Opinion ID: 2981314
Heading Depth: 3
Heading Rank: 2

Heading: Payment of Premiums

Text: Mrs. Moss also asserts that because Mr. Moss paid a premium in August of 2008, he was entitled to insurance coverage beyond his termination date. Specifically, Mrs. Moss maintains that Mr. Moss should have been covered through the end of August 2008 rather than his termination date of August 5, 2008. If so, Mr. Moss would have died within the thirty-one-day conversion period without converting his policy. Under the policy, if death occurs “within the 31 day conversion application period,” Unum is bound to pay “the amount of insurance that could have been converted.” (Policy, R. 24-4, at 2.) The record reflects that Unum acknowledged premiums paid by Mr. Moss from January 6, 2008, through his termination date, August 5, 2008. Mrs. Moss places significant weight on an entry made in Unum’s database on October 10, 2008 which states: Covered under sickness and injury to 12 month prov in policy as long as premiums continued. The premiums continued from 1/6/2008 to termination date of 8/5/2008 Died 9/24/2008 ?? Premiums paid to 8/5/2008 per claim form. Premiums paid through 8/1/2008 per merlin (60 day grace period) 16 No. 11-6017 Rose Moss, et al. v. Unum Life Insurance Co., et al. EE died 9/24/2008. PREMIUMS ARE ALL SET ON THIS CLAIM. (R. 24-15, at 1–2.) Based on this entry, Mrs. Moss contends that Mr. Moss’s premiums were paid for in their entirety, entitling him to continued coverage up until his death.4 Therefore, Mrs. Moss claims, the sixty-day grace period provided for in the policy applied. The policy provides a sixty-day grace period if the employer does not pay premiums, as required, in a timely manner to Unum. (Policy, R. 24-3, at 18–19.) The policy states that Unum may cancel the policy if “the Employer fails to pay any portion of the premium within the 60 day grace period.” (Id. at 19 (emphasis in original).) The policy defines “grace period” as “the period of time following the premium due date during which premium payment may be made.” (Id.) Mrs. Moss maintains that Mr. Moss paid premiums through the end of August of 2008 to ServiceMaster, who was then required to pay such premiums to Unum within the sixty-day grace period. Mrs. Moss’s argument, however, does not recognize the effect that Mr. Moss’s termination had on his ability to receive coverage under the group policy. After Mr. Moss was terminated on August 5, 2008, he had to convert his coverage to an individual policy. Under the policy, ServiceMaster was no longer required to provide premium payments to Unum for his part of the group policy. Mrs. Moss further maintains that Mr. Moss was entitled to coverage under the group policy for twelve months after his termination, pursuant to the policy’s provisions covering those not 4 Mrs. Moss’s interpretation of the entry language is questionable. Mrs. Moss reads “PREMIUMS ARE ALL SET ON THIS CLAIM” as a statement that Mr. Moss had paid premiums up until his death or through the end of August 2008. However, Mrs. Moss’s reading is inconsistent with the remainder of the entry. The entry clearly notes that premiums were paid through August 5, 2008—the date of Mr. Moss’s termination. 17 No. 11-6017 Rose Moss, et al. v. Unum Life Insurance Co., et al. working due to injury or sickness. As a result, Mrs. Moss claims that Mr. Moss did not need to convert his coverage for twelve months. Mrs. Moss bases her argument on the following provision contained in the policy: ONCE YOUR COVERAGE BEGINS, WHAT HAPPENS IF YOU ARE NOT WORKING DUE TO INJURY OR SICKNESS? If you are not working due to injury or sickness, and if premium is paid, you may continue to be covered for up to 12 months. (Policy, R. 24-3, at 24 (emphasis in original).) Mrs. Moss reads this provision as if the word “may” is replaced by the word “will.” This argument, however, is inconsistent with the clear and unambiguous language of the Plan and policy. The word “may” should be given its ordinary meaning, which cannot be read as a guarantee of coverage for twelve months. Minges Creek, L.L.C. v. Royal Ins. Co. of Am., 442 F.3d 953, 956 (6th Cir. 2006) (terms not defined in an insurance policy are given their ordinary meaning). An employee is eligible to participate in the Plan and receive coverage under the policy if they are “regular full-time employees” who work “at least 30 hours a week.” (Policy, R. 24-3, at 4.) Mr. Moss fit this category before being declared disabled, meaning he was eligible to participate in the Plan and receive basic and supplemental life insurance. The policy provides that if an employee stops working due to injury or sickness, coverage may continue so long as the employee continues to pay the premium. Mr. Moss was an eligible employee when he was declared disabled, and this exception allowed him to maintain coverage. The two provisions are not ambiguous and do not conflict. Continuation of coverage, however, is conditional on an employee “not working due to injury or sickness.” (Policy, R. 24-3, at 24.) After Mr. Moss was terminated, he was not working due to 18 No. 11-6017 Rose Moss, et al. v. Unum Life Insurance Co., et al. his termination, rather than due to injury or sickness. The provision no longer applied after Mr. Moss was terminated. Whether Mr. Moss continued to pay the premiums is immaterial. The language of the Plan unambiguously states that coverage ends upon termination and that conversion must take place within thirty-one days. (Policy, R. 24-4, at 1. “You and your dependents must apply for individual life insurance under this life conversion privilege and pay the first premium within 31 days after . . . your employment terminates.”) Thus, despite any payment of premiums intended to continue coverage after Mr. Moss’s termination date, his coverage under the group policy ended on August 5, 2008. After that date, he was no longer an eligible employee covered under the group plan. He was required to convert his coverage to an individual policy. Because the payment of premiums beyond Mr. Moss’s termination date did not automatically convert his coverage, Mr. Moss was not entitled to coverage beyond his termination date. Nothing in the record indicates that Unum’s decision to deny continued coverage under the group policy was arbitrary and capricious. Based on the foregoing, we conclude that the record supports a reasoned explanation for the plan administrator’s decision. Moon, 405 F.3d at 379. Applying Glenn and considering Unum’s conflict of interest as one factor in reviewing the decision, we believe that the other factors are not closely balanced in this case, given the support in the record for the plan administrator’s decision. We hold that Unum’s decision was not arbitrary and capricious and affirm the district court’s judgment in denying Mrs. Moss’s claim for relief. C. Mrs. Moss’s Motion to Compel Mrs. Moss also contends that the district court erred in denying her motion to compel production of documents withheld from the administrative claim file on the basis of the attorney19 No. 11-6017 Rose Moss, et al. v. Unum Life Insurance Co., et al. client privilege. The question of whether the attorney-client privilege applies is a mixed question of law and fact and is reviewed by this Court de novo. Reg’l Airport Auth. of Louisville v. LFG, LLC, 460 F.3d 697, 712 (6th Cir. 2006); see also Ross v. City of Memphis, 423 F.3d 596, 600 (6th Cir. 2005) (clarifying that de novo review applies when discovery issue concerns application of attorney-client privilege). Where, as here, the underlying claim is based on federal law, federal common law determines the extent of the privilege. See Fed. R. Evid. 501; Swidler & Berlin v. United States, 524 U.S. 399, 403 (1998). The purpose of the attorney-client privilege is to “encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.” Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). The privilege is not ironclad, however, and is subject to exceptions. In re United States, 590 F.3d 1305, 1310 (Fed. Cir. 2009), rev’d on other grounds sub nom. United States v. Jicarilla Apache Nation, — U.S. —, 131 S. Ct. 2313 (2011). One such exception is the fiduciary exception, which requires that when an attorney gives advice to a client acting as a fiduciary for third-party beneficiaries, that attorney owes the beneficiaries a duty of full disclosure. In re Long Island Lighting Co., 129 F.3d 268, 272 (2d Cir. 1997). Under the fiduciary exception in the context of ERISA, “a fiduciary of an ERISA plan ‘must make available to the beneficiary, upon request, any communications with an attorney that are intended to assist in the administration of the plan.’” Bland v. Fiatallis N. Am., Inc., 401 F.3d 779, 787 (7th Cir. 2005) (quoting In re Long Island Lighting Co., 129 F.3d at 272). This is because 20 No. 11-6017 Rose Moss, et al. v. Unum Life Insurance Co., et al. “[w]hen an attorney advises a plan administrator or other fiduciary concerning plan administration, the attorney’s clients are the plan beneficiaries for whom the fiduciary acts, not the plan administrator.” Wildbur v. ARCO Chem. Co., 974 F.2d 631, 645 (5th Cir. 1992) (citing WashingtonBaltimore Newspaper Guild, Local 35 v. Wash. Star Co., 543 F. Supp. 906, 909 (D.D.C. 1982)). The fiduciary exception generally applies only to communications related to plan administration and not to communications after a final decision or “addressing a challenge to the plan administrator in his or her personal capacity.” Redd v. Bhd. of Maint. of Way Emps. Div. of the Int’l Bhd. of Teamsters, No. 08-11457, 2009 WL 1543325, at  (E.D. Mich. June 2, 2009). The Ninth Circuit has explained: Thus, the case authorities mark out two ends of a spectrum. On the one hand, where an ERISA trustee seeks an attorney’s advice on a matter of plan administration and where the advice clearly does not implicate the trustee in any personal capacity, the trustee cannot invoke the attorney-client against the plan beneficiaries. On the other hand, where a plan fiduciary retains counsel in order to defend herself against the plan beneficiaries . . ., the attorney-client privilege remains intact. United States v. Mett, 178 F.3d 1058, 1064 (9th Cir. 1999). “[H]ard cases should be resolved in favor of the privilege, not in favor of disclosure.” Id. at 1065. Although the Sixth Circuit has not addressed the fiduciary exception in the ERISA context, it has recognized the exception in a different context. See Fausek v. White, 965 F.2d 126, 133 (6th Cir. 1992) (applying the exception to a dispute between a corporation and its minority shareholders). The district court noted that several district courts in the Sixth Circuit have applied or discussed the fiduciary exception in ERISA cases, and considered it appropriate to determine whether the fiduciary exception to the attorney-client privilege applied in this case. Upon an in camera review of the 21 No. 11-6017 Rose Moss, et al. v. Unum Life Insurance Co., et al. documents at issue, the district court found that the attorney-client privilege applied to all of the documents and that the fiduciary exception did not apply. On appeal, Mrs. Moss maintains that she is entitled to the privileged documents under the fiduciary exception. Mrs. Moss makes much of the fact that the documents at issue were created before a final benefits determination was made. However, it is equally important to note that all of the documents sought were generated after initiation of this lawsuit. Moreover, it appears that none of the documents concerned administration of the plan. Rather, as noted in Unum’s privilege log, the withheld communications concerned the pending lawsuit. (Unum Privilege Log, R. 56-4.) This is further supported by an affidavit of Unum’s in-house counsel, Sandra Livingston. (Livingston Aff., R. 62-2.) Thus, despite the fact that these communications occurred prior to a final benefits decision, the communications relate to a pending lawsuit, do not concern the plan administration, and thus the fiduciary exception does not apply. We therefore conclude that the district court did not err in denying Mrs. Moss’s motion to compel. D. ServiceMaster’s and the Plan’s Motion for Protective Order Mrs. Moss also contends that the district court abused its discretion in granting ServiceMaster’s and the Plan’s motion for protective order regarding Mrs. Moss’s discovery requests. We review a district court’s decision to grant a protective order for abuse of discretion. Nix v. Sword, 11 F. App’x 498, 499 (6th Cir. 2001) (per curiam); Coleman v. Am. Red Cross, 979