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Gordon v. Cigna Corp.

United States Court of Appeals, Fourth Circuit

May 15, 2018

KIMBERLY P. GORDON, Plaintiff - Appellant,
v.
CIGNA CORPORATION; LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendants - Appellees, and UCG HOLDINGS LP; OIL PRICE INFORMATION SERVICES, LLC, Defendants.

          Argued: January 24, 2018

          Appeal from the United States District Court for the District of Maryland, at Greenbelt. Roger W. Titus, Senior District Judge. (8:16-cv-00238-RWT)

         ARGUED:

          Jonathan Tycko, TYCKO & ZAVAREEI LLP, Washington, D.C., for Appellant.

          Christopher Joseph Boran, MORGAN, LEWIS & BOCKIUS, LLP, Chicago, Illinois, for Appellees.

         ON BRIEF:

          Anna 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.

          Jeremy P. Blumenfeld, MORGAN, LEWIS & BOCKIUS LLP, Philadelphia, Pennsylvania, for Appellees.

          Before AGEE, WYNN, and THACKER, Circuit Judges.

         Affirmed by published opinion. Judge Wynn wrote the opinion, in which Judge Agee and Judge Thacker joined.

          WYNN, Circuit Judge:

         Steven 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.

         The 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.

         I. A.

          During 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.

         The 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).

         According 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 policy-holder.

         Under 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).

         B.

         Steven 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.[1]

         By July 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.

         Under 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.

         Kimberly 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. ...


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