Read v. Sun Life Assurance Co. of Canada , 268 F. App'x 369 ( 2008 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 7, 2008
No. 07-10945 Charles R. Fulbruge III
Summary Calendar Clerk
NATALYA READ
Plaintiff-Appellant
v.
SUN LIFE ASSURANCE COMPANY OF CANADA
Defendant-Appellee
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 5:06-CV-258
Before REAVLEY, SMITH, and BARKSDALE, Circuit Judges.
PER CURIAM:*
Natalya Read’s (Read) action against Sun Life Insurance Company seeks
accidental death and disability (AD&D) benefits under her husband’s employee-
welfare-benefit plan. Applying ERISA, the district court denied Read’s requests
for discovery outside of the administrative record, and granted summary
judgment to Sun Life, holding: the plan administrator did not abuse its
discretion in denying Read’s claim. Read presents three issues.
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
No. 07-10945
In 2005, Robert Read (Mr. Read) died as a result of a one-vehicle accident.
The accident report indicated a blood specimen was taken from Mr. Read, but
the alcohol/drug result was “PENDING”. After the test was completed, a
supplemental report was completed, indicating Mr. Read had a blood-alcohol
concentration of .10 at the time of the accident. Texas law prohibits operating
a motor vehicle with a blood alcohol concentration of .08 or greater. Accordingly,
the supplemental report listed “Under Influence-Alcohol” as a factor and
condition causing the accident.
Prior to his death, Mr. Read had acquired a life insurance and AD&D
policy through his employer, Unit Corporation, designating his wife, Read, as the
beneficiary under both. The AD&D policy excluded coverage for, inter alia, self-
inflicted injuries, injuries occurring while committing a criminal act, and injuries
occurring while operating a motor vehicle while intoxicated.
After her husband’s death, Read submitted a claim for life insurance and
AD&D benefits. Sun Life paid life insurance benefits, but determined the above-
mentioned exclusions precluded coverage for AD&D due to Mr. Read’s driving
while intoxicated. Accordingly, Read’s AD&D claim was denied.
Read filed this action in Texas court for payment of death benefits; Sun
Life removed it to federal court, claiming ERISA preempts Read’s state-law
claim. In district court, Read made two separate written discovery requests to
Sun Life.
In response to those requests, Sun Life produced the administrative record
relating to Read’s claim. It also submitted an affidavit stating the produced
record was the complete administrative record. For the portion of those requests
seeking discovery outside of that record, Sun Life moved for, and was granted,
an order denying discovery.
Sun Life then moved for summary judgment. The court held: Sun Life’s
denial of AD&D benefits was not an abuse of discretion under ERISA.
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No. 07-10945
Read claims: the AD&D policy is not a “qualified plan” regulated by
ERISA; the district court abused its discretion by denying her motion to compel
discovery; and summary judgment was awarded improperly to Sun Life.
As a threshold matter, we must determine whether the employer’s AD&D
policy is a benefit plan regulated by ERISA. This issue of fact is reviewed for
clear error. E.g., McNeil v. Time Ins. Co., 205 F.3d 179, 189 (5th Cir. 2000). To
be ERISA-qualified, a plan must: (1) exist; (2) fall outside the Department of
Labor safe-harbor provision; and (3) satisfy the primary elements of an ERISA
“employee benefit plan”—that is, establishment or maintenance by an employer
intending to benefit employees. E.g., Meredith v. Time Ins. Co., 980 F.2d 352,
355 (5th Cir. 1993).
Read maintains the policy is instead a “garden variety, group life
insurance policy purchased by Unit Corporation for its employees”. This intent
is obvious, Read asserts, from the statement on the first page of the policy,
stating it is subject to the laws of Oklahoma. The undisputed evidence in the
record establishes otherwise. The policy shows: the source of the funding is the
employer and policyholder, Unit Corporation; and, the purpose is to provide
insurance for its full-time employees. Additionally, the plan does not fall within
the Department of Labor safe-harbor provision because Unit Corporation was
obligated to pay premiums under the AD&D policy. See 29 C.F.R. § 2510.3-1(j)
(prohibiting, for purposes of safe-harbor, inter alia, contributions from being
made by an employer). Indeed, employees did not contribute. Therefore, ERISA
was correctly applied to Unit Corporation’s AD&D policy.
Under ERISA, discovery is limited to review of the administrative record
that existed at the time of review by the plan administrator. See Estate of
Bratton v. Nat’l Union Fire Ins. Co., 215 F.3d 516, 521 (5th Cir. 2000). Limited
exceptions to that rule exist, e.g., for evidence involving interpretation of a plan
provision, or explaining medical terms. See Vega v. Nat’l Life Ins. Servs., Inc.,
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No. 07-10945
188 F.3d 287, 299 (5th Cir. 1999) (en banc). The exceptions were neither
asserted by Read, nor applicable to the requested discovery. Sun Life produced
the entire administrative record, twice, and later certified its completeness by
affidavit.
For Read’s claim that the summary judgment was improper, the judgment
is reviewed de novo. E.g. Kennedy v. Plan Admin’r for Dupont Sav. & Inv. Plan,
497 F.3d 426, 428 (5th Cir. 2007), cert granted, No. 07-636, 2008 U. S. Lexis 1291
(19 Feb. 2008). Such judgment is appropriate when “there is no genuine issue
as to any material fact and . . . the movant is entitled to judgment as a matter
of law”. FED. R. CIV. P. 56(c); see, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322-
23 (1986). Where, as here, an ERISA plan administrator’s benefits decision is
discretionary, that decision is reviewed only for abuse of that discretion. See
Meditrust Fin. Servs. Corp. v. The Sterling Chems., Inc., 168 F.3d 211, 213 (5th
Cir. 1999). “[I]f the administrator’s decision on eligibility is supported by
substantial evidence and is not erroneous as a matter of law, it will be upheld”.
Barhan v. Ry-Ron Inc., 121 F.3d 198, 201 (5th Cir. 1997).
Because Sun Life serves as both the insurer and the claims administrator,
it operates under a conflict of interest, because it “potentially benefits from every
denied claim”. Vega, 188 F.3d at 295. Therefore, a “sliding scale” standard of
review is applied. Wade v. Hewlett-Packard Dev. Co. LP Short Term Disability
Plan, 493 F.3d 533, 538 (5th Cir. 2007). “The standard of review does not
change, i.e., it remains abuse of discretion; the existence of a conflict of interest
is simply a factor to be considered in determining whether the administrator
abused its discretion.” Id. (emphasis and citation omitted).
Along this line, Read asserts that, because Sun Life both administers and
insures the plan, an apparent conflict of interest exists. “Even if a conflict of
interest exists under these facts, the district court detailed the appropriate
standard of review for such cases and nevertheless granted summary judgment
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No. 07-10945
for [Sun Life], ruling that the [a]dministrator had not abused its discretion in
denying [Read’s] claim.” Wade, 493 F.3d at 538. Indeed, Read presents no
evidence, other than the potential for conflict, establishing an abuse of
discretion.
Essentially for the reasons stated by the district court, summary judgment
was proper. Summary-judgment evidence establishes the claims administrator’s
decision was supported by substantial evidence to allow a determination that the
AD&D claim should be denied. See Meditrust Fin. Servs. Corp., 168 F.3d at 214.
As noted, the accident report indicates Mr. Read’s blood was tested, and the test
revealed a blood alcohol concentration in excess of that allowed of motor vehicle
operators under Texas law. See TEX. PEN. CODE ANN. §§ 49.01(2)(B) and
49.04(a).
AFFIRMED.
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