Lewis v. UNUM Life Insurance Co. of America , 188 F. App'x 259 ( 2006 )

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Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not be published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.”
8