Opinion ID: 995857
Heading Depth: 3
Heading Rank: 1

Heading: Contractual obligations under the ERISA plan

Text: In reviewing Provident's denial of coverage in the amount of $125,000 under Otley Leary's Member Only policy, based upon its 5 assertions that Otley Leary had improperly completed his enrollment card when selecting the Member Only coverage, we must interpret the language of the Plan itself to determine whether the denial of coverage was appropriate. When ERISA governs a contract interpretation case, [f]ederal courts interpret ERISA regulated benefit plans without deferring to either party's interpretation, by`using ordinary principles of contract law [and] enforcing the plan's plain language in its ordinary sense.' Jenkins v. Montgomery Indus., Inc., 77 F.3d 740, 42 (4th Cir. 1996) (quoting Bailey v. Blue Cross & Blue Shield of Virginia, 67 F.3d 53, 57 (4th Cir. 1995)) (internal citation omitted). When there is ambiguity, [w]e have held repeatedly that ambiguous language must be construed against the drafter. Bailey, 67 F.3d at 58 (quoting Doe v. Group Hospitalization & Medical Services, 3 F.3d 80, 89 (4th Cir. 1993); Glocker v. W.R. Grace & Co., 974 F.2d 540, 544 (4th Cir. 1992)). In determining as a matter of law that a contract is ambiguous, we may examine evidence extrinsic to the contract. Bailey, 67 F.3d at 58. Most of Plaintiffs' claims in the amended complaint derive from the interpretation of language in the insurance enrollment card under the Plan. This language states as follows: Please Note: If husband and wife are both members, each may select the Member Only Plan or one may select the Family Plan (which includes coverage to spouse and children). The named insured will be beneficiary for spouse coverage and for dependents coverage. (J.A. at 17.) Plaintiffs argue in their appellate brief that, because this language is susceptible to multiple meanings, the language is ambiguous and should be construed against SEANC and Provident and in favor of the Plaintiffs. We disagree. The Plan provides unambiguous limitations that prohibit duplicate coverage for family members. In a letter dated August 20, 1992, addressed to Iris Leary, Charles S. Beach (Beach), Newman's Executive Vice President, stated that thepurpose of the notice on the Enrollment Card is to avoid multiple coverages for the same individual under one policy. (J.A. at 181.) In a second letter also dated August 20, 1992, addressed to Zella Leary Alexander, 6 Beach explained that because Iris Leary selected theMember and Family Plan, Otley Leary was not eligible for coverage under his Member Only policy, as he already had coverage under Iris Leary's policy as a dependent. (J.A. at 182.) Beach referred to the language of the Plan's enrollment card and the Plan's brochure to reiterate Otley Leary's ineligibility for double coverage as an employee under his Member Only coverage and as a dependent under Iris Leary's Member and Family coverage. Section III of the Plan's brochure, titled Eligibility and Termination Coverage, states, in relevant parts: The term Dependent means (a) your spouse . . . . The term Dependent will not include any person who is eligible for coverage as an Employee. (J.A. at 163.) It is undisputed that when Otley Leary enrolled in theMember Only policy on September 14, 1991, he was already a dependent under Iris Leary's Member and Family policy. (J.A. at 158 and 179).6 Therefore, Otley Leary could not be eligible for coverage as a retired employee under his Member Only policy because he was already insured as a dependent under Iris Leary's Member and Family policy and because the Plan clearly prohibits duplicate coverage for family members. Since Otley Leary's Member Only coverage was invalid under the Plan's limitations, Newman, as the Plan administrator for Provident, acted correctly when it canceled Otley Leary's coverage under the Member Only policy and returned the premiums deducted in error to Otley Leary's estate. (J.A. at 181, 183.)