NOT RECOMMENDED F OR F ULL-TEXT PUBLICATION F ile Nam e: 12a0822n.06
No. 11-6177
UNITED STAT ES COURT OF AP P EALS F OR THE S IXTH CIRCUIT

CL ARCOR, I

NC., Plaintiff-Appellant,

v. M A D IS O N N A T IO N A L LIF E IN S U R A N C E COMPANY, I

NC., Def endant- Appellee

. ) ) ) ) ) ) ) ) ) ) ) ON AP P E AL FROM THE UNI TED STATES DI STRI CT COU RT FOR THE MI DDL E DI STRI CT OF TEN

NESSEE

BEF ORE: SUTTON and GRI FF I N, Circuit J udg es; and HO OD, District Judge. *
GRI FF I N, Circuit J udg e. I n this action, plaintiff CL ARCOR, I nc. (“Clar cor” ) filed suit ag ainst defe ndant Madison National L ife I nsuranc e Company (“Ma dison”), asser ting that Madison wrong fully denied Clarcor ’s insurance -cove rag e claim. Upon cross-motions for summary judgme nt, the district court held that Clarcor was not entitled to cover ag e. The district court also denied Clarcor ’s m o tion to alter or amend the judg ment. This timely appea l followed. Upon re view, we aff irm.
I

. The undisputed fa cts of this case wer e summarized by the district court a s follows: This is an insurance cover ag e dispute betwee n Clarcor , the insured, and Madison, the ins u r e r . Clarcor , which is a filtration service s and products company , provided health

The Honora

ble J oseph M. Hood, Senior United States District J udg e for the Easter n District * of Ke ntucky , sitti ng by

desig nation.No. 11-6177

Clarcor, Inc. v. M

adison Nat’l L ife Ins. Co.

insurance for its employ ee s throug h the self-f unded “He nderson Hourly Union Medica l Plan” (the “Plan”)

. To insure ag ainst major employ ee health car e expenses incurre d under the Plan, Clarcor obtained from Madison an Ex cess L oss I nsuranc e Policy (the “Policy ”), which was effective for the period of J anuar y 1, 2009[,] throug h Dec ember 31, 2009

. The Policy cover ed “elig ible expenses” incurre d by Clarcor under the Plan from J anuar y 1, 2008[,] to Dec ember 31, 2009[,] and “elig ible expenses” paid under the Plan from J anuar y 1, 2009[,] throug h Dec ember 31, 2009. Under the Policy , eac h “cove red person” was subject to a $250,000 deductible; that is, Clarcor was insured by Madison for expenses or “losses” under the Plan in excess of $250,000 per

Plan benef

iciary , per y ear . This dispute cente rs on Plan elig ibilit y , and the definitions and limit ations of cer tain Policy and Plan terms and pr ovisions are important. A “cove red person” under the Policy is “an indiv i d ual elig ible for cover ag e, and cover ed under the Plan.” For prese nt purposes, cover ed persons larg ely consisted of Clarcor employ ees and their depende nts. “Losses” or “elig ible expenses” under the Policy do not include “any pay ment [by Clarcor ] which does not strictly comply with the provisions of the Plan,” that has been “re ceive d and acc epted” by Madison. That is, Madison ag ree d to cover Clarcor ’s excess Plan losses, but only if those losses wer e cover ed under the Plan that Madison had re viewed a

nd approve d. Under the section titled “Who I s Eligible,” the Plan states th at “y o u are elig ible to participa te in this plan if y ou are a regularly assig ned, full-time employ ee of Clarcor for at least 3 consec utive months and are regularly schedule d to work a minimum of 40 hours per wee k.” For employ ees, the Plan states that “cove rag e ends the ear liest o f: the date y our employ ment with Clarcor ends; the date contributions cea se; t h e date y ou are no longe r elig ible to participa te in this plan; the date y ou voluntarily terminate cover ag e during open enrollment or specia l enrollment; or the date this plan terminate s.” Another section of t he P lan t itled “Ge nera l Enrollment Requirements and Election I nformation” a ll o w s b e n e f iciarie s to make “enr ollments elec tions” or chang es to their Plan cover ag e if the benef iciary has a “cha

ng e in status.” This chang e in enrollment must take place within 30 day s o f the “qualify ing” chang e in status. A series of qu al i fy i n g chang es, including termination, birth, death, and reduc tion in hours are listed. This section fu rt h er provides that the chang e in enrollment must be “consistent with” the c hang e in status and be tied to some g ain or loss in eligibility for a benef

iciary

. “I n other words

. . . the elec tion chang e must corr espond with the eff ect on c overa g e.”

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The Plan also has Family and Medica l L eave Act (F ML A) and COBRA provisions. The FML A pro vision, in essenc e, provides that elig ibilit y under the Plan will continue for the d u ra t i o n o f l eave , as l ong as t he covera g e continues to be paid for duri n g t hat time. The COBRA provisions state that, consistent with fede ral law, when a “qualify

ing event” that would otherwise e nd the cove rag e occ urs, “the pla n offe rs optional continuation cover ag e.” A series of “qualify ing ev en t s , ” including termination of employ

ment and “re duction in hours,” are provided. I f a benef iciary elec ts to rec eive COBRA cover ag e, that individual, in exchang e for paying the premiums on the P lan, i s allowed to rema in cover ed by the P lan for a set period of time even throug h [si c] he or she would otherwise no longe r be elig ible fo r P l an cover ag e due to the “ qualify ing e vent.” This specific dispute arose beca use one of Cl arc or’s employ ees, I .K., incurre d a considera ble amount o f h ealth car e costs

. . . . The last day I .K. was “re g ularly schedule d” to w ork at Clarcor was October 20, 2007. At this time, I .K. was place d on FML A leave , which continued until J anuar y 12, 2008. I .K. did not return to work afte r the e x piration of her FML A leave and wa s not offer ed C OB RA cover ag e, but was, instead, place d on short-term disability

. Whil e on short-term disability , Clarcor continued to make benef

it deductions from I .K’s compensa tion for health insurance cover ag e and continued to submit I .K.’s name to Madison as one of the benef iciarie s of the Plan. I .K.’s employ ment was terminated on J une 23, 2008, and, the next day , for the f irst time, she was off

ere d COBRA c overa g e by Clarcor

. I .K.’s health car e costs during the rele v an t t i m e period wer e well in excess of $250,000 and, in J une 2009, Clarcor submitt ed a claim to Madison under the Policy

. Madison ra i s ed conce rns about cover ag e for Clarcor ’s expenses, sug g esting that I

. K.’s move to short-term disability had rende red her ineligible under the Pl an . I n discussions betwee n C l ar co r and Madison reg arding this issue, Clarcor confirme d that it has a “cor

porate prac tice” of continuing benef it deductions for employ ees on s h ort-ter m disability

. On November 6, 2009, Madison, throug h its Polic y administrator, informed Clarcor that it wa s denying Clarcor ’s reque st for reimburse ment for I .K’s expenses incurre d afte r J anuar y 12, 2008, that is, afte r I .K. came off of

FML A leave and we nt onto short-term disability

. On Fe bruar

y 24, 2010, Clarcor filed its [c] omplaint, seeking a decla ratory judgme nt that Clarcor ’s “excess” expenses for I .K. wer e co v ered under the Plan and reimbursa ble under the Policy and, on the same theory , asser ting a claim for brea ch of contra ct ag ainst Madison.

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Clarcor, Inc. v. M

adison Nat’l L ife Ins. Co.
Clarcor, Inc. v. Madison Nat’l Life Ins. Co. , No. 3:10–189, 2011 WL 2682998, at *1-3 (M.D. Tenn.
J uly 11, 2011) (inter

nal citations and footnote omitted). Following discovery , the parties filed cross-motions for summary judgme nt. There afte r, the district court held that Clarcor was not entitled to cover ag e under the Policy beca use I .K. cea sed to be elig ible under the Plan when she went on short-term disability leave , and, there fore , her medical
expenses wer e not re imbursable under the Policy

. Clarcor then filed a motion to alter or amend the judgme nt pursuant to Fe dera l Rule of Civil Procedur e 59(e)

. There in, Clarcor asser ted that the district court did not adequately addre ss its claim
t h at Madison was obliga ted to reimburse Clarcor for medical expenses incurre d during I .K. ’s
COBRA cover ag e. The district court denied the mot i on, holding that beca use I .K. lost Plan 1

cover ag e upon the termination of her FML A leave , COBRA should have been offe red within 30 day s of that termination. Be ca u s e C OB R A was not timely offe red, and beca use I .K. lost her Plan elig ibilit y , the district court held that I .K.’s medical expenses wer e not rec overa ble under the Policy

. This timely

appea l followed.
I I

. We conduct a de novo revie w of the district court’s summary judgme nt order

. Med. Mut. of Ohio v. k. Amalia Enters. Inc. , 548 F.3d 383, 389 (6th Cir. 2008). “I n revie wing a g rant of summary

COBRA stan ds for the Consolidated Omnibus Budg et Reconc iliation Act of 1985. 29 1 U.S.C. § 1161, et seq. Under COBRA, an employ ee is entitled to elec t continued health car e cover ag e for a period that commence s when the employ ee would otherwise lose cover ag e under an employ er’ s health ca

re pla n. 29 U.S.C. §§ 1161, 1165.

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Clarcor, Inc. v. M

adison Nat’l L ife Ins. Co.
judgme nt on cross-moti o n s seeking such relief , we apply the same leg al standards as the district
court: whether , with the evidenc e viewed in the light most favor able to the non-moving party , there

are no g enuine issues of materia l fac t, so that the moving party is entitled to a judgme nt as a matter of law.” United States v. Petroff–Kli ne , 557 F.3d 285, 290 (6th Cir. 2009); see Fe d. R. Civ. P. 56(a)

. “Althoug h we g ener ally revie w a g rant or denial of a motion to alter or amend a judgme nt under Rule 59(e) for abuse of discretion, when the Rule 59(e) motion seeks revie w of a gra n t o f s ummary judgme nt, we apply a de novo standard of revie w.” Am. Civil Liberti es Union of Ky. v. M cCreary Cnty., Ky. , 607 F.3d 439, 450 (6th Cir. 2010). Be cause we are exercising diversity jurisdiction over this matter, we must apply state substantive law. Himmel v. Ford Motor Co. , 342 F.3d 593, 598 (6th Cir. 2003). I t is undisput ed that Te nnessee law applies.
“I t is elementa

ry in insurance law that a claimant under an i n s u ranc e policy has the initial burden of proving that he comes within the terms of the policy

. . . . Conversely , the insurer car ries the burden if it claims that one of the policy exclusions applies to t h e claimant and preve nts

rec overy .” Bla i n e Co n s t

. C o r p
. v. Ins. Co. of N. Am. , 171 F.3d 343, 349 (6th Cir. 1999) (internal quotation marks and citation omitted) (apply ing Tenne ssee law). “[I ]n the absenc e of any ambig uity , it is our duty to take th e o rd i n ar y meaning of the words used, favor ing neither party in their
const ru ct ion.” State Farm Fire & Cas. Co. v. W hite , 993 S.W .2d 40, 43 (Tenn. Ct. App. 1998) (interna l quotation marks and citations omitted). “Where there is an ambig uity or uncer tainty with

re gar ds to the terms of an insurance policy , the court must interpre t the terms strictly ag ainst t h e

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Clarcor, Inc. v. M

adison Nat’l L ife Ins. Co.

draf ter of the policy .” Tenn. Farmers Mutual Ins. Co. v. Tait , 20 F. App’x 503, 506 (6th Cir. 2001) (per curiam) (apply

ing T ennesse e law)

. I I I

. As its primary arg

ument on appea l, Clarcor asser ts that I

. K. wa s at all rele vant times an “elig ible” employ ee under the Plan and, there fore , her m ed i ca l expenses paid by Clarcor are

rec overa ble under the Policy . We disag ree . The plain and unambig uous terms of the Plan demonstrate that I .K. was not elig ible for Plan

cover ag e following the commence ment of her short-term disability leave

. Ind eed, elig ibilit y is expressly limit ed to “re g ularly assig ned, full-time employ ee[s]

. . . regul arly schedule d to work a minimum of 40 hours per wee k.” The only persons exempt from this require ment are : (1) qualified retire es; (2) employ ees on FML A leave ; and (3) employ ees rec eiving C OBRA cover ag e. No exception is made for e mploy ees, suc h as I .K., who commenc e short-te rm disability leave

. Clarcor disputes this rea ding of the Plan, making sever al unpersua sive arguments. First, Clarcor asser

ts tha t the elig ibilit y require ments descr ibed above mere ly ref er to “ initial elig ibilit y ” and not continuing elig ibilit y . This argument is easily reje cted. There is no indication that the “who is elig ible” provision conce rns i nitial, as opposed to g ener al, eligibility require ment s . I ndeed, the Plan contains a separ ate section that sets forth “whe n cover ag e beg ins.” I t is nonsensical for the Plan
to contain two separ ate sections on initial elig ibilit y . Acc ording ly , when rea d in context, it is clea r that the full-time employ

ment require ment perta ins to g ener al, continuing elig ibilit y under the Plan.

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Clarcor, Inc. v. M

adison Nat’l L ife Ins. Co.
Next, Clarcor asser

ts that while short-term disability leave may result in the loss of cover ag e,

an employ ee can choose to reta in P l an cover ag e under the “g ener al enrollment require ments and elec tion information” clause , which provide s: I f y ou have a qualify ing chang e in y our s t at u s , y ou may chang e y our enrollment decision within 30 day s of the chang e in s t at u s . . . . Your chang e in enrollment elec tion must be consistent with y our chang e in status. I n other words, y ou may only chang e y our elec tion if the chang e in status cause s y ou . . . to g ain or lose elig ibilit y for cover ag e under this or ano ther plan, and the elec tion chang e must corr espond with the eff

ect on c overa g e. . . . A qualify ing chang e in status includes

. . . a chang e in employ ment status, such as reduc tion or incre ase in hour s of employ ment

. . . or commence ment or return from an unpaid lea

ve of a bsence

. (Emphasis adde d.) Clarc or asse rts that beca use an employ ee “may ” cha ng e his or her

status upon the occur renc e of a qualify ing event, I .K. had the discretion to reta in full cover ag e during her shortterm disability

leave

. This argument makes littl e sense. First, an employ ee loses cover ag e under the Plan on “the d at e [ the employ ee is] no longe r elig ible” under the Plan. And, as noted above, I .K. lost her elig ibilit y when she commence d her short-term disability leave

. Moreove r, the “g ener al enrollment” provision is clea

r in that it only allows em p l o y ee s t o elec t a chang e in enrollment status that

corr esponds with their cha ng ed cir cumstance s. I n this case, I .K. lost her elig ibilit y under the Plan beca use of her reduc tion of hours, allowing her to elec t COBRA cover ag e. Under the plain lang uag e of the Plan, I .K. had no other cover ag e options. Clarcor next asser

ts that I .K. was cover ed under the Plan beca use Clarcor signe d an “ac tively
at work” waiver

. Howeve r, this wa iver, contained in the Policy , in no way aff ects Plan cover ag e. - 7 -No. 11-6177

Clarcor, Inc. v. M

adison Nat’l L ife Ins. Co.
And, I .K. must be elig ible under the Plan for her expenses to be reimbursa ble under the Policy

. The
“ac tively at work” waiver unambig uously applies to Section 4 of the Policy , which would otherwise exclude Policy cove rage for e mploy ees w ho wer e not ac tively at work on the date c overa g e under the Policy beg an. Acc ording ly , by signing the waiver , C l ar co r em ploy ees on FML A leave or

rec eiving COBRA cover ag e would still be cover ed under the Policy even though not actively at work

on the date cover ag e commence d. This waiver in n o way implicates the full-time employ ment require ment of the Plan. Clarcor next contends that I .K. was elig i b l e fo r cover ag e under the Plan beca use she continued to pay her premiums, and Clarcor , in turn, continued to pay premiums to Madison. This
arg ument is easily reje cted. When Madison was acc ep t i ng these premium pay ments, it was not

awa re that I .K. was no longe r elig ible under the Plan. Acc ording ly , t h e ac ce p t ance of premium
pay ments does not constitute some sort of admission or waiver

. More importantly , the Policy clea rly
states that Madison will not reimburse Clarcor for liabiliti es assumed but not cover ed by the Plan. (“ L o s s o r L osses does not include

. . . any pay ment which does not strictly comply wi t h t h e provisions of the Plan.”). The acc eptanc e of premiums does not alter t he unambig uous cover ag e require ments of the Plan and Policy

. Finally , Clarcor asser

ts that lang uag e contained in a Plan claim form establishes that a “leave of absenc e” does not nece ssarily result in a loss of cover ag e under the Plan. This claim form, howeve r, is n o t i n co rp o ra ted into the Plan. Acc ording ly , it is parol evidenc e that will not be considere d. See Kiser v. W olfe , 353 S.W .3d 741, 749-50 (Tenn. 2011) (“B eca use the document sets

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Clarcor, Inc. v. M

adison Nat’l L ife Ins. Co.

out the extent of cover ag e in an unambi gu o u s m an n er , there is no rea son to

. . . consider parol evidenc e.”) (footnote omitted); Airline Constr . Inc. v . Barr , 807 S.W .2d 247, 259 (Tenn. Ct. App. 1990) (“U nder the parol evidenc e rule parol evidenc e is inadmissible to contradict, var y , or alter a written contra ct wher e the written instrument is valid, complete, and unambig uous, absent fra ud or mistake or any claim or alleg atio n t h er eo f. ”). Moreove r, even if the claim form did constitute
appropr iate evidenc e, the district court was correct in noting that the document appea rs to be a
g ener ic form with little evidentiar y value. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 252 (1986) ( holding that a

nonmoving pa

rty must present more tha

n a “me re . . . sc intill a” of evidenc e
to withstand a motion for summary judgme nt). Acc ording ly , the district court corr ectly held that I .K. lost her Plan elig i b i l i t y wh en she went on short-term disability leave and, there fore , medical expenses incurre d afte r that time, paid by Clarcor , are not reimbursable under the Policy

. I V. Arg uing in the alterna

tive, Cla rc o r co n tends that even if I .K. wer e ineligible for cover ag e under the Plan while on short-term disability , s h e wa s eli g ible during her period of COBRA

cover ag e. We disag ree . Be cause I .K. lost Plan elig ibilit y during her short-term disability leave , she

was not elig ible to rec eive COBRA cover age when it was offe red. To be elig ible for COBRA
coverage u n d er t h e P lan, “an individual must be a cover ed person . . . on the day befor e the qualify ing event.” A “qualif y i n g event” is an event causing the employ ee to otherwise lose healthca re cover ag e, such as a “re duction in hours” or “ter mination.” Her e, Cla rc o r as s erts that
I .K.’s termination constituted the qualifying event. Howeve r, beca use I .K. was not c overe d by the

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Clarcor, Inc. v. M

adison Nat’l L ife Ins. Co.

Plan during her short-term disability leave , she was not a cover ed person the “day befor e” the alleg ed qualify ing event. Thus, I .K. was not elig ible to rec eive COBRA cover ag e at that time. Rather, I .K.’s “qualify ing event” was the termination of her FML A leave

. CO BR A co v era g e should have been offe red at that time.
Be ca use the sequenc e of events prec ludes I .K.’s cover ag e under the Plan for the medi ca l
expenses at issue, Clarcor reque sts the court to cre ate a fiction. Specifica lly , it reque sts that we

assume that COBRA cover ag e was offe red immediately afte r I .K.’s FML A leave , requiring Madison
to reimburse Clarcor for the expenses it would have incurre d during that time. This we cannot do.
I ndeed, Clarcor offe rs no authority providing relief based upon a fictional, timely offe r of COBRA

cover ag e. 2
Moreove r, even if I .K. was somehow elig ible to rec eive COBRA cover ag e when she did, the medical expenses incurre d during that time are expressly excluded by the Policy

. Ex clusion number nine provides: “this Policy will not cover . . . [e] x penses for any COBRA continuee or retire e whose continuation of cover ag e was not offe red in a timely manner or acc ording to COBRA reg ulations.”
I n this case , as descr ibed above , Clarcor should have offe red COBRA cover ag e to I .K. upon the termination of her FML

A leave

. See, e.g. , Jordan v. Tyson Foods, Inc. , 257 F. App’x 972, 980 (6th Cir. 2007) (“A n FML A leave can result in a qualifying event if an employ ee wh o does not return from FML A l eave (1) wa s cover ed under her e mploy er’ s health plan the da y befor e taking FML A

Madison asser

ts that even if I .K. proper ly rec eived COBRA cover ag e, Medica re would have 2 been the primary pay er, not the Plan. Howeve r, we need not addre ss this issue beca use I .K. was not elig ible for the COB RA cover ag e she r ece ived. - 10 -No. 11-6177

Clarcor, Inc. v. M

adison Nat’l L ife Ins. Co.

leave , (2) doe s not return to employ ment at t he end of the F ML A leave , and (3) would lose hea lth

cover ag e in the absenc e of COBRA continuation cover ag e.”)

. Such cover ag e was not offe red at that time, and, th erefore , the latter offe r of COBRA cover ag e was untimely

. Acc ording ly , medical
expenses incurre d by Clarcor as a result o f its untimely offe r of COBRA cover ag e are excluded under the Policy

. I n sum, Clarcor cannot avoid the consequ en ce s of Plan and Policy lang uag e by offe ring insurance cover ag e not otherwise provided by the Plan. Indeed, the Policy expressly provides that Madison is not responsible “for any liability [C larc or] assume[s] under any contra ct or ag ree ment other than the P lan.” The Majestic Star Casino, LLC v. T rustmark Ins. C o. , 667 F. Su pp. 2d 809,
816 (N.D. I ll. 2009) (“[I ]t is the terms of the plan that control here , not Majestic’s interpre tation or implementation of the plan.”)

. Madison cannot be forc ed to reimburse Clarcor for pay ments made to an inelig ible employ ee. V.
For the fore g oing r easons, we aff irm the judg ment of the district cour t.

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