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Vaughn v. Aetna Life Insurance Co.

United States District Court, N.D. Georgia, Atlanta Division

May 17, 2018

STEPHANIE D. VAUGHN, Plaintiff,
v.
AETNA LIFE INSURANCE COMPANY, Defendant.

          OPINION AND ORDER

          WILLIAM S. DUFFEY, JR. UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendant Aetna Life Insurance Company's (“Aetna”) Motion for Judgment on the Administrative Record [22] and Plaintiff Stephanie D. Vaughn's (“Ms. Vaughn” or “Plaintiff”) Motion for Summary Judgment [25]. Also before the Court is Aetna's Motion for Leave to File Under Seal [24] and Aetna's Motion for Oral Argument regarding its Motion for Judgment on the Administrative Record [32].

         I. BACKGROUND

         Plaintiff Stephanie Vaughn is the daughter of Mr. James Sheffield, deceased, and the named beneficiary of his life insurance policy. Mr. Sheffield was an employee of Lafarge North America Inc. (“Lafarge”) from 1980 until February 5, 2010, when he left his employment due to a disability. Mr. Sheffield, while employed, participated in an employee welfare benefit plan (the “Plan”) sponsored by Lafarge. The Plan includes long term disability (“LTD”) benefits and death benefits under a basic and supplemental life insurance program. Mr. Sheffield died on October 24, 2012. This action is a dispute regarding Aetna's denial of benefits to Plaintiff for supplemental life insurance coverage (“Supplemental Life”) under the Plan. There is no dispute regarding Mr. Sheffield's LTD and basic life insurance benefits. Aetna was the Plan administrator for Supplemental Life coverage under the Plan.

         A. The Plan and Death Benefits

         The Plan provided Basic and Supplemental Life to Mr. Sheffield, funded by the Group Life and Accident and Health Insurance Policy No. GP-885600, issued by Aetna to Lafarge. (Administrative Record [23] (“AR”) at 000297). The Basic Life insurance (“Basic Life”) provided benefits equal to 200% of the employee's basic annual earnings at the time of death, rounded up to the next $1, 000. (AR000250). The Plan provided that benefits generally terminate on the last day of the month during which the employee ceases active work. (AR000236). The Plan allowed Basic Life coverage to continue after the employee ceased active work if Lafarge determined that the employee became “totally and permanently disabled” while insured and Lafarge continued premium payments.[1] Mr. Sheffield qualified for this extension, and Aetna paid the $130, 000 Basic Life benefit to Plaintiff when he died.[2] Benefits under the Basic Life coverage are not at issue in this dispute.[3]

         The Plan also provided Supplemental Life coverage. (AR000250).[4] It is this coverage that is at issue in this case. Under the Supplemental Life coverage provisions, Supplemental Life coverage premium payments are waived if the employee is determined to be totally and permanently disabled, as that term is defined in the Plan (the “Waiver of Premium”). Whether an employee is “totally and permanently disabled” is a decision required to be made by Aetna.[5] The Waiver of Premium provision stated:

If you are not able to work due to disease or injury, your insurance may be extended if Aetna determines you are permanently and totally disabled. If a determination of permanent and total disability is made, you will not have to make any further contributions for your coverage and no premium payments will be required from your Employer.
You are permanently and totally disabled only if disease or injury stops you from working at your own job; or any other job for pay or profit; and it must continue to stop you from working any reasonable job.
A “reasonable job” is any job for pay or profit which you are, or may reasonably become fitted for by education, training, or experience.

(AR000221).

         B. The Supplemental Life Coverage Request

         On August 10, 2010, Mr. Sheffield submitted to Aetna a “Group Claim Form - Permanent and Total Disability - Life Insurance.” (AR000205). Mr. Sheffield claimed Supplemental Life coverage and sought a waiver of premium on the grounds he was permanently and totally disabled. On March 29, 2012, Aetna sent a letter (the “March 29, 2012, Denial Letter”) to Mr. Sheffield denying his Supplemental Life insurance claim. (AR000341-344). Aetna explained:

We have completed our review of your claim for the Waiver of Premium benefit and have determined that the information received in support of this claim has not established that this loss falls within the Permanent and Total Disability coverage requirements of the Policy. Accordingly, the Waiver of Premium benefit in the amount of $200, 000.00 has not been approved for you under the terms of the Policy.
. . . .
Based on our review of the clinical documentation in your file, we have determined that there was insufficient medical evidence to support a permanent and total disability, one that will preclude you working at any occupation, and therefore, you do not qualify for an extension of your Life Insurance benefit. For these reasons, we are unable to approve your request.

(AR000342-43). The letter cited two physicians' statements that did not support Mr. Sheffield's disability including because there was no information to support that he was unable to participate in vocational rehabilitation.

         The March 29, 2012, Denial Letter explained to Mr. Sheffield that he had a right to appeal the decision not to provide Supplemental Life benefits. It also informed him that he had a right to bring a claim under ERISA if the denial of the insurance benefit was upheld on appeal. He was told:

If you disagree with this determination of benefits, you have a right to a review of the decision and to bring a civil action under Section 502(a) of [ERISA] if your denial is upheld on appeal. [Aetna] will review any additional evidence you submit, including but not limited to:
. The specific information listed above, [6] and
. Any other claim information or documentation you believe would assist us in reviewing your claim.
To obtain a review, you or your representative should submit a request in writing to this office. Your request should include the group name (e.g., employer), name of the insured, the insured's social security number and the issues and comments and any documents, records or other information that you would like to have considered, whether or not submitted in connection with the initial claim. You may also receive, upon request free of charge, documents, records and other information relevant to your claim. The written request for review must be mailed or delivered within 180 days following receipt of this explanation. Ordinarily, you will receive notification of the final determination within 45 days following your receipt of your request.

(AR000343 (emphasis in original)). On March 29, 2012, Aetna sent a similar letter to Lafarge, notifying Lafarge of Aetna's denial, and Lafarge ceased paying premiums for Mr. Sheffield's Supplemental Life benefits. (AR000345).

         Mr. Sheffield did not seek review of the denial of his Waiver of Premium benefits within the 180-day period required in the March 29, 2012, Denial Letter.[7] He died on October 24, 2012. (AR000355).

         C. The January 21, 2015, Denial of Plaintiff's Claim for the Supplemental Life Benefit

         On November 24, 2014, over two years after Mr. Sheffield's death, Ms. Vaughn sent a letter to Aetna demanding that Aetna pay Ms. Vaughn Supplemental Life benefits in the amount of $200, 000, plus interest.[8] (AR000500).

         On January 21, 2015, Aetna responded to Ms. Vaughn's letter (the “January 21, 2015, Denial Letter”), denying her demand. (AR000507-510). The January 21, 2015, Denial Letter explained that “[i]n order for the [Supplemental] Life Insurance Benefit to be payable under this Policy, Mr. Sheffield must have had [Supplemental] Life Insurance coverage in force at the time of his death.” (AR000509). The letter explained further that because Aetna had determined that Mr. Sheffield was not totally and permanently disabled and Lafarge discontinued Supplemental Life insurance premiums, Mr. Sheffield's Supplemental Life coverage terminated on or about March 29, 2012. The letter also explained the distinction between the Basic Life coverage that was extended due to illness after Mr. Sheffield ceased working, and the Supplemental Life Insurance coverage that was not:

[T]he requirements for payment of additional benefits under the Supplemental Life Insurance are different from the requirements for Long Term Disability and Basic Life Insurance coverage. Even though Mr. Sheffield met the eligibility for Long Term Disability Benefit and extension for Basic Life Insurance determined by [Lafarge], we have determined that there was insufficient medical evidence to support a permanent and total disability under the Permanent and Total Disability Feature for his Supplemental Life Insurance coverage. Our denial letter was sent to Mr. Sheffield and [Lafarge] on March 29, 2012. According to [Lafarge], Mr. Sheffield's premium payment(s) ...

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