KIMBERLY P. GORDON, Plaintiff - Appellant,
CIGNA CORPORATION; LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendants - Appellees, and UCG HOLDINGS LP; OIL PRICE INFORMATION SERVICES, LLC, Defendants.
Argued: January 24, 2018
from the United States District Court for the District of
Maryland, at Greenbelt. Roger W. Titus, Senior District
Jonathan Tycko, TYCKO & ZAVAREEI LLP, Washington, D.C.,
Christopher Joseph Boran, MORGAN, LEWIS & BOCKIUS, LLP,
Chicago, Illinois, for Appellees.
C. Haac, TYCKO & ZAVAREEI LLP, Washington, D.C.; Daniel
S. Kozma, LAW OFFICE OF DANIEL S. KOZMA, Washington, D.C.;
James E. Miller, Kolin C. Tang, SHEPHERD FINKELMAN MILLER
& SHAH, LLP, Chester, Connecticut, for Appellant.
P. Blumenfeld, MORGAN, LEWIS & BOCKIUS LLP, Philadelphia,
Pennsylvania, for Appellees.
AGEE, WYNN, and THACKER, Circuit Judges.
by published opinion. Judge Wynn wrote the opinion, in which
Judge Agee and Judge Thacker joined.
Gordon worked for Oil Price Information Services, Inc. and
paid premiums on life insurance policies that totaled $300,
000 in coverage. But when Steven Gordon died in January 2014,
his insurer, The Life Insurance Company of North America
("LINA"), paid Steven's wife and beneficiary,
Kimberly Gordon, only $150, 000. The reason, LINA claimed,
was because Steven Gordon had only been approved for $150,
000 in coverage-not for the full $300, 000 in coverage he had
been paying for. When Kimberly Gordon sued for the difference
between the two amounts, the district court granted summary
judgment in favor of the insurance company.
district court found that the errors leading to Steven
Gordon's reduced coverage resulted from mistakes by his
employer, which administered the life insurance plan, not the
insurance company. Thus, the insurance company did not breach
any fiduciary duty it may have had under the Employee
Retirement Income Security Act of 1974 ("ERISA"),
nor did it knowingly participate in a breach of trust by
another fiduciary. The district court also found that
discovery would not lead to any information that would change
its conclusion, so the court granted summary judgment before
either party conducted discovery. Kimberly Gordon, on behalf
of Steven Gordon's estate, now appeals the district
court's decision. We affirm.
the time of Steven Gordon's employment, Oil Price
Information Services was a subsidiary of UCG Holdings, LP
(collectively referred to as "UCG, " unless
otherwise specified). UCG employees were eligible to
participate in the company's group life insurance plan
(the "Plan"). The policies provided by UCG were
underwritten by the Defendant Life Insurance Company of North
America ("LINA"), a wholly-owned subsidiary of
Defendant CIGNA Corporation (collectively referred to as
"CIGNA Defendants"). Every employee at UCG received
$50, 000 in basic group life insurance, for which UCG paid
all premiums at no cost to the employee. Employees could also
elect to purchase additional coverage and have the associated
premiums automatically deducted from their pay.
Plan documents allocate responsibilities between UCG and
LINA. The "Administration Manual" provides that the
Plan is self-administered, meaning that UCG, as the employer,
was "responsible for day-to-day program
administration." J.A. 100, 111; see also J.A.
98 (listing UCG as the "Plan Administrator"). In
that role, UCG's responsibilities included, inter
alia, "[v]erifying employee eligibility for
benefits, " "[p]roviding enrollment materials to
employees, " "[m]aking sure employees enroll
accurately and on time, " "[h]andling changes to
benefit elections, " and "[c]ompleting premium
payment procedures." J.A. 103. UCG also was responsible
for providing accurate record-keeping of
"[i]ndividual-level information (such as beneficiary
designations, applications, coverage change forms, and
assignments), " as well as for providing employees with
accurate and timely information about their benefits. J.A.
104. The manual also described UCG's fiduciary
responsibilities under ERISA:
ERISA places certain responsibilities on fiduciaries, who
are the persons responsible for managing the employee benefit
plan. In general, fiduciaries must act prudently, must
follow the terms of the written plan documents (one of which
is your group insurance policy), must act solely in the
interests of participants and beneficiaries, and must refrain
from certain conflicts of interest and other prohibited
transactions. ERISA plans are managed by a fiduciary
known as the Plan Administrator, which is most often the
employer. . . .
J.A. 103 (emphasis added).
to the manual, UCG's responsibilities also included
"Self Billing." J.A. 111. This structure meant that
UCG-not LINA-maintained all employee-level coverage data,
calculated employee premiums, and collected those premiums
via payroll deduction. Then, at the end of each month, UCG
prepared and submitted an invoice, along with a single, bulk
premium to LINA. The bulk premium reflected the total monthly
premiums for both basic and supplemental life insurance
coverage under the Plan. The premium did not identify the
names of individual policy-holders for whom payment was being
made, nor did UCG list the amount being paid for any specific
its authority as Plan Administrator, UCG executed an
"Appointment of Claim Fiduciary" form, in which it
appointed LINA as "the designated fiduciary for the
review of claims for benefits under the Plan." J.A. 98.
In this role, LINA was "responsible for adjudicating
claims for benefits under the Plan, and for deciding any
appeals of adverse claim determinations." Id.
LINA also had "the authority, in its discretion, to
interpret the terms of the Plan . . . [and] to decide
questions of eligibility for coverage or benefits under the
Plan." Id. However, notwithstanding LINA's
role as a fiduciary with respect to claims
adjudication, the form explicitly stated that it "does
not authorize [the] Claim Fiduciary any fiduciary
responsibility with respect to the administration of
the Plan except as provided" in the Claim Fiduciary
form. Id. (emphasis added).
Gordon began work with UCG in late March 2013. At that time,
he enrolled in the Plan and attempted to obtain $250, 000 in
supplemental coverage. Accordingly, UCG deducted
approximately $210 in monthly premiums-the amount associated
with that level of coverage-from Steven Gordon's pay
during his employment at UCG. The amount deducted totaled
just over $1, 260.
2013, Steven Gordon had become seriously ill and was
hospitalized multiple times. On January 27, 2014-less than a
year after he began working for UCG-Steven Gordon passed
away. After Steven's death, Kimberly Gordon (the
beneficiary of his life insurance policy), filed a claim with
LINA seeking a payment of $300, 000 (the $50, 000 in basic
group life insurance provided by UCG, as well as the $250,
000 in supplemental coverage paid for by her late husband).
But LINA approved the claim for only $150, 000. The reason
for the discrepancy stemmed from some technicalities in the
policy requirements and UCG's failure to correctly
account for those nuances.
the terms of the Plan, employees who elected supplemental
coverage had a "Guaranteed Issue amount"-that is,
the amount of coverage the insurance company agreed to
provide "without requiring the participant to submit
medical evidence for approval." J.A. 205. The guaranteed
issue amount under the Plan was $100, 000 in supplemental
coverage (for a total of $150, 000 when combined with the
$50, 000 of basic group life insurance provided by UCG). For
anything more than $100, 000 in supplemental coverage,
however, an employee needed to submit further information to
verify insurability. According to the CIGNA Defendants'
records, they never received that additional required
information from Steven Gordon, so he was never approved for
$250, 000 in supplemental insurance. For that reason, the
CIGNA Defendants agreed to pay Kimberly Gordon only $150,
000-that is, the $50, 000 of coverage paid for by UCG and the
$100, 000 in supplemental coverage for which Steven Gordon
was eligible without submitting any medical evidence.
Gordon asked the CIGNA Defendants to reconsider their
decision, but they refused to alter their conclusions. She
also sought answers from UCG. In a letter to Kimberly
Gordon's counsel, UCG explained that when Steven Gordon
had started employment with UCG, he had been given an
"Enrollment Guide" discussing the position's
insurance benefits. J.A. 264. This guide stated that,
"[f]or any amount [of supplemental insurance] over $100,
000, you must provide evidence of insurability." J.A.
230. Because Steven Gordon never submitted that evidence, he
was never approved by LINA for supplemental coverage above
the guaranteed amount. UCG's letter further confirmed
that the Plan operated in practice as it was described in the
Plan documents. In particular, UCG described the self-billing
format, in which "[n]o specific employee information
[wa]s forwarded to CIGNA, only employee count, volume, and
[total] premium amount." J.A. ...