Court Opinion

ID: 43866
Source: CourtListenerOpinion
Date Created: 2010-04-25 22:01:40+00
Date Added: 2024-06-11T14:56:21.913864
License: Public Domain

United States Court of Appeals
                                                                                          Fifth Circuit
                                                                                        F I L E D
                      IN THE UNITED STATES COURT OF APPEALS
                                                                                          July 7, 2006
                               FOR THE FIFTH CIRCUIT
                                                                                    Charles R. Fulbruge III
                                                                                            Clerk
                                           No. 05-30589

MARILYN R. LEWIS,

                                                                               Plaintiff – Appellant,
                                               versus

UNUM LIFE INSURANCE COMPANY OF AMERICA,

                                                                             Defendant – Appellee.

                           Appeal from the United States District Court
                              for the Western District of Louisiana

Before SMITH, WIENER, and STEWART, Circuit Judges

CARL E. STEWART, Circuit Judge*:

       This case involves a dispute over life insurance proceeds. Plaintiff-Appellant, Marilyn Lewis

(“Lewis”) claims that she is entitled to one half of Carrol Raymond, Sr.’s (“Raymond”) life insurance

proceeds. Lewis, Raymond’s sister, appeals the district court’s dismissal of her suit based on its

determination that the decision of the insurance carrier, UNUM Life Insurance Company of America

(“UNUM”), that Catherine Raymond (“Catherine”), Raymond’s ex-wife, was entitled to 100% of the

insurance proceeds was not an abuse of discretion. For the following reasons, we affirm.

   *
   Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not be published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.
                         FACTUAL AND PROCEDURAL BACKGROUND

          Lewis sued to recover life insurance benefits under a group life insurance policy issued to

Raymond’s employer, W-H Energy Services, Inc., the designated plan administrator, as part of an

Employee Welfare Benefit Plan under ERISA1; Raymond, a yardhand/forklift driver, was a qualified

beneficiary under the plan with respect to a group life insurance policy issued by UNUM. The group

plan provided a basic life, accidental death and dismemberment benefit of $20,000 and Raymond

elected supplemental life insurance coverage for $126,000–three times his annual salary.

          Raymond died on January 14, 2001, of a heart attack/heart disease; Catherine was designated

as the first beneficiary and was Raymond’s ex-wife at the time of the beneficiary designation. The

beneficiary designation form listed Catherine as receiving 100% of the insurance benefits and Lewis,

whose name appeared below Catherine’s, as also receiving 100%. Raymond indicated on the form

that if neither Catherine nor Lewis were living or eligible when the insurance proceeds were to be

paid out, he wanted 100% of the proceeds to go to his son, Carol Raymond, Jr.

          On February 7, 2001, UNUM was contacted regarding a claim for Raymond’s life insurance

benefits. It subsequently informed Catherine that it was approving the claim for the group life

insurance benefits and was depositing $94,640.35 in a security money market account created in the

designated beneficiary’s name in accordance with the policy provisions. UNUM also explained to

Catherine that the remaining benefit of $42,000 was still under review.

          On July 5, 2001, UNUM received an unexpected call from Lewis averring that it had been her

brother’s intention for Catherine and her to split the insurance proceeds. UNUM explained the details

of Raymond’s beneficiary designation form and told Lewis that Catherine would be the beneficiary

   1
       The parties stipulate that ERISA governs.

                                                   2
of 100% of the insurance proceeds. On July 13, 2001, UNUM received a letter from counsel

representing Lewis demanding payment of benefits. UNUM responded to the letter and enclosed a

copy of the policy provisions with respect to changing beneficiaries and explained that Raymond had

not changed his beneficiary designation at any time from Catherine to Lewis or expressed an intention

for Catherine or Lewis to divide the insurance proceeds. Ultimately, UNUM paid an additional

$43,616.19 to Catherine and Lewis filed suit in state court.

        Lewis sought to be declared a beneficiary under the group life insurance policy. She claimed

entitlement to one-half of the insurance benefits due upon Raymond’s death. UNUM removed the

case to federal court because the policy at issue is governed by ERISA. Thereafter, the district court

issued a ruling in UNUM’s favor dismissing Lewis’s claims. It held that the plan administrator had

made a factual determination and that the plan administrator’s decision was not arbitrary or

capricious, as there was concrete evidence in the administrative record to support the decision that

Lewis is not eligible for benefits under the plan. Accordingly, the district court held that Lewis failed

to sustain her burden of proof that she is entitled to relief from UNUM’s decision to deny her claim

for insurance benefits.

                                            DISCUSSION

A. Standard of Review

        We review de novo the district court’s determination as to whether the plan administrator

abused its discretion in denying a claim of benefits. Lain v. UNUM Life Ins. Co. of Am., 279 F.3d

337, 343 (5th Cir. 2002). We will accept the factual findings made by the district court underlying

its review of the benefit determination unless the district court’s findings are clearly erroneous. Id.;

Sweatman v. Commercial Union Ins. Co., 39 F.3d 594, 600-01 (5th Cir. 1994).

                                                   3
         An administrator’s denial of benefits under an ERISA plan is reviewed de novo, unless the

benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for

benefits or to construe terms of the plan, as we have here.2 Lain, 279 F.3d at 342. In such a case,

we review the administrator’s actions under the abuse of discretion standard, giving substantial

deference to an administrator’s decision to deny benefits. Vega v. Nat’l Life Ins. Servs., Inc., 188

F.3d 287, 295 (5th Cir. 1999) (en banc); Jordan v. Cameron Iron Works, Inc., 900 F.2d 53, 55 (5th

Cir. 1990). Accordingly, factual determinations made by the administrator will be reviewed under

an abuse of discretion standard and will be rejected only if the court determines the administrator

abused its discretion in denying benefits. Lain, 279 F.3d at 342; Meditrust Fin. Serv. Corp. v.

Sterling Chems., Inc., 168 F.3d 211, 213 (5th Cir. 1999).

         Moreover, since UNUM insures the plan and is also entirely responsible for awarding

entitlement to benefits, we employ a “sliding scale” method to determine whether UNUM abused its

discretion, identifying factors that support a degree of conflict on UNUM’s part. Lain, 279 F.3d at

343; Vega, 188 F.3d at 296. In doing so, we must analyze whether the plan administrator acted

arbitrarily or capriciously by determining whether it made the decision to deny benefits without a

rational connection between the known facts and the decision or between the found facts and the

evidence. Lain, 279 F.3d at 342.

B.       Analysis and Applicable Law

         In her first point of error, Lewis explains that W-H Energy Services, as Raymond’s employer,

delegated the decision making authority to UNUM and, therefore, UNUM owed fiduciary duties to

     2
    The policy provides, “When making a benefit determination under the Summary of Benefits,
UNUM has discretionary authority to determine your eligibility of benefits and to interpret the terms
and provisions of the Summary of Benefits.”

                                                  4
the plan participants and beneficiaries.3 Because UNUM failed to provide Raymond with adequate

information about his benefit options, specifically, concerning the designation of beneficiaries and

instructions on how to complete the beneficiarydesignation form, Lewis alleges that UNUM breached

its fiduciary duty to Raymond and his beneficiaries and states that Raymond was not to blame for the

form’s resulting ambiguity. Next, Lewis asserts that when viewing the beneficiary designation form

in its totality, there is a lack of concrete evidence to support the plan administrator’s decision that she

is not eligible for benefits under the plan. She states that because her name was not placed in the

lower section of the UNUM form–the area reserved for persons designated as beneficiaries if and only

if the names of the persons written in the upper section of the form are not living at the time the

insurance proceeds become payable–the form clearly indicated that Raymond intended Lewis to be

a current, rather than a successive, beneficiary. As such, Lewis explains that UNUM’s decision to

award the full amount of the life insurance proceeds to Catherine was “arbitrary and capricious, and

therefore, an abuse of the Plan Administrator’s discretion” because Raymond designated an equal

share for both Catherine and Lewis, not 100% to each, but 100% to both. Accordingly, Lewis asserts

that she “sustained her burden of proof that she is entitled to relief from UNUM’s decision to deny

her claim for insurance benefits.”

        UNUM, on the other hand, argues that the beneficiary designation form completed by

Raymond evidenced his intention for 100% of the life insurance proceeds to go to Catherine, not

Lewis. UNUM explains that this court should affirm the district court’s dismissal, as Lewis has

   3
    Lewis cites Prudential Insurance Company of America v. Doe, 140 F.3d 785, 789-90 (8th Cir.
1998), as support for her assertion that, “[w]here an insurance company had responsibility for
interpreting the terms of an insurance contract and had substantial discretion with respect to the
decisions involving claims, it has been found to be a fiduciary under ERISA.”

                                                    5
offered no factual basis or case law to support her allegations and the administrative record

contradicts her contentions. UNUM does not dispute that it acted as a fiduciary with respect to the

administration of claims made under the policy; however, it explains that its function was merely to

provide benefits. Therefore, UNUM argues that providing benefits under the policy does not confer

plan administrator status on it, as the policy makes it clear that the beneficiary designation forms are

submitted to the employer. Accordingly, UNUM urges this court to agree with the district court and

hold that the district court did not err in determining that UNUM’s interpretation of the beneficiary

designation form was reasonable.

        This court has determined that an administrator’s decision to deny benefits must be based on

evidence, even if disputable, that clearly supports the basis for its denial. Vega, 188 F.3d at 299.

Accordingly, we will affirm the administrator’s decision only if it is supported by substantial evidence.

Meditrust, 168 F.3d at 215. “Substantial evidence” is more than a mere scintilla; it is that which a

reasonable mind would determine provides enough evidence to support a conclusion. Girling Health

Care, Inc. v. Shalala, 85 F.3d 211, 215 (5th Cir. 1996).

        A review of the record leads us to conclude that the plan administrator did not abuse its

discretion.   The evidence in this case supporting UNUM’s interpretation of the beneficiary

designation form well surpasses a mere scintilla and UNUM’s fiduciary responsibilities extended only

to those aspects of the employer’s employee welfare benefit plan that it controlled (e.g., the

administration of life insurance claims asserted by eligible employees and their dependents). See

Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enters. Inc.,793 F.2d 1456,

1459-60 (5th Cir. 1986) (explaining that “[t]he phrase ‘to the extent’ indicates that a person is a

fiduciary only with respect to those aspects of the plan over which he exercises authority or control”).

                                                   6
UNUM followed the plain language of the beneficiary designation form, which was submitted to the

employer. Furthermore, the evidence presented by Lewis is insufficient to support a finding that

UNUM undertook additional fiduciary duties; in fact, the administrative record reveals that UNUM

claims it did not even receive a copy of Raymond’s beneficiary designation form from his employer

until after the claim for death benefits was submitted to the employer.

        Likewise, the district court did not err in finding UNUM’s interpretation of the beneficiary

designation form reasonable. The beneficiary designation form, as filled out by Raymond, clearly

listed Catherine’s name and the figure “100%” above Lewis’s name and the figure “100%.” UNUM

interpreted this entry on Raymond’s beneficiary designation form to mean that Lewis would only take

the life insurance benefits if Catherine pre-deceased her at the time the insurance proceeds would be

paid out, which she did not. As the district court explained, this was a purely factual determination

on UNUM’s part to “ascertain Mr. Raymond’s intention with regard to the way he completed the

form. The determination of an insured’s intention as to designating his beneficiaries is not a question

of law, nor an interpretation of the [p]olicy; it is a finding of fact.”

        Therefore, applying the clearly erroneous standard of review, we reason that there is no

evidence to suggest that the district court clearly erred in determining that UNUM did not abuse its

discretion in denying the claims of Lewis. The district court determined that UNUM’s decision was

supported by “concrete evidence for the interpretation that Mr. Raymond intended that Mrs.

Raymond receive 100% of the benefits if she outlived him.” As the district court explained, because

the beneficiary designation form does not use the words “primary” or “alternative,” it would have

been reasonable to assume that Raymond wanted Catherine and Lewis to each take one half of the

insurance proceeds, except that Raymond did not simply list two names in the primary beneficiary

                                                    7
section; he designated percentages for each party. Furthermore, the plain language of the policy

states, “It is important that you name a beneficiary and keep your designation current. If more than

one beneficiary is named and you do not designate their order or share of payments, the beneficiaries

will share equally.” As mentioned, Raymond did designate the order and percentage of the benefits.

Thus, the determination reached by UNUM was supported by the record and by the beneficiary

designation form; the district court did not err when it noted that the existence of another plausible

explanation does not affect its reasoning in reaching the outcome in this case.

        For the reasons detailed above, we agree with the district court’s dismissal of this case:

UNUM’s interpretation was not an abuse of discretion and the district court did not err in determining

that UNUM’s interpretation was reasonable in light of the evidence. Therefore, because no evidence

exists to prove that the district court’s factual finding was clearly erroneous and because the

beneficiary designation form supports UNUM’s benefit determination, we affirm the district court’s

decision to dismiss this case,4 holding that Lewis failed to sustain her burden of proof that she is

entitled to the relief she seeks.

                                          CONCLUSION

            For the foregoing reasons, the judgment of the district court is AFFIRMED.

  4
   Specifically, the district court concluded, “The Administrative Record contains concrete evidence
supporting the Plan Administrator’s decision that Marilyn Lewis is not eligible for benefits under the
Plan. As such, the decision was not arbitrary and capricious, and therefore, not an abuse of
discretion. For these reasons, Ms. Lewis has not sustained her burden of proof that she is entitled
to relief from UNUM’s decision to deny her claim for insurance benefits. Her claims will be
dismissed with prejudice.”

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