘whether there is an absence of reasoning

to support the plan administrator’s decision.’” Majeski v. Metro. Life Ins. Co., 590 F.3d 478, 484

(7th Cir. 2009) (quoting Leger v. Tribune Co. Long Term Disability Benefit Plan, 557 F.3d 823,

831 (7th Cir. 2009)). Questions of judgment must be left to the plan administrator, and it is not

this Court’s function to decide whether it would reach the same conclusion as the administrator. 

Davis v. Unum Life Ins. Co. of Am., 444 F.3d 569, 576 (7th Cir. 2006) (citations omitted). 

B. The Plan’s Decision Was Arbitrary and Capricious

Grise first contends that the Plan’s denial of benefits was arbitrary and capricious

because the administrative record contains an absence of reasoning to support it. (See Pl.’s

8
Mem. in Supp. 9-12.) The Plan responds that its decision was reasonable based upon the plan

language and the administrative record. (See Defs.’ Cross Mot. Mem. 8-11.)

Under the arbitrary-and-capricious standard, the Court will uphold the Plan’s decision if:

(1) it is possible to offer a reasoned explanation, based on the evidence, for a

particular outcome, (2) the decision is based on a reasonable explanation of relevant

plan documents, or (3) the administrator has based its decision on a consideration of

the relevant factors that encompass the important aspects of the problem.

Becker v. Chrysler LLC Health Care Benefits Plan, 691 F.3d 879, 885 (7th Cir. 2012). Put

another way, the Court looks only to ensure that the Plan’s decision has rational support in the

record. Id. Moreover, the Plan must articulate an explanation that makes a “rational connection”

between the issue, the evidence, the text, and the decision made. Schaub v. Consol. Freightways,

Inc. Extended Sick Pay Plan, 895 F. Supp. 1136, 1140 (S.D. Ind. 1995). 

In the instant case, the Plan denied Grise’s benefits under its “employment-related

conditions/workers’ compensation” exclusion. (AR 2, 3.) That exclusion provides that benefits

are not payable if charges were incurred: (1) as the result of or in connection with any activity

pertaining to any act of employment for profit, gain, or compensation for which the claimant

either receives a W-2 or 1099 from an employer or files a self-employment schedule for federal

income taxes; or (2) as the result of a disease, illness, or condition for which benefits are payable

under any Workers’ Compensation Act, Occupational Diseases Act, or other similar benefit

program. (Defs.’ Ex. 1 at 17.) By using “or,” “[t]his exclusion is written in the disjunctive; one

exclusion does not depend on the other, nor does one determine the other.” Marquette Gen.

Hosp. v. Goodman Forest Indus., 315 F.3d 629, 633 (6th Cir. 2003). But a review of the

administrative record reveals that it does not provide rational support for the Plan’s denial of

9
coverage under either part of the exclusion.8

1. The Plan’s Initial Denial of Benefits

First, NAA, the third-party administrator charged with processing claims, initially

determined that the medical bills arising from Grise’s accident were ineligible for coverage

because they were for workers’ compensation. (AR 91, 100, 117.) Nothing in the administrative

record, however, indicates why NAA determined, as an initial matter, that Grise’s claims were

for workers’ compensation. In fact, most of the health insurance claim forms submitted by

Grise’s medical providers reported that his condition was not employment related. (AR 59-65,

68-70, 72, 80-84, 86, 92-97, 101-12.) 

In her September 13, 2012, letter appealing the denial of health coverage, Mrs. Grise

states, “Through an outside source, I have been told that the article in The Goshen News [sic] on

8

 Although the parties do not raise the issue, the Plan’s failure to follow ERISA’s procedural requirements

significantly hampered Grise’s ability to obtain meaningful and “full and fair” review of the Plan’s benefits denial at

both the administrative appeal and judicial review stages. See Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 688-89

(7th Cir. 1992). First, the EOB notices issued to the Grises (AR 91, 100, 117) do not comply with the requirements

set forth in 29 C.F.R. § 2560.503-1(g)(1)(i)-(iv). The EOBs offer only a bare conclusion that the charges were “for

workers’ comp,” which fails to communicate the “specific reasons” for the denial, see Love v. Nat’l City Corp.

Welfare Benefits Plan, 574 F.3d 392, 397 (7th Cir. 2009); do not identify the specific provision under which the

charges were excluded, see Tormey v. Gen. Am. Life Ins. Co., 973 F. Supp. 805, 813-14 (N.D. Ill. 1997); and do not

describe the additional material or information necessary for Grise to perfect his claim or the Plan’s review

procedures and their time limits. See 29 C.F.R. 2560.503-1(g)(1)(i)-(iv). 

Additionally, between the initial denial of benefits and the final denial, the Plan appears to have switched

its basis for the denial from the workers’ compensation exclusion to one based on employment-related conditions. 

(Compare AR 91, 100, 117 (stating that Grise’s charges were “for workers’ comp” and thus ineligible), with AR 2-3

(denying Grise’s charges as “in connection with an activity pertaining to an act of employment”).) But “[d]enying a

claim at the administrative appeal stage based on grounds not asserted in the initial claim denial is [ ] a violation of

ERISA’s procedural requirements.” Brimer v. Life. Ins. Co. of N. Am., 462 F. App’x 804, 809 (10th Cir. 2012)

(unpublished); see also Halpin, 962 F.2d at 696 (noting that a post hoc attempt to furnish a rationale for a denial of

benefits to avoid reversal on appeal is unacceptable).

 Finally, it is somewhat suspect that NAA, in its letter referring Grise’s appeal to the Plan Administrator,

states, “Mrs. Grise is requesting that an exception be made in this instance and that the claims be processed by the

Plan” (AR 6), a statement that is then repeated in the Plan Administrator’s final denial letter (AR 4). Yet the

regulations require that a plan provide for a review on appeal that “does not afford deference to the initial adverse

benefit determination.” 29 C.F.R. § 2560.503-1(h)(3)(ii). NAA’s statement that, on appeal, Mrs. Grise was

“requesting that an exception be made,” and the Plan Administrator’s adoption of it, suggest that the Plan’s initial

determination may have been afforded impermissible deference. In her appeal, Mrs. Grise was not seeking an

“exception” from the exclusion, but rather an independent review of the Third-Party Administrator’s reliance upon it.

10
August 12, 2012, was the factor in changing the course of Chuck’s medical claim.” (AR 36.) 

This assertion is somewhat borne out by the fact that NAA issued its three EOBs denying Grise

coverage on August 23, August 30, and September 13, 2012 (AR 91, 100, 117), after the article

was purportedly published, and also by NAA’s September 25th letter, which is duplicated and

signed as the Plan Administrator’s October 3rd denial on appeal, which states that “Mrs. Grise

mentions the article in The Goshen News [sic] on August 12, 2012.” (AR 4, 6 (emphasis

added).) Referring to “the article” in this manner suggests that both NAA and Flair knew about

the article as well. More importantly, the Plan’s counsel admitted at the Rule 16 preliminary

pretrial conference on January 31, 2013, that the Plan considered this newspaper article in

determining that Grise suffered an occupational injury. (See Docket # 21.) And he did so

twice—first as his own affirmative statement that Mrs. Grise, in her appeal letter, “challenges the

news article that the company considered,” and then when confirming the Court’s recounting of

his representations. 

Such a deliberate, clear, and unequivocal oral statement, made in the course of judicial

proceedings, qualifies as a judicial admission. In re Lefkas Gen. Partners, 153 B.R. 804, 807

(N.D. Ill. 1993) (citations omitted); see McCaskill v. SCI Mgmt. Corp., 298 F.3d 677, 680 (7th

Cir. 2002) (holding that a verbal admission by defense counsel at oral argument was a binding

judicial admission, “the same as any other formal concession made during the course of

proceedings”). A judicial admission is binding upon the party making it, cannot be controverted

at trial or on appeal, and has the effect of withdrawing a fact from contention. Keller v. United

States, 58 F.3d 1194, 1198 n.8 (7th Cir. 1995). As such, the Plan is bound by its counsel’s

statement at the scheduling conference—that the Plan considered the newspaper article when

11
deciding to deny Grise benefits. 

Yet, despite the fact that the Plan admittedly considered this newspaper article, it is not in

the administrative record, meaning that the Court cannot evaluate or determine if the article

provides rational support for the Plan’s initial determination. See Becker, 691 F.3d at 885

(instructing the Court to look to ensure that the Plan’s decision has rational support in the

record). Moreover, the “persistent core requirements” of full and fair review “include knowing

what evidence the decision-maker relied upon, having an opportunity to address the accuracy

and reliability of that evidence, and having the decision-maker consider the evidence presented

by both parties prior to reaching and rendering his decision.” Militello v. Cent. States, Se. & Sw.

Areas Pension Fund, 360 F.3d 681, 690 (7th Cir. 2004). But, in spite of Mrs. Grise’s contention

that this news article was mostly “bogus,” it appears that the Plan never did anything to verify

the information reported there by, for instance, interviewing the Grises.

The flaws in the Plan’s initial determination do not end there. When initially denying

Grise benefits—ostensibly because his medical bills fell under “workers comp”—it gave no

explanation of how it came to this conclusion or what evidence it relied on, thereby failing to

make a “rational connection” between the issue, the evidence, the text, and its decision. See

Schaub, 895 F. Supp. at 1140. Because there is no evidence in the record to support the Plan’s

initial determination, it is not possible to offer a reasonable explanation for the Plan’s initial

denial of benefits. And, as the Court will take up next, the statements in Mrs. Grise’s two appeal

letters do not cure this initial deficiency or provide rational support for the application of either

part of the “employment-related conditions/workers’ compensation” exclusion. 

12
2. The “Employment-Related Conditions” Exclusion

The first part of the exclusion—excluding charges arising from employment-related

conditions—is easily disposed of. That part of the exclusion requires that the charges be

incurred as the result of or in connection with any activity pertaining to any act of employment

for profit, gain, or compensation for which the claimant either receives a W-2 or 1099 from an

employer or files a self-employment schedule for federal income taxes. (Defs.’ Ex. 1 at 17.) 

The administrative record, however, does not contain a W-2, 1099, or a self-employment

schedule for Grise and Mrs. Grise’s letters do nothing to plug the gap. As such, it was not

rational for the Plan to determine that this part of the exclusion applied when the record was

devoid of anything that met its requirements. See Wheeler v. Aetna Life Ins. Co., No. 01 C 6064,

2003 WL 21789029, at *11 (N.D. Ill. July 23, 2003) (concluding that a plan’s termination of

benefits was arbitrary and capricious when it failed to either acknowledge the actual language of

the plan provisions under which the benefits were terminated or analyze the claimant’s condition

in accordance with those provisions). 

Nor does the record allow the Plan to offer a reasoned explanation for applying the

exclusion; indeed, if anything, the record seemingly supports the conclusion that the

employment-related conditions exclusion does not apply to Grise’s claims because there is no

evidence that he received a W-2, a 1099, or filed any sort of self-employment schedule, or, even

(as the Plan’s exclusionary language puts it) that he was engaged in “any act of employment . . .

[.]” Consequently, this part of the exclusion could not apply to Grise on this record.

3. The “Workers’ Compensation” Exclusion

Undeterred, the Plan retreats to its original basis for denial—that Grise’s claims are

13
excluded because they were “incurred as the result of a disease, illness, or condition for which

benefits are payable under any Workers’ Compensation Act, any Occupational Diseases Act or

any other similar such benefit program.” (Defs.’ Ex. 1 at 17.) Although there is no evidence in

the administrative record supporting the Plan’s initial determination that Grise’s claims were “for

workers comp”—again, lending some credence to the assertion that the mostly “bogus”

newspaper article was considered—the Plan argues that Mrs. Grise’s two appeal letters form the

basis for applying this part of the exclusion. 

In those letters, Mrs. Grise stated that her husband was a co-owner of the warehouse-type

building in which the accident occurred—and was there almost every day for that reason—and

while she described the structure as a “commercial property,” she noted that only a small part of

it was for Alum A Craft, a business that produced very little income, but which remained “viable

on paper.” (AR 8, 36.) She further explained that Grise kept Alum A Craft going to offset the

cost of the building, which she described as more of a place for Grise to do personal projects,

with welding only taking less than ten percent of his time. (AR 36.) And a workers’

compensation policy was not in place because the market did not offer an affordable policy for

sole proprietors. (AR 36.) At the same time, Mrs. Grise maintained that the accident did not

happen in the part of the building that housed Alum A Craft or while Grise was working for that

business; rather, she articulated that the accident occurred in a different part of the building

while Grise was doing maintenance work as the owner. (AR 8.) 

Grise argues that the Plan simply ignored these assertions (see Pl.’s Mem. in Supp. 12-

13), while the Plan argues that “each time Mrs. Grise made those assertions, she further

described that Plaintiff was working in the commercial property that he owned and maintained

14
for business purposes and used to generate income” (Defs.’ Cross Mot. Mem. 9). In order to

adequately address these arguments, state laws governing workers’ compensation must be

considered. Since both sides rely on the Indiana Workers’ Compensation Act (“WCA”) (Defs.’

Cross-Mot. Mem. 10-11; Pl.’s Reply 14-17), the Court confines its analysis to that statute and

the related case law. 

To recover under the WCA, “a claimant must establish that an injury or death occurred

‘by accident arising out of and in the course of employment.’” Outlaw v. Erbich Prods. Co., 742

N.E.2d 526, 529 (Ind. Ct. App. 2001) (citing IND. CODE § 22-3-2-2). “An injury ‘arises out of’

employment when a casual nexus exists between the injury sustained and the duties or services

performed by the injured employee.” Id. (citation omitted). And “[a]n accident occurs ‘in the

course of employment’ when it takes place within the period of employment, at a place where

the employee may reasonably be, and while the employee is fulfilling the duties of employment

or while engaged in doing something incidental thereto.” Id. (citation omitted). Although both

of these requirements must be met before, as the Plan puts it, “benefits are payable” under the

WCA, Milledge v. Oaks, 784 N.E.2d 926, 929 (Ind. 2003), the Plan addresses only the first one,

arguing that Grise’s injury arose out of his employment. (Defs.’ Cross. Mot. 10-11.) 

a. “Arising Out” of Employment

The causal connection necessary to show that an accidental injury arises out of

employment “is established when a reasonably prudent person considers the injury to be born out

of a risk incidental to the employment, or when the facts indicate a connection between the

injury and the circumstances under which the employment occurs.” Milledge, 784 N.E.2d at 929

(quoting Wine-Settergren v. Lamey, 716 N.E.2d 381, 389 (Ind. 1999)). The risks “incidental to

15
employment” fall into the following three categories: (1) risks distinctly associated with

employment, (2) risks personal to the claimant, and (3) risks that are neither distinctly

employment nor distinctly personal in character. Id. at 930 (citations omitted). Risks that fall

into either the first or third category are generally covered under the WCA, while risks personal

to the claimant—those that are either caused by a pre-existing illness or condition unrelated to

employment—are not compensable. Id. (citation omitted).

The Plan relies on Milledge for the proposition that “[i]n cases where the cause of an

injury cannot be determined with certainty to arise out of employment, the Indiana Supreme

Court has held that an individual’s injury is presumed to arise out of activities incidental to

employment and, therefore, be compensable under the WCA.” (Defs.’ Cross Mot. Mem. 10.) 

That, however, is not the holding of Milledge. On the contrary, Milledge holds that when

resolving questions concerning injuries that result from “neutral risks”—meaning that they are

neither personal to the claimant nor distinctly associated with the employment—courts should

apply the “positional risk doctrine.” 784 N.E.2d at 931-32. Under this doctrine, “[a]n injury

arises out of the employment if it would not have occurred but for the fact that the conditions and

obligations of the employment placed the claimant in the position where he was injured.” Id. at

931 (emphasis in original) (citation omitted). If the “in the course of employment” element is

then met, it creates a rebuttable presumption that the injury “arises out” of employment. Id. 

According to the administrative record, however, the only possible employer here is

Alum A Craft as there is no evidence that Grise was employed by any other business.9

 But, as

9

 To the extent that the Plan is arguing that at the time of his accident Grise was working for some

unidentified entity when cleaning the jointly owned building, there is no evidence in the record to support this claim. 

Moreover, even if an entity existed, the record contains no evidence establishing whether this entity employed five

or more persons such that the WCA would apply, see IND. CODE § 22-3-9-1, or that Grise was serving that entity

16
discussed later, the record contains no evidence that Grise’s accident occurred in the course of

his employment with Alum A Craft, and, as such, no rebuttable presumption is created. More to

the point, there is nothing in the record showing that the conditions and obligations of Grise’s

alleged employment at Alum A Craft put him on the second floor of the building as opposed to

his capacity as its owner.

Besides Milledge, the other case that Plan relies on, Manous, LLC v. Manousogianakis,

824 N.E.2d 756, 766-67 (Ind. Ct. App. 2005), in which the Indiana Court of Appeals held that a

business owner’s murder in his café after business hours was compensable under the WCA, is

also distinguishable from Grise’s case. In that case, the Court of Appeals explicitly noted that

there was no evidence that any other activities, besides business-related activities, were

conducted on the premises. Id. at 766. Here, however, there is ample evidence that Grise

performed other activities unrelated to business in the building; in fact, according to Mrs. Grise’s

statements, only ten percent of Grise’s time in the building was even spent on his welding

business, with the vast majority devoted to personal projects or tasks unrelated to Alum A Craft

(AR 36). Thus, the record offers no rational support for the conclusion that Grise’s injuries

“arose out” of his employment with Alum A Craft.

b. “In the Course of Employment”

As to the second requirement, the Plan points to no evidence in the record, and this Court

cannot find any, that Grise’s injuries occurred “in the course of” his employment with Alum A

Craft. Arguably, the accident occurred at a place where Grise, as an Alum A Craft employee,

“under any contract of hire or apprenticeship, written or implied” as is required to make him an employee under the

WCA, see IND. CODE § 22-3-6-1(b). Even more damaging to the Plan’s argument is the fact that the record is

completely devoid of any evidence that Alum A Craft employed the five persons necessary for it to incur obligations

under the WCA. See IND. CODE § 22-3-9-1.

17
would reasonably be, but there is no evidence that the accident occurred “within the period of

employment” or while Grise “was fulfilling the duties of employment or [ ] engaged in doing

something incidental thereto.” Outlaw, 742 N.E.2d at 529. 

First, “the period of employment encompasses a reasonable time before and after the

employer engages in work.” Constr. Mgmt. & Design, Inc. v. Vanderweele, 660 N.E.2d 1046,

1049 (Ind. Ct. App. 1996) (citation omitted). But the only evidence in the record is from Mrs.

Grise’s letters, in which she explicitly contends he was not working for the welding business at

the time of his accident, but rather was cleaning another part of the building. More importantly,

as illustrated by Mrs. Grise’s letters, Grise was neither fulfilling employment duties for Alum A

Craft, nor engaged in doing something incidental to, or in furtherance of, that employment when

his accident occurred. On this record, it appears that other than the fact that the accident

occurred in a different part of the same building that housed Alum A Craft, there was no

connection between the two. See id. at 1050-51 (concluding that an accident did not occur in the

course of the claimant’s employment when he was engaged in an endeavor which could only be

described as personal and not in furtherance of company business). As such, the record lacks

any evidence that Grise’s accident either occurred in the course his employment with Alum A

Craft or arose out of that employment, both of which are required for the WCA to apply. 

In the end, the Plan bears the burden of establishing Grise’s lack of entitlement to

medical coverage. Diaz, 499 F.3d at 643. But there is no evidence in the record, as it stands

today, from which the Plan could reasonably determine that either part of the “employmentrelated conditions/workers’ compensation” exclusion applied to Grise’s injuries, making the

Plan’s denial of benefits based on this exclusion arbitrary and capricious. Therefore, Grise’s

18
motion for summary judgment will be GRANTED, while Defendants’ Cross-Motion for

Summary Judgment will be DENIED as to the Plan.

C. Remedy

Turning to the appropriate remedy, Grise asks for legal fees pursuant to ERISA and “all

other relief appropriate in the premises” in his motion (Pl.’s Mem. in Supp. 16) and, in his

Complaint, also requests a judgment in his favor, an award of damages sufficient to compensate

him for his losses, and prejudgment interest, if appropriate (Compl. 10). But a plan participant

does not have a right to sue a plan fiduciary for damages. See Harzewski v. Guidant Corp., 489

F.3d 799, 804 (7th Cir. 2007). Furthermore, although the Court has discretion to award

reasonable attorneys’ fees and costs as well as prejudgment interest, see Holmstrom, 615 F.3d at

779, the parties have not briefed either of these issues, and, thus, the Court will reserve judgment

on these issues until they have done so. 

Nevertheless, having found that the Plan acted arbitrarily and capriciously in denying

Grise benefits, the question is whether the case should be remanded for further findings and

explanations or whether benefits should be directly awarded. Powers v. Nat’l Rural Letters

Carriers’ Ass’n Long-Term Disability Income Plan, No. 4:07-cv-0062-DFH-WGH, 2009 WL

1259378, at *9 (S.D. Ind. May 5, 2009). According to the Seventh Circuit, when a plan

administrator fails to provide adequate reasoning for its determination or to afford the claimant

adequate procedures in its initial denial of benefits, both of which are the case here, the

appropriate remedy is to remand to the plan administrator for further findings or explanations

and to provide the claimant with the procedures he sought in the first place. Majeski, 590 F.3d at

484 (citations omitted); Hackett v. Xerox Corp. Long-Term Disability Income Plan, 315 F.3d

19
771, 775-76 (7th Cir. 2003). Moreover, “[w]hen additional evidence on the merits of the claims

for benefits is presented for the first time to the district court, the court should remand to the

fiduciary to make the initial assessment of whether such facts establish an applicant’s

eligibility.” Wolfe v. J.C. Penney Co., 710 F.2d 388, 394 (7th Cir. 1983), abrogated on other

grounds by Firestone Tire, 489 U.S. at 115. On the other hand, a direct award of benefits is

reserved for “the rare case where the record . . . contains such powerfully persuasive evidence

that the only determination the plan administrator could reasonably make is that the claimant is

[covered under the plan].” Kirkpatrick v. Liberty Mut. Grp., Inc., 856 F. Supp. 2d 977, 999 (S.D.

Ind. 2012) (quoting Majeski, 590 F.3d at 484). 

In the instant case, the parties have submitted additional evidence to this Court—namely

tax returns that were not a part of the administrative record—suggesting that a remand is

appropriate. See Wolfe, 710 F.2d at 394. Furthermore, although Grise has shown that the Plan

acted arbitrarily and capriciously, the evidence is not so powerfully persuasive that the only

determination the Plan could reasonably make is that Grise’s claims were covered under the

plan. That determination is to be made on remand, after the Plan has considered all the evidence,

adequately investigated the circumstances surrounding Grise’s accident, clearly and fully

articulated the basis for its decision and the reasons supporting it, and sufficiently complied with

ERISA’s notification procedures. 

V. CONCLUSION

For the foregoing reasons, Plaintiff Charles Grise’s Motion for Summary Judgment

(Docket # 27) is GRANTED and Defendants’ Cross Motion for Summary Judgment (Docket #

34) is GRANTED as to Flair Interiors, Inc., but DENIED as to Flair Interiors, Inc. Employee

20
Benefit Plan. 

Grise’s claims are therefore REMANDED to the Plan for administrative proceedings,

with instructions to complete a benefits eligibility determination no later than April 26, 2013. 

Counsel are to inform the Court of the Plan’s decision promptly thereafter. The Court retains

jurisdiction over this action, which will remain open during the remand. See Lockhart v.

Jefferson Pilot Fin. Ins. Co., No. 03 C 1745, 2005 WL 914446, at *15 (N.D. Ill. Mar. 29, 2005);

Robyns v. Reliance Standard Life Ins., No. IP98-1241-C-H/G, 2001 WL 699886, at *3 (S.D. Ind.

May 17, 2001). 

SO ORDERED. 

Enter for this 27th day of March, 2013.

S/Roger B. Cosbey 

Roger B. Cosbey,

United States Magistrate Judge

21