Court Opinion

ID: 1004884
Source: CourtListenerOpinion
Date Created: 2013-07-04 18:48:04.481997+00
Date Added: 2024-06-11T15:06:09.107383
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
               FOR THE FOURTH CIRCUIT

BERNARD A. BAND, M.D.,                
                Plaintiff-Appellee,
                v.
                                               No. 00-2106
THE PAUL REVERE LIFE INSURANCE
COMPANY,
             Defendant-Appellant.
                                      
           Appeal from the United States District Court
            for the District of Maryland, at Greenbelt.
             Alexander Williams, Jr., District Judge.
                         (CA-99-404-AW)

                     Argued: January 24, 2001

                      Decided: July 20, 2001

     Before WILKINS and MICHAEL, Circuit Judges, and
     Claude M. HILTON, Chief United States District Judge
              for the Eastern District of Virginia,
                     sitting by designation.

Reversed and remanded by unpublished per curiam opinion.

                           COUNSEL

ARGUED: Bryan David Bolton, FUNK & BOLTON, P.A., Balti-
more, Maryland, for Appellant. H. Kenneth Armstrong, ARM-
STRONG, DONOHUE, CEPPOS & VAUGHAN, CHARTERED,
Rockville, Maryland, for Appellee. ON BRIEF: James F. Taylor,
FUNK & BOLTON, P.A., Baltimore, Maryland, for Appellant.
2               BAND v. PAUL REVERE LIFE INSURANCE
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                             OPINION

PER CURIAM:

   This case is before the Court on the Paul Revere Insurance Compa-
ny’s challenge to the District Court’s grant of summary judgment to
Dr. Bernard A. Band, an ERISA beneficiary, for an additional six
months of disability benefits, and the denial of summary judgment to
the Paul Revere Insurance Company.

   Bernard A. Band, M.D. was a beneficiary of an employee welfare
benefit plan governed by ERISA and which was provided through an
insurance policy. The policy was purchased and paid for by his
employer, Drs. Band, Badway & Goodridge, P.A., for the purpose of
providing benefits in the event of disability. On September 27, 1989,
Mr. Kevin Tumey interviewed Dr. Bernard Band and hand-wrote an
application for disability insurance. Mr. Tumey mistakenly recorded
Dr. Band’s birth date as August 24, 1933 instead of August 24, 1932.
Once Mr. Tumey completed the application, he gave it to Dr. Band
to sign. Paul Revere Insurance Company then provided Dr. Band with
a typed application which Dr. Band signed on January 24, 1990. In
signing the applications, Dr. Band certified: "I have read the state-
ments and answers recorded above. They are, to the best of my
knowledge and belief, true and complete and correctly recorded."
Both applications likewise stated: "No agent or broker has authority
to waive the answer to any question, to determine insurability, to
waive any of the Company’s rights, or to make or alter any contract
or policy."

   Dr. Band became disabled on December 21, 1994, and submitted
a claim for disability benefits on May 26, 1995. The benefit period
then commenced retroactive to March 21, 1995, pursuant to Dr.
Band’s policy. Benefits are determined by the birth date of the
insured. On December 21, 1994, Dr. Band was 61 years old as com-
puted by the statements in his application. Dr. Band was in fact 62
years of age on December 21, 1994.
                 BAND v. PAUL REVERE LIFE INSURANCE                   3
   The "Maximum Benefit Period" is the longest period of time for
which disability benefits are available. The Maximum Benefit Period
is 48 months "for total disability starting at age 61 but before age 62"
and 42 months for "total disability starting at age 62 but before age
63." In June of 1997 Dr. Band inquired with Paul Revere as to when
his benefit period would expire. Paul Revere represented by letter
indicating that the benefits would continue until March of 1999, the
full 48 months.

   On or about February 20, 1998, Paul Revere advised Dr. Band that
its prior statement to Dr. Band which represented that the maximum
benefit period would be reached on March 21, 1999, was incorrect
because it was calculated using the incorrect birth date stated in his
application. Dr. Band was further advised that the correct maximum
benefit period based on his correct birth date was 42 months and
would end in September 1998, instead of six months later. Paul
Revere paid 42 months of total disability from March 21, 1995, to
September 21, 1998. Dr. Band admits that his date of birth was
August 24, 1932, and that he was age 62 at the time of his disability.

   After Paul Revere denied Dr. Band’s claim for the additional six
months of disability, Dr. Band brought suit in the Circuit Court for
Montgomery County, Maryland, arguing that Paul Revere was
required to use the incorrect birth date in his insurance application to
calculate his age at the start of disability, entitling him to the addi-
tional six months of disability payments. Paul Revere removed the
action to the United States District Court for the District of Maryland
based on the ERISA preemption. Dr. Band amended his complaint to
state a claim for benefits pursuant to U.S.C. § 1132(a)(1)(B). The Dis-
trict Court heard cross motions for summary judgment filed by the
parties and granted summary judgment to Dr. Band.

   In doing so, the district court concluded that Dr. Band was entitled
to 48 months of benefits because Paul Revere was estopped from
asserting any defenses inconsistent with the benefit period of 48
months. The district court applied the common law principles of
waiver and promissory estoppel to Dr. Band’s ERISA insurance con-
tract because according to the district court, Paul Revere assured Dr.
Band that he was to recover 48 months of benefits. It also concluded
that the misstatement of age was done wholly on the part of Mr.
4                BAND v. PAUL REVERE LIFE INSURANCE
Tumey, as an agent of Paul Revere. Additionally, the district court
concluded that Paul Revere had waived its misstatement of age provi-
sion within Dr. Band’s policy and was therefore estopped from assert-
ing it as a defense to the denial of benefits assured to Dr. Band.
  This appeal by Paul Revere followed. We review the district
court’s grant of summary judgment de novo. See Canada Life Assur-
ance Co. v. Estate of Lebowitz, 185 F.3d 231, 235 (4th Cir. 1999).
   The burden is on an insurance beneficiary to prove his or her total
disability benefits under a Plan. Fuja v. Benefit Trust Life Ins. Co., 18
F.3d 1405, 1408 (7th Cir. 1994) (ERISA plaintiff has burden of prov-
ing coverage); see also Gable v. Sweetheart Cup Co. Inc., 35 F.3d
851, 855-56 (4th Cir. 1994) (ERISA plaintiffs bear the burden of
proving their employer’s ERISA plan contains a promise to provide
vested benefits.). Because Dr. Band sought 48 months of total disabil-
ity benefits, he had to prove that he suffered "a total disability starting
at age 61 but before age 62."
   In determining whether Dr. Band met this burden, we are governed
by principles of federal law. See Pilot Life Ins. Co. v. Dedaux, 481
U.S. 41, 56-57 (1987). "ERISA demands adherence to the clear lan-
guage of the employee benefit plan." White v. Provident Life Accident
Ins. Co., 114 F.3d 26, 28 (4th Cir. 1997). The express terms of the
Plan must be followed. See Healthsouth Rehabilitation Hosp. v.
American Nat’l Red Cross, 101 F.3d 1005, 1009-10 (4th Cir. 1996).
   The district court concluded that the maximum benefit period was
48 months "under the policy and the incorporated application." It did
so by using Dr. Band’s incorrect birth date from his application to cal-
culate his age at the start of his disability. Nothing in the Plan sug-
gests that age at the start of disability is calculated by reference to the
birth date on the insured’s application. See, e.g., Shalloway, 151 F.2d
at 551 (refusing to consider the birth date on an insurance application
when the correct inquiry focused on age). The unrefuted evidence
shows that Dr. Band’s age was 62 at the start of the disability. Dr.
Band offered no evidence that he was 61 at the start of his disability.
Therefore, the district court’s conclusion was contrary to the Plan,
which states the maximum benefit period is 42 months for disability
starting "at age 62."
                 BAND v. PAUL REVERE LIFE INSURANCE                      5
   The district court acknowledged that Paul Revere’s Misstatement
of Age provision limited Dr. Band’s maximum benefit period to 42
months.* Nevertheless, it employed principles of waiver and estoppel
to avoid application of the Misstatement of Age provision. Yet, it is
well settled in this Circuit that principles of waiver and estoppel can-
not be used to modify the express terms of an ERISA plan. Bakery
v. Confectionary Union & Indus. Int’l Pension Fund v. Ralph’s Gro-
cery Co., 118 F.3d 1018, 1027 (4th Cir. 1997); White, 114 F.3d at 29;
Healthsouth Rehabilitation Hosp., 101 F.3d at 1010. Mullins v. Blue
Cross and Blue Shield of Va., Inc., 79 F.3d 380, 381 (4th Cir. 1996);
Singer, 964 F.2d at 1452. This rule is based on ERISA’s exacting
requirement that the express terms of ERISA benefit Plan are fol-
lowed. See White, 114 F.3d at 29; see also Healthsouth Rehabilitation
Hosp., 101 F.3d at 1009 ("oral and informal amendments to estab-
lished ERISA plans are completely incapable of altering the specified
terms of the plans’ written coverage."). Further, any modification
must be implemented in conformity with formal amendment proce-
dures established pursuant to 29 U.S.C. § 1102. Healthsouth Rehabili-
tation Hosp., 101 F.3d at 1009; Coleman, 969 F.2d at 59; see also
White, 114 F.3d at 29; Alday, 906 F.2d at 665 (holding that statements
in correspondence and a Summary of Personal Benefits booklets were
informal written amendments prohibited by § 1102(b)(3)). There is no
evidence whatsoever that any formal amendment procedures were
taken by Paul Revere.
   The district court recognized the "general rule in the Fourth Circuit
[that] federal common law doctrines of waiver and estoppel do not
apply to ERISA contracts." The district court, however, departed from
this Circuit’s precedent by creating an "exception" derived from the
following statement in White v. Provident Life & Accident Insurance
Company: "White cannot even point to any explicit assurances by
Provident that he was entitled to double coverage." The district court
concluded that Paul Revere’s letters to Dr. Band "satisfy the explicit
assurances exception set forth in White."
  The district court misconstrues White and this Court’s precedent.

   *The insurance contract contains a Misstatement of Age Provision
Section 9.9 which states, if the insured’s age has been misstated, the ben-
efits under the policy would be those that the premium the insured paid
would have purchased at their correct age.
6                BAND v. PAUL REVERE LIFE INSURANCE
The White Court categorically stated that the deferral common law of
ERISA "does not incorporate the principles of waiver and estoppel."
White, 114 F.3d at 29. Thus, the explicit assurances exception crafted
by the district court does not exist. Even if White intended to carve
out such an exception, it would not apply to "non-conforming" writ-
ten modifications to the Plan. White, 114 F.3d at 29; see also Health-
south Rehabilitation Hosp., 101 F.3d at 1009; Coleman v. Nationwide
Life Ins. Co., 969 F.2d 54, 58-59 (4th Cir. 1992). "[I]nformal amend-
ments to established ERISA plans are completely incapable of alter-
ing the specified terms of the plan’s written coverage." Healthsouth
Rehabilitation Hosp., 101 F.3d at 1009; Coleman, 969 F.2d at 59
("Oral or informal written modifications to a plan . . . are of no
effect."). Any modification must be implemented in conformity with
formal amendment procedures established pursuant to 29 U.S.C.
§ 1102. Healthsouth Rehabilitation Hosp., 101 F.3d at 1009; Cole-
man, 969 F.2d at 59; see also White, 114 F.3d at 29; Alday, 906 F.2d
at 665 (holding that statements in correspondence and Summary of
Personal Benefits booklet were informal amendments prohibited by
§ 1102(b)(3)).
   Paul Revere’s letters to Dr. Band were not formal plan amend-
ments. The first letter, stating the incorrect maximum benefit period
under the Plan, was written solely at the request of Dr. Band. The sec-
ond, waiving the Misstatement of Age provision in the plan, made
clear the correct maximum benefit of 42 months would apply. Paul
Revere’s waiver was applied to the amount of benefits, not to the
maximum benefit period. The district court found that Paul Revere
"intentionally decided to waive that right," when Paul Revere stated
that it would not "pursue this issue," in a letter written to Dr. Band
dated May 11, 1998. However, Paul Revere was referring to recover-
ing any overpayments it made to Dr. Band. The district court failed
to note that this letter specifically stated it would only pay 42 months
of benefits. Paul Revere obviously did not intend to waive the very
right it was asserting.

   For the foregoing reasons the decision of the district court is
reversed and remanded for entry of an order granting summary judg-
ment to Paul Revere.

                                      REVERSED AND REMANDED