Opinion ID: 794475
Heading Depth: 3
Heading Rank: 1

Heading: Damages for supplemental insurance

Text: 50 Both parties agree that if we uphold the district court's determination that Paese was entitled to total disability benefits through March 8, 2002, Paese is entitled to recover the amount he paid for conversion life coverage under the terms of the Sequa plan ($5,635). However, the parties dispute whether Paese can recover damages under ERISA section 502(a)(1)(B) for the purchase of substitute outside insurance from New York Life Insurance Company (New York Life) when his insurance benefits from Hartford were terminated. 51 The facts surrounding the payment of the $12,005 annual premium for term life insurance from New York Life are not the model of clarity. Hartford sent Paese a letter dated May 12, 2004 that stated that his term life insurance under the Sequa plan would expire in July 2004. In this letter, Hartford offered Paese permanent life insurance at an annual premium of $19,162.45. On appeal, Paese claims that when he learned of the high cost of Hartford's life insurance, he sought and found the most cost effective alternative, which apparently was offered by New York Life. 52 However, as noted by Hartford, the record shows that Paese paid $12,005 for New York Life's insurance on August 16, 2003, nearly a year before the May 12, 2004 letter. Moreover, Hartford claims that the conversion insurance which Paese purchased under the terms of the Sequa Plan was still in effect due to Paese's payment of a $2,838 premium in July 2003. Thus, Hartford argues that Paese's purchase of the New York Life insurance was unrelated to any of Hartford's actions. Paese admits that Hartford continued to provide term life insurance coverage, but places the blame on Hartford for having to purchase the policy from New York Life, arguing that Hartford never formally told him that his insurance coverage would continue under the Sequa Plan. Specifically, Paese contends that he reasonably relied on Hartford's letter of September 23, 2002 stating that his term life insurance would expire in eleven months from that date (approximately August 23, 2003). 53 However, Paese fails to explain adequately why he paid a $2,838 premium in July 2003 for the Hartford term life insurance policy (which would have covered him until July 2004) prior to his payment of $12,005 to New York Life in August 2003. If he were relying on Hartford's September 23, 2002 letter that his life insurance would expire in August 2003, we are unable to divine why would he have paid an annual premium of $2,838 to Hartford to continue its life insurance policy until July 2004. In light of these facts, we conclude that the district court erred in granting Paese damages of $12,005 for the purchase of the New York Life insurance policy, because the record does not demonstrate that this policy was a replacement or substitute for the existing (and apparently inforce) Hartford policy. We therefore vacate the district court's award of damages for this supplemental insurance policy and remand for further proceedings consistent with this opinion.