Court Opinion

ID: 13919
Source: CourtListenerOpinion
Date Created: 2010-04-25 06:31:07+00
Date Added: 2024-06-11T15:04:01.334551
License: Public Domain

UNITED STATES COURT OF APPEALS
                          FOR THE FIFTH CIRCUIT

                        _______________________

                              No. 97-30368
                        _______________________

ALFRED THOMAS,

                                                  Plaintiff-Appellant,

                                 versus

RELIANCE STANDARD LIFE INSURANCE CO.,

                                                   Defendant-Appellee.

_________________________________________________________________

           Appeal from the United States District Court
               for the Western District of Louisiana
                           (95-CV-2142-L)
_________________________________________________________________
                          January 15, 1998

Before JONES and SMITH, Circuit Judges, and FITZWATER, District
Judge.*

PER CURIAM:**

          Alfred Thomas appeals from the district court’s grant of

summary   judgment     to   Reliance   Standard   Life   Insurance   Co.

(“Reliance”).    The district court held that the policy issued by

     *
        District Judge of the Northern District of Texas, sitting
by designation.
    **
        Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
Reliance to Thomas’s employer did not provide coverage to Thomas

for his alleged permanent and total disability.              We affirm.

                               I.    Background

       Thomas began his employment with Cabot Corporation (“Cabot”)

in 1968.     He participated in Cabot’s company benefit plan, which

included group accident insurance.             The group accident insurance

was provided to Cabot by Reliance under policy VAR50230, and it

included benefits for employees who became permanently and totally

disabled.    The parties agree that the group accident policy is an

“employee    welfare    benefit     plan”    as   defined    by   the    Employee

Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et. seq.

(“ERISA”).

            In 1992, Cabot and Reliance renegotiated their group

accident insurance policy.          Under policy VAR50230A, which became

effective August 1, 1992, permanent and total disability benefits

were   terminated,     but   otherwise      the   policy   remained     virtually

identical to its predecessor, policy VAR50230.              Cabot notified its

employees by letter and a revised Employee Benefits Handbook of the

modification to the policy.

            On   September     22,     1994,      Thomas    allegedly      became

permanently and totally disabled, and he filed a claim under

Reliance’s group accident policy.           Reliance refused payment on the

ground that VAR50230A did not provide coverage for permanent and

total disability.       Thomas then filed suit against Reliance in

                                       2
Louisiana state court, and Reliance removed the case to federal

district court.         The district court granted summary judgment to

Reliance, finding (1) that VAR50230A did not provide coverage for

permanent    and   total       disability,     (2)   that   Louisiana   law     was

inapplicable to the issue of the adequacy of notice provided by

Reliance to Thomas in switching from VAR50230 to VAR50230A, and (3)

that proper notice was given by Reliance pursuant to ERISA.

                                  II.     Analysis

            This court reviews de novo a district court’s grant of

summary judgment.        See Burditt v. West American Ins. Co., 86 F.3d
475, 476 (5th Cir. 1996).           The party moving for summary judgment

must demonstrate an absence of any genuine issue of material fact.

See FED. R. CIV. P. 56(c).          While the nonmovant must provide more

than mere conclusory allegations to defeat summary judgment, the

court should decide every reasonable inference in favor of the

party opposing the motion.          See Burditt, 86 F.3d at 476.

                            A.    Coverage Claims

            Thomas argues that the district court incorrectly applied

an “abuse of discretion” standard to determine whether Reliance

improperly denied coverage for his permanent and total disability

claim under ERISA.       Thomas argues that a less deferential standard

of review should apply because Reliance has an inherent conflict of

interest    as   both    the     claims   administrator     and   the   payor   of

disability benefits.

                                           3
            A denial of ERISA benefits by a claims administrator is

reviewed under an abuse of discretion standard if the plan gives

the claims     administrator      discretionary    authority       to    determine

eligibility for benefits or to construe the terms of the plan.                  See

Duhon v. Texaco, Inc., 15 F.3d 1302, 1305 (5th Cir. 1994) (citing

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)).

If a plan gives discretion to a claims administrator who is

operating under a conflict of interest, “that conflict must be

weighed as a factor in determining whether there is an abuse of

discretion.”       Id. at 1306 (quoting Bruch, 489 U.S. at 115).              There

is no intermediate or heightened standard of review for examining

a decision of a claims administrator who is operating under a

potential conflict of interest.        Rather, the potential conflict of

interest must be given due consideration in applying the abuse of

discretion standard. See Sweatman v. Commercial Union Ins. Co., 39
F.3d 594, 599 (5th Cir. 1994); Duhon, 15 F.3d at 1306.

            The parties do not contest that Reliance and Cabot had

total discretion to grant or deny benefits.              Therefore, the abuse

of discretion standard applies.            See Duhon, 15 F.3d at 1306.

Having heard oral argument and carefully reviewed the briefs and

pertinent    portions    of   the   record,   we   are    persuaded      that   the

district court correctly found that Reliance did not abuse its

discretion in denying permanent and total disability benefits to

Thomas,     even    recognizing     Reliance’s     dual     role        as   claims

                                       4
administrator   and   insurer.     VAR50230A     unambiguously   does   not

provide coverage for permanent and total disability.

                          B.     Notice Claims

          Thomas argues that Reliance provided improper notice to

him of the change in coverage from VAR50230 to VAR50230A under La.

R.S. 22:213(B)(7) and La. R.S. 22:636(F).          Because we agree with

the district court that neither statute applies to the issue of the

adequacy of notice provided by Reliance to Thomas, we need not

reach Reliance’s argument regarding preemption by ERISA.

                  (1).    La. R.S. 22:213(B)(7).

          Thomas argues that Reliance violated § 22:213(B)(7) by

failing to give proper notice of the change in coverage from

VAR50230 to VAR50230A.    Section 22:213(B)(7) states:

          B. Other provisions (optional). No such policy
     shall be delivered or issued for delivery containing
     provisions respecting the matters set forth below unless
     such provisions are, in substance, in the following
     forms, or, at the option of the insurer, in forms which
     in the written opinion of the commissioner of insurance
     are not less favorable to the policyholder.
          . . . .
          (7)   Cancellation:   The insurer may cancel this
     policy at any time subject to the provisions of R.S.
     22:228. Such cancellation shall be by written notice,
     delivered to the insured, or mailed to his last address
     as shown by the records of the insurer, shall refund the
     prorata unearned portion of any premium paid, and shall
     comply with the provisions of R.S. 22:636(F).

LA. REV. STAT. ANN. § 22:213(B) (West 1995) (emphasis added).           The

district court found that both VAR50230 and VAR50230A were issued

                                     5
and delivered in Massachusetts, not Louisiana.                        Therefore, §

22:213(B)(7) was inapplicable.

                 VAR50230A     states    expressly     that     “[t]his    policy    is

delivered in Massachusetts and is governed by its laws.”                     VAR50230

does       not   contain      such   language,   but     the   affidavit    of    Wayne

Steigerwalt, an assistant vice president of Reliance, states that

both       VAR50230     and    VAR50230A     were    issued     and   delivered     in

Massachusetts.         Appellant’s response to the language in VAR50230A

is that it is voided by La. R.S. 22:629.                  Section 22:629 states:

             A. No insurance contract delivered or issued for
        delivery in this state and covering subjects located,
        resident, or to be performed in this state or any group
        health and accident policy insuring a resident of this
        state, regardless of where made or delivered shall
        contain any condition, stipulation, or agreement:
                  (1) Requiring it to be construed according to
        the laws of any other state or country . . . ;
                  (2)   Depriving the courts of this state of
        jurisdiction of action against the insurer . . . .
                  . . . .
             B. Any such condition, stipulation, or agreement in
        violation of the Section shall be void, but such voiding
        shall not affect the validity of the other provisions of
        the contract.

LA. REV. STAT. ANN. § 22:629 (West 1995). Assuming, without deciding,

that § 22:629 voids the express language in VAR50230A, Thomas

presents         no   evidence       which   questions    the    veracity    of     Mr.

Steigerwalt’s affidavit. Because appellant offers no evidence that

the policy was issued and delivered in Louisiana,10. VAR50230 states:

       1
       Appellant’s only response to Mr. Steigerwalt’s affidavit is
that VAR50230 and VAR50230A require that certificates of insurance
be delivered to the policies’ insureds, who reside in Louisiana.

                                             6
“CERTIFICATE OF INSURANCE: The Company [Reliance] will issue to the Policyholder for delivery to each Insured

Person an individual certificate setting forth a statement as to the insurance protection to which the Insured Person is

entitled and to whom indemnities provided by this Policy are payable.”

         VAR50230A states: “CERTIFICATE OF INSURANCE: We will provide a certificate of insurance for each

Insured Person. The certificate will set forth the terms of coverage and to whom benefits are payable.”20. La. R.S.

22:655 permits a third-party to bring a direct action against an insurer under very limited circumstances. See LA. REV.

STAT. § 22:655 (West 1997). 3 he has failed to raise an issue of material fact regarding Reliance’s evidence that the

policy was issued and delivered in Massachusetts. For this reason, § 22:213(B)(7) is inapplicable to this case.

                                               (2). La. R.S. 22:636(F)

                  Appellant also argues that Reliance provided improper notice of the change in coverage from

VAR50230 to VAR50230A under La. R.S. 22:636(F). Section 22:636(F) states:

                  F. No insurer shall cancel or refuse to renew any policy of group or family group health and
         accident insurance except for nonpayment of premium or failure to meet the requirements for being
         a group or family group insurance policy until sixty days after the insurer has mailed written notice
         of such cancellation or nonrenewal by certified mail to the policyholder.

LA. REV. STAT. ANN. § 22:636(F) (West 1995) (emphasis added). The district court found that § 22:636(F) did not

apply to Thomas because he was not the “policyholder.” Cabot is specifically named as the “policyholder” in both

VAR50230 and VAR50230A. Certain subsections of § 22:636 specifically refer to providing notice to “insureds,” but

not subsection F. The clear and unambiguous meaning of subsection F is that notice of cancellation of group accident

  This, so his argument goes, means that “delivery” takes place in
Louisiana. In Landry v. Travelers Indemnity Co., 890 F.2d 770, 772
(5th Cir. 1989), this court interpreted the definition of
“delivered in Louisiana” under La. R.S. 22:655.

   The court held that mailing certificates of insurance to a
Louisiana subsidiary of a Houston corporation, when the policy
itself was delivered to the corporation’s Houston headquarters, did
not constitute “delivery” under Louisiana law. See id. at 772-73.
By analogy, sending certificates of insurance to Reliance’s
insureds does not constitute “delivery” under Louisiana law when
the appellant presents no evidence to contradict either the express
language of VAR50230A or Mr. Steigerwalt’s affidavit that VAR50230
and VAR50230A were issued and delivered in Massachusetts.

                                                           7
policies is only required to be made to the “policyholder,” (i.e., Cabot). Therefore, § 22:636(F) is inapplicable to this

case.

                                                  (3).       ERISA

                  Under ERISA, the “plan administrator” must furnish each

plan participant with notice of a modification to an employee

benefit plan no later than 210 days after the end of the plan year

in which the modification is adopted.                                 See 29 U.S.C. §§ 1022(a)(1),

1024(b)(1).              Cabot is the “plan administrator” because neither

VAR50230 nor VAR50230A designates a plan administrator.                                                      See 29

U.S.C. § 1002(16).4                  Therefore, Reliance cannot be held liable for

any alleged failure of Cabot to properly notify its employees of

the change from VAR50230 to VAR50230A.                                    See Klosterman v. Western

Gen. Management, Inc., 32 F.3d 1119, 1122 (7th Cir. 1994); Kerns v.

Benefit Trust Life Ins. Co., 992 F.2d 214, 217 (8th Cir. 1993)

(both holding, regarding substantially similar provisions of ERISA,

that only the plan administrator is liable for inadequate notice or

disclosure).

         4
            29 U.S.C. § 1002(16) defines “administrator” as follows:
              (A) The term “administrator” means—
                   (i) the person specifically so designated by
         the terms of the instrument under which the plan is
         operated;
                   (ii) if an administrator is not so designated,
         the plan sponsor; . . .
              (B) The term “plan sponsor” means (i) the employer
         in the case of an employee benefit plan established or
         maintained by a single employer . . . .

                                                           8
                        III.   Conclusion

     For the foregoing reasons, we affirm the judgment of the

district court.

     AFFIRMED.

                                9