Ministeri v. Reliance Standard Life Insurance Company

United States Court of Appeals
For the First Circuit
No. 21-1651
RENEE MINISTERI, Personal Representative of the Estate of
Anthony Ministeri,
Plaintiff, Appellee,
v.
RELIANCE STANDARD LIFE INSURANCE COMPANY,
Defendant, Appellant.
No. 21-1652
RENEE MINISTERI, Personal Representative of the Estate of
Anthony Ministeri,
Plaintiff, Appellant,
v.
RELIANCE STANDARD LIFE INSURANCE COMPANY,
Defendant, Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Leo T. Sorokin, U.S. District Judge]
Before
Barron, Chief Judge,
Selya and Howard, Circuit Judges.
Joshua Bachrach, with whom Kara Thorvaldsen and Wilson,
Elser, Moskowitz, Edelman & Dicker LLP were on brief, for
defendant.
Teresa A. Monroe, with whom Monroe Law LLP, Eugene F.
Sullivan, Jr., Richard J. Sullivan, and Sullivan & Sullivan, LLP
were on brief, for plaintiff.
July 25, 2022
SELYA, Circuit Judge. It is common ground that
ambiguities in an insurance policy — particularly ambiguities in
an insurance policy issued as part of an employee benefit plan
and, thus, within the protective carapace of the Employee
Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-
1461 — must ordinarily be construed against the issuing insurer.
The case at hand is a poster child for this familiar proposition.
The backdrop is easily painted. In these consolidated
appeals, we are tasked — among other things — with deciding whether
an employee lost life insurance coverage under his employer's group
policy after he developed a brain tumor that disrupted his usual
work. The insurance company denied coverage on the ground that
the employee had lost coverage before his death. We conclude that
the policy language invoked by the insurance company is less than
clear, bringing into play the rule that ambiguous terms in an
insurance policy should be read, within reason, in favor of
coverage. Applying that rule, we hold that the employee was
covered at the time of his demise.
The court below granted a motion for summary judgment
filed by the employee's widow as to both the basic life insurance
amount of $624,000 and the supplemental life insurance amount of
$468,000. See Ministeri v. Reliance Standard Life Ins. Co., 523
F. Supp. 3d 157, 181 (D. Mass. 2021). The court also awarded her
attorneys' fees, costs, and prejudgment interest. The insurer has
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appealed, and the widow has cross-appealed to challenge the rate
set by the district court for prejudgment interest. Discerning
neither any reversible error nor any abuse of discretion, we reject
both appeals and leave the parties where we found them.
I
We briefly rehearse the relevant facts and travel of the
case. On April 1, 2014, Anthony Ministeri (Ministeri) began
working at AECOM Technology Corporation (AECOM) in Chelmsford,
Massachusetts, as a construction services executive. He was to
work twenty-four hours per week for an annual salary of $156,000.
His ordinary duties required frequent travel.
Through AECOM's group plan, Ministeri selected life
insurance coverage underwritten by Reliance Standard Life
Insurance Company (Reliance). He opted for coverage in the amount
of $624,000 (four times his salary) in basic life insurance and
$468,000 (three times his salary) in supplemental life insurance.
On May 2 — barely a month after beginning his new job —
Ministeri became discombobulated (to the point of getting lost in
an office building, struggling to drink from cups, and typing
gibberish) while on a business trip in New York City. Upon his
return to Massachusetts, an MRI revealed a brain lesion. After
two brain biopsies, Ministeri was diagnosed with glioblastoma (an
especially aggressive type of brain tumor). He was treated with
radiation and chemotherapy through July.
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Ministeri retained his job at AECOM and did at least
some work from home during the period from May until early August
2014 (although the parties wrangle over how much work he did and
when he did it). He continued to receive his customary salary and
submitted timesheets claiming his normal twenty-four hours of work
each week (always Monday, Tuesday, Wednesday), and AECOM
invariably approved those timesheets.
On July 31, Ministeri met with Dr. Elizabeth Collins for
an outpatient consultation. Ministeri's measured optimism (at
least for the short term) is reflected in Dr. Collins's note of
that meeting. He said that he felt "much better" and that he was
"completely comfortable walking independently." Moreover, he
"explained that he would like to return back to work," including
significant air travel. He acknowledged, however, that his brain
tumor would eventually "come back" and estimated that he was at
eighty percent of his prior functioning, noting that he felt "a
little bit slow in the uptake in his brain."
On August 10, Ministeri suffered a massive pulmonary
embolism. He received extensive hospital care and eventually was
transferred to a rehabilitation facility. Unable to work at all,
Ministeri took a formal leave effective August 8, 2014. He applied
for and received long-term disability benefits under a separate
policy issued by Reliance (also a part of AECOM's benefits
package). For purposes of that policy, Reliance determined that
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Ministeri's last day of work at AECOM was August 6. Ministeri
continued to pay his premiums on his life insurance policy until
his death the following year.
During the fall and early winter of 2014, Ministeri's
condition showed signs of improvement. A series of neuro-oncology
clinic notes signed by Dr. Erik Uhlmann — after monthly meetings
with Ministeri from September through January — recount that
Ministeri's "[m]ental status [wa]s satisfactory in areas of
alertness, orientation, concentration[,] memory and language";
that he had "[n]o trouble walking, good balance," and "no fatigue";
and that he had "[n]o visual problems, no weakness," and "no
difficulty . . . speaking." On September 19, 2014, Dr. Uhlmann
wrote that Ministeri was "presently not fit to return to work" but
would be "able to return to work" on January 5, 2015. In January,
though, Dr. Uhlmann pushed back the projected date of Ministeri's
return to work to March 31, 2015. Despite Dr. Uhlmann's optimism,
Ministeri was never able to resume work and succumbed to his
illness on October 2, 2015.
On March 24, 2016, Ministeri's widow, plaintiff Renee
Ministeri, submitted a proof-of-loss statement to Reliance,
through AECOM. In it, she claimed a total of $1,092,000 under her
late husband's life insurance policy. On July 8, 2016, Reliance
denied the claim. In a letter to the plaintiff, it stated that
Ministeri lost eligibility under the policy once he stopped working
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"Part-time," which the policy defined as "working for [AECOM] for
a minimum of 20 hours during [his] regularly scheduled work week."
Reliance explained that, following Ministeri's disorientation in
New York in May of 2014, he was no longer performing his usual
duties (especially travel) for a minimum of twenty hours per week
and, thus, his coverage under the policy had lapsed. The plaintiff
appealed this denial, but Reliance held firm.
In March of 2018, the plaintiff sued Reliance in the
United States District Court for the District of Massachusetts
alleging wrongful denial of benefits under section 502(a) of ERISA,
29 U.S.C. § 1132(a)(1)(B), (a)(3).1 Reliance answered the
complaint, and the plaintiff's request to expand the
administrative record through discovery was denied. Ministeri,
523 F. Supp. 3d at 165. In due course, the parties cross-moved
for summary judgment on the administrative record. After briefing
and oral argument, the district court granted the plaintiff's
motion for summary judgment, denied Reliance's cross-motion, and
awarded the plaintiff the sum of $1,092,000. See id. at 161-62.
In a subsequent order, the court awarded the plaintiff attorneys'
fees ($102,018.75), costs ($426.83), and prejudgment interest (to
be computed at a rate of 7.5%). See Ministeri v. Reliance Standard
1 The complaint also named AECOM as a defendant, but the
district court subsequently dismissed the suit against AECOM. See
Ministeri, 523 F. Supp. 3d at 165. The plaintiff has not
challenged that dismissal.
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Life Ins. Co., No. 18-10611, 2021 WL 3815929, at *1 (D. Mass. Aug.
18, 2021).
These cross-appeals followed. In them, Reliance seeks
to reverse the entry of summary judgment in favor of the plaintiff
as well as the denial of its cross-motion for summary judgment,
and the plaintiff seeks to augment the award of prejudgment
interest by elevating the prejudgment interest rate.
II
In the ERISA context, motions for summary judgment "are
nothing more than vehicles for teeing up ERISA cases for decision
on the administrative record." Stephanie C. v. Blue Cross Blue
Shield of Mass. HMO Blue, Inc. (Stephanie C. I), 813 F.3d 420, 425
n.2 (1st Cir. 2016). This posture sweeps aside "[t]he burdens and
presumptions normally attendant to summary judgment practice."
Id. A district court must review de novo an ERISA claim
challenging a denial of benefits where, as here, the benefit plan
does not give the plan administrator discretionary authority to
determine eligibility for benefits. See Firestone Tire & Rubber
Co. v. Bruch, 489 U.S. 101, 115 (1989). Under this de novo
standard, the court "may weigh the facts, resolve conflicts in the
evidence, and draw reasonable inferences." Stephanie C. v. Blue
Cross Blue Shield of Mass. HMO Blue, Inc. (Stephanie C. II), 852
F.3d 105, 111 (1st Cir. 2017). The district court appropriately
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recognized that the de novo standard of review applied in this
case. See Ministeri, 523 F. Supp. 3d at 166.
Our review of a district court's entry of summary
judgment is de novo. See Martinez v. Sun Life Assur. Co. of Can.,
948 F.3d 62, 67 (1st Cir. 2020). In the context of these ERISA
appeals, that standard governs our review of the district court's
legal conclusions. See Tsoulas v. Liberty Life Assurance Co. of
Bos., 454 F.3d 69, 76 (1st Cir. 2006); Muller v. First Unum Life
Ins. Co., 341 F.3d 119, 125 (2d Cir. 2003); see also DiGregorio v.
Hartford Comprehensive Emp. Benefit Serv. Co., 423 F.3d 6, 13 (1st
Cir. 2005). Even so, we assay the district court's embedded
factual findings only for clear error. See Doe v. Harvard Pilgrim
Health Care, Inc., 904 F.3d 1, 10 (1st Cir. 2018).
With these standards in place, we first address
Reliance's appeal. A trio of issues demands our attention:
whether Ministeri was covered by his basic life insurance at the
time of his death; whether Ministeri was covered by his
supplemental life insurance at that time; and whether the amount
of the supplemental life insurance benefit, if available at all,
was obliterated by the application of the insurance policy's so-
called "cap."
A
The group life insurance policy subscribed to by
Ministeri covered only those individuals who belonged to an
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"Eligible Class[]." For Ministeri, the relevant class was
"Active . . . Part-time Corporate Vice President" at AECOM. The
terms "Active" and "Corporate Vice President" are not defined in
the policy. "Part-time" is defined as "working for [AECOM] for a
minimum of 20 hours during a person's regularly scheduled work
week." The policy provides that "insurance . . . will terminate"
on "the date the Insured ceases to be in a class eligible for this
insurance."
The parties agree that, if Ministeri was still within
the eligible class on August 8, 2014 (his last day of work before
the pulmonary embolism occurred and his formal leave commenced),
then his basic life insurance coverage would have been in place
when he died on October 2, 2015. That is so because the policy's
continuation provision allows continued coverage for twelve months
if "the Insured ceases to be eligible . . . due to illness or
injury." Under this provision, coverage would be extended until
August 8, 2015. And because Ministeri died less than sixty days
after that date, he would automatically be covered under the
policy's conversion provision — a provision that applies only to
the basic insurance. Seen in this light, it is apparent that
Ministeri's coverage for basic life insurance at the time of his
death hinges on whether he was still within the eligible class
when he took leave on August 8, 2014.
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Reliance submits that by the time Ministeri took leave
in August, he no longer qualified as an "Active . . . Part-time
Corporate Vice President." Ministeri lost that status, Reliance
says, as far back as May 2, 2014 (when he began working exclusively
from home and soon found himself beset with medical appointments).
In support of this thesis, Reliance makes two arguments. First,
it argues that the at-home work Ministeri performed after May 2
was not the kind of work expected of an "Active . . . Corporate
Vice President" because Ministeri's usual duties required frequent
travel and attendance at meetings. Second, it argues that even if
Ministeri's at-home work qualified under the policy, he was not
doing enough of it after May 2 to achieve the twenty-hour weekly
benchmark. We find both arguments wanting.
1
Our analysis of Reliance's first argument starts with
the premise that "provisions of an ERISA-regulated employee
benefit plan must be interpreted under principles of federal common
law," which "embodies commonsense principles of contract
interpretation" such as giving effect to the language's "plain,
ordinary, and natural meaning." Filiatrault v. Comverse Tech.,
Inc., 275 F.3d 131, 135 (1st Cir. 2001). In undertaking this
interpretive mission, we "may refer to dictionaries to help
elucidate the common understanding of terms, although dictionary
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definitions are not controlling." Martinez, 948 F.3d at 69 (citing
Littlefield v. Acadia Ins. Co., 392 F.3d 1, 8 (1st Cir. 2004)).
Sometimes, this linguistic probe hits a dead end because
the terms of an ERISA-regulated insurance policy are ambiguous.
In such an event — and if review of the benefit decision is de
novo — we apply "the doctrine of contra proferentem."2 Id. That
doctrine teaches that unclear "term[s] must be construed in favor
of" the insured. Id.; see Hughes v. Bos. Mut. Life Ins. Co., 26
F.3d 264, 268-69 (1st Cir. 1994). This entrenched canon reflects
the insight that insurance policies are typically contracts of
adhesion: the insurance company drafts the policy and the insured,
rarely able to negotiate the terms, is left high and dry unless he
accedes to the proffered terms. See Mut. Life Ins. Co. of N.Y. v.
Hurni Packing Co., 263 U.S. 167, 174 (1923) ("[I]t is consistent
with both reason and justice that any fair doubt as to the meaning
of [the insurance company's] own words should be resolved against
it."); Kunin v. Benefit Tr. Life Ins. Co., 910 F.2d 534, 540 (9th
Cir. 1990) (similar in ERISA context).
We hasten to add, however, that the doctrine of contra
proferentem does not leave the insurer at the mercy of the insured.
2 If review of a benefit decision is deferential because the
policy grants the insurer interpretive discretion, the doctrine of
contra proferentem has no application. See Lavery v. Restoration
Hardware Long Term Disab. Benefits Plan, 937 F.3d 71, 78 (1st Cir.
2019); Stamp v. Metro. Life Ins. Co., 531 F.3d 84, 93-94 (1st Cir.
2008).
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Courts may not indulge fanciful readings, chimerical
interpretations, or "torture[d] language" to find "nuances the
contracting parties neither intended nor imagined." Burnham v.
Guardian Life Ins. Co. of Am., 873 F.2d 486, 489 (1st Cir. 1989).
With specific reference to the ERISA context, "contract language
is ambiguous only 'if the terms are inconsistent on their face' or
'allow reasonable but differing interpretations of their
meaning.'" Martinez, 948 F.3d at 69 (quoting Rodriguez-Abreu v.
Chase Manhattan Bank, 986 F.2d 580, 586 (1st Cir. 1993)).
Here, the phraseology of "Active . . . Part-time
Corporate Vice President" contains important ambiguities. Neither
"Active" nor "Corporate Vice President" is defined in the policy.
Citing a dictionary, Reliance says "active" means "doing something
as you usually do, or being able to do something physically or
mentally." Active, Cambridge Dictionary, https://dictionary.cam
bridge.org/us/dictionary/english/active (last visited July 21,
2022). Relatedly, Reliance mentions the duties listed in AECOM's
job description for Ministeri's role: "[t]ravel to be 90%, with
at least 50% regionally based (East Coast) and 50% to represent
the rest of the country and international travel." And, finally,
Reliance cites the comments that it received from AECOM's
representative to the effect that, after May 2, "Ministeri was not
able or expected to perform his job at home, as the job required
regular and frequent travel throughout the United States to
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clients." Putting these pieces together, Reliance posits that
because Ministeri "was physically unable to perform these required
duties" after May 2, "he did not satisfy the 'Active'
requirement."3
Even assuming for argument's sake that Reliance's
reading of "Active" is reasonable and that its understanding of
Ministeri's role is accurate, the policy language can be reasonably
interpreted differently. As the Tenth Circuit observed when
confronted with a similar contract issued by Reliance, the word
"active" in this context can reasonably mean "current employee."
Carlile v. Reliance Standard Life Ins. Co., 988 F.3d 1217, 1227
(10th Cir. 2021); see id. at 1224 (rejecting "Reliance's argument
that the dictionary definition of 'active' unambiguously means
'actually working'"). Similarly, the Fourth, Fifth, and Sixth
Circuits have rejected kindred arguments made by Reliance and
concluded that the term "active," as used in policies that mirror
the one at issue here, is ambiguous and must be construed against
the insurer. See Miller v. Reliance Standard Life Ins. Co., 999
F.3d 280, 285 (5th Cir. 2021) (holding that Reliance policy's
3 Reliance makes a related argument that, after May 2,
Ministeri no longer satisfied the "Corporate Vice President"
requirement because he "was not performing the actual tasks of a
Corporate Vice President as identified by AECOM." But Reliance
then clarifies that the term "Active" is the basis for its argument
that Ministeri's job "[t]itle alone is not enough" to qualify him
as a Corporate Vice President. We therefore consider these
arguments together, treating the phrase as a whole.
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"phrase 'active, full-time' employees must be construed in the
insured's favor to include those who, on the relevant date, are
current employees even if not actually working"); Wallace v.
Oakwood Healthcare, Inc., 954 F.3d 879, 894 (6th Cir. 2020)
(concluding that "'[a]ctive' could also mean non-retired"); Tester
v. Reliance Standard Life Ins. Co., 228 F.3d 372, 376 (4th Cir.
2000) ("Reliance's construction of the term 'active' does not
eliminate the ambiguity . . . because it unreasonably restricts
coverage to the time that an employee is actually at work.").
In solidarity with our sister circuits, we hold that the
phrase "Active . . . Corporate Vice President" in this policy is
ambiguous and must be construed against Reliance. We believe that,
under a reasonable construction of this phrase, Ministeri could be
regarded as an "Active . . . Corporate Vice President" as long as
he was a non-retired employee holding a job title matching the
rank of Corporate Vice President. It is undisputed — and the
district court found — that Ministeri was a current employee until
he formally took leave on August 8, 2014 and that he had not
"received a demotion or lower title." Ministeri, 523 F. Supp. 3d
at 172. In view of those facts, Reliance's first argument
founders.
2
Reliance's next argument addresses the quantity, rather
than quality, of Ministeri's at-home work after May 2.
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Specifically, Reliance contends that Ministeri was working less
than twenty hours per week and therefore dropped out of the "Part-
time" category.
The policy defines "Part-time" as "working for [AECOM]
for a minimum of 20 hours during a person's regularly scheduled
work week." Although Ministeri continued to submit, and his
supervisor continued to approve, timesheets reflecting twenty-four
hours of work each week after May 2 until he took leave in August,
Reliance scoffs that these timesheets are plainly unreliable. It
notes, for example, that the timesheets claim a full eight hours
of work on several days on which Ministeri had medical appointments
for his glioblastoma, including one day on which he underwent a
biopsy and another day on which a hospital note records that he
"FELL STANDING WITH CANE OUTSIDE OF LOBBY AFTER CHEMO AND RADIATION
FOR BRAIN CA[NCER]." Pointing to Ministeri's myriad of medical
appointments and his severely debilitating symptoms, Reliance says
that he simply could not have worked twenty hours per week after
May 2 and, thus, was no longer "Part-time" at AECOM within the
meaning of the policy.
We disagree with the central thrust of Reliance's
suggestion. The district court acknowledged that the timesheets
are suspect and that "Ministeri did not keep careful track of his
time," perhaps because he "was a high-level employee at AECOM" and
was allowed some leeway in this respect. Ministeri, 523 F. Supp.
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3d at 170. Ultimately, though, the district court did not make a
finding as to whether Ministeri worked at least twenty hours every
week after May 2.4 See id. at 172 n.8. Nor do we deem such a
factual finding indispensable: regardless of exactly how many
hours Ministeri worked during this period and regardless of the
reliability of the timesheets, the term "Part-time" is reasonably
susceptible of a construction broad enough to encompass
Ministeri's situation. We explain briefly.
Under the policy, Ministeri remained within the eligible
class while he worked at least "20 hours during [his] regularly
scheduled work week." The phrase "regularly scheduled work week"
is not defined. Reliance urges us to read this provision as
denoting an employee "who regularly works twenty hours a week."
In Reliance's view, this means that we must evaluate Ministeri's
actual work routine following the onset of his medical difficulties
week by week, to see how frequently he worked a minimum of twenty
hours in each such week. For example, to decide whether Ministeri
was still within the eligible class on August 8, 2014 (before his
leave), Reliance would have us examine his routine in the weeks
4 The district court did find that, even after May 2,
"Ministeri was able to manage [his] symptoms and continue working"
at least twenty hours per week "regularly," though perhaps not
every week. Ministeri, 523 F. Supp. 3d at 172 & n.8. Reliance
contends that this finding is clearly erroneous. We take no view
of this question because, as explained in the text, Ministeri was
eligible regardless of how many hours he worked during that period.
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leading up to that date and determine whether he regularly worked
at least twenty hours a week in that window.
Perhaps that is one reasonable interpretation of the
"Part-time" definition. But there is another straightforward —
and decidedly reasonable — way to read "regularly scheduled work
week." That is to read "regularly scheduled work week" as denoting
any week that is not disrupted by holidays or other sanctioned
time off, such as vacation days, sick days, or personal days. On
such a reading, the question is whether Ministeri was working at
least twenty hours during such ordinary weeks. In the period after
May 2, Ministeri's regular work schedule was overtaken by an
onslaught of symptoms, procedures, treatments, and appointments.
All of these appointments were sanctioned, at least implicitly, by
AECOM. We think that Ministeri's work weeks in this time frame
could reasonably be described as irregularly scheduled and, thus,
whether he managed to work at least twenty hours a week during
this interval is beside the point. See Tester, 228 F.3d at 374,
377 (holding, under materially identical Reliance policy
provision, that employee who had been on medical leave for five
weeks before death was covered because she "was working for [the
employer] on a regular basis and . . . was simply out sick when
she died"). To sum up, the eligibility provision requiring
Ministeri to work at least twenty hours "during [his] regularly
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scheduled work week" could reasonably refer to his typical weekly
workload before the chaos introduced by his medical condition.5
On this reading, the work weeks in April of 2014 furnish
clear examples of Ministeri's "regularly scheduled work week."
And the record is unequivocal: in April of 2014, AECOM hired
Ministeri with the expectation that he would work twenty-four hours
a week, which he unarguably did during that month.6 The weeks that
followed were (as we have explained) irregularly scheduled work
5 The term "regularly scheduled work week" might also
reasonably be read as referring to the employee's schedule as
established by his job description upon hiring, regardless of
whether the employee in fact kept to that schedule. See Miller,
999 F.3d at 285 (applying contra proferentem and holding "that the
term 'regular work week' must be construed to refer to an
employee's job description, or to his typical workload when on
duty"); Wallace, 954 F.3d at 894 (holding that provision requiring
employee to "work[] . . . for a minimum of 30 hours during a
person's regular work week" could "be reasonably interpreted to
mean that a person's job description requires that person to work
thirty hours a week"). On this interpretation, Ministeri would
have remained "Part-time" until his leave for the simple reason
that he was hired to work more than twenty hours per week. But —
as we explain in the text — Ministeri remained "Part-time" even if
the policy is read to require some factual assessment of the hours
that he actually worked "during [his] regularly scheduled work
week."
6 Even though the record indicates that Ministeri began
experiencing some symptoms early in April of 2014, and the Social
Security Administration (SSA) later found that he "became
disabled" on April 10, 2014, Reliance concedes that Ministeri
"continued to work until his business trip on May 2, 2014." In
any event, the SSA's finding was based on Ministeri's statement in
January of 2015. The district court found that this "statement
deserves no weight" because Ministeri was by then severely
confused. Ministeri, 523 F. Supp. 3d at 171. Discerning no clear
error, we accept this factual determination and disregard the SSA
finding.
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weeks. Construing the ambiguous terms in the policy against
Reliance — as we must — there was no requirement that Ministeri
work any specific number of hours during those weeks.
Consequently, we conclude that Ministeri was working "Part-time"
within the policy's meaning at least until he formally took leave
on August 8, 2014.
3
Continuing to resist the conclusion that Ministeri was
within the eligible class after May 2, 2014, Reliance leans heavily
on our decision in Burnham, 873 F.2d 486. That decision, however,
cannot support the weight that Reliance places upon it.
In Burnham, we held that an employee working from the
hospital and from home while receiving radiation therapy was not
covered by a group life insurance policy, which defined "full-time
Employee" as one who "regularly works at least 30 hours per
week . . . at his [employer's] business establishment." Id. at
487-90. The work requirement in Burnham, though, lacked the
qualification that it applied only "during [the employee's]
regularly scheduled work week." That qualifying language — as
reasonably construed, favorably to the insured — allows us to
disregard Ministeri's work during the period when his schedule
became irregular. The policy in Burnham was less forgiving,
indicating that the location and hours benchmarks must be met
"regularly" even during a period of hospitalization. In other
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words, the question before us is whether Ministeri was "Active"
and "working . . . a minimum of 20 hours during [his] regularly
scheduled work week." Burnham did not construe those terms and is
neither controlling nor instructive here.
4
The short of it is that Ministeri fell within a
reasonable construction of the "Active . . . Part-time Corporate
Vice President" provision at least through August 8, 2014 (when he
went on leave). With that date fixed and tacking on the policy's
provisions for a one-year continuation and sixty-day conversion,
it necessarily follows that Ministeri's basic life insurance
coverage was in effect when he died on October 2, 2015.
B
At the time of his death, Ministeri's basic life
insurance coverage was in effect through the policy's conversion
provision. The policy states, however, that this provision does
not apply to the supplemental coverage. Instead, the policy's
portability provision determined whether Ministeri's supplemental
life insurance could outlast the twelve-month continuation period
that ended in August of 2015. Under that provision, the
satisfaction of certain enumerated requirements allows
supplemental coverage to be transported to the insured outside of
the usual eligibility criteria.
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The parties agree that all of the portability
requirements were satisfied in this case save for one (which is in
dispute). That requirement provides that the insured must
"notif[y] [Reliance] in writing within sixty (60) days from the
date he/she ceases to be eligible." We henceforth refer to this
written notification as an "application" for portability.
Reliance asserts that Ministeri never submitted such a written
application for portability and, thus, that his supplemental
coverage was not in effect when he perished.
The district court concluded that it was "unable to
determine whether Mr. Ministeri provided timely notice on this
record." Ministeri, 523 F. Supp. 3d at 176. But the court found
this lack of certitude irrelevant: it noted that Reliance had
never mentioned this deficiency in its correspondence with the
plaintiff and, therefore, Reliance breached its obligation under
ERISA to "provide adequate notice in writing to any participant or
beneficiary whose claim for benefits under the plan has been
denied, setting forth the specific reasons for such denial." 29
U.S.C. § 1133(1) (emphasis supplied); see Ministeri, 523 F. Supp.
3d at 177. The court proceeded to find that this violation had
prejudiced the plaintiff and — as an equitable remedy — barred
Reliance from raising Ministeri's failure to apply for
portability. Id. at 178. As a result, the court held that
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Ministeri was covered for supplemental life insurance when he
died.7 Id.
Judicial interpretations of ERISA's requirements are
reviewed de novo. See Jette v. United of Omaha Life Ins. Co., 18
F.4th 18, 26 (1st Cir. 2021). The district court's finding of
prejudice due to the insurer's violation, though, is a factual
finding that engenders review only for clear error. See id. at 32
(citing Santana-Díaz v. Metro. Life Ins. Co., 816 F.3d 172, 182
(1st Cir. 2016)); DiGregorio, 423 F.3d at 13. With respect to
"the selection of a remedy in an ERISA case," we have made pellucid
that the "district court enjoys considerable latitude" and,
accordingly, appellate review of such decisions is for abuse of
discretion. Colby v. Union Sec. Ins. Co. & Mgmt. Co. for Merrimack
Anesthesia Assocs. Long Term Disability Plan, 705 F.3d 58, 68 (1st
Cir. 2013).
After careful consideration, we affirm the district
court's decision to bar Reliance from raising the missing
portability application as a defense against the plaintiff's claim
for supplemental coverage. Our reasoning follows.
The district court held, in the alternative, that Reliance
7
was barred from raising the absence of a portability application
because of its purported breach of a separate notice requirement.
See Ministeri, 523 F. Supp. 3d at 178-80. Because we uphold the
district court's decision to bar Reliance from raising this issue
on the ground of Reliance's ERISA violation, we take no view of
the district court's alternative holding.
- 23 -
1
We need not belabor the fact of Reliance's ERISA
violation. ERISA and its implementing regulations clearly mandate
that any denial of benefits claimed must be accompanied by a
written notice "setting forth the specific reasons for such
denial." 29 U.S.C. § 1133(1); see 29 C.F.R. § 2560.503-1(g)(1),
(j)(1). As we have explained, "a plan administrator, in
terminating or denying benefits, may not rely on a theory for its
termination or denial that it did not communicate to the insured
prior to litigation." Stephanie C. II, 852 F.3d at 113.
Reliance's written denial letters to the plaintiff
discuss only the issue of Ministeri's qualification for the
eligible class; they are silent on portability. To the extent
that Reliance now attempts to ground its denial of supplemental
coverage on Ministeri's failure to apply for portability, that
attempt is problematic. Reliance chose "to hold that basis in
reserve rather than communicate it to the beneficiary," thereby
thwarting "a full and meaningful dialogue regarding the denial of
benefits." Glista v. Unum Life Ins. Co. of Am., 378 F.3d 113, 129
(1st Cir. 2004).
There is no merit to Reliance's protest that it had no
obligation to mention the portability-application deficiency until
the issue was first raised by the plaintiff. The plaintiff's
initial claim for benefits encompassed the supplemental life
- 24 -
insurance amount. As the district court found, Reliance
immediately investigated whether Ministeri had submitted an
application for porting and determined that he had not. Ministeri,
523 F. Supp. 3d at 176. Thus, Reliance evidently had "available
sufficient information to assert" the lack of a portability
application as "a basis for denial of benefits." Glista, 378 F.3d
at 129. It should have put its cards on the table then and there.
But it chose to keep quiet about its discovered basis for denial
until litigation ensued. That is precisely the sort of delayed
reaction that ERISA forbids.
2
The closer question is whether the plaintiff was
prejudiced by Reliance's violation. As a general matter,
establishing prejudice in the ERISA setting requires that the
plaintiff show that, but for the violation, "the outcome in [her]
case might have been different." Santana-Díaz, 816 F.3d at 182
n.11. We have found prejudice when, for instance, an insurer's
"failure to put [a claimant] on notice of a fact . . . precluded
him from making a 'substantial argument.'" Lavery v. Restoration
Hardware Long Term Disability Benefits Plan, 937 F.3d 71, 83 (1st
Cir. 2019) (quoting Bard v. Bos. Shipping Ass'n, 471 F.3d 229, 243
n.20 (1st Cir. 2006)).
The court below found that the plaintiff was prejudiced
by Reliance's failure to furnish notice of Ministeri's missing
- 25 -
portability application because she was "deprived . . . of a
meaningful opportunity to challenge" this rationale during the
administrative claims process. Ministeri, 523 F. Supp. 3d at 178.
The court added that a remand for further administrative
proceedings would not ameliorate this harm because the plaintiff
had
argued for summary judgment on the narrow
theory that her husband had worked until
August 8, 2014 — an argument the [district
court] found persuasive. . . . Had Reliance
timely informed Mrs. Ministeri of its
[portability-application] rationale, she may
well have adopted a different litigation
strategy such as, for example, drawing upon
favorable precedent in Tester, 228 F.3d at
373-77, and Carlile [v. Reliance Standard Ins.
Co., 385 F. Supp. 3d 1180, 1186-88 (D. Utah
2019)], to argue her husband retained
eligibility until a later date — avoiding the
[portability-application] issue altogether.
Were the [district court] to remand, Mrs.
Ministeri would be bound by her earlier
arguments (and [the district court's]
findings) when presenting her claim to
Reliance, creating a situation in which
Reliance might very well benefit from its
failure to comply with ERISA's requirements.
Id.We understand the district court's theory of prejudice
to run along the following lines: if the plaintiff had been
apprised of the portability-application problem during the
administrative process, as ERISA demands, then she might have
argued that her husband was still within the eligible class at
- 26 -
least a few days into October of 2014.8 If that argument were
successful, then — given the twelve-month continuation period —
Ministeri would have been fully covered for supplemental insurance
at the time of his death without any need to apply for portability.
But the plaintiff is now locked into arguing that Ministeri dropped
out of the eligible class in August of 2014, which potentially
creates a problem for her portability claim due to the missing
application. The prejudice suffered by the plaintiff, as found by
the district court, thus lies in foreclosing her substantial
argument that her husband was still eligible at least into October
of 2014.9
Curiously, Reliance's briefs do not say a word about the
district court's theory of prejudice. Reliance does baldly assert
that any ERISA violation on its part was merely technical and
caused no harm. But it wholly fails to address the rationale
8 Although the district court framed this argument as "a
different litigation strategy," Ministeri, 523 F. Supp. 3d at 178,
we think it is fairly implied in the court's reasoning that the
plaintiff might have first made this same argument directly to
Reliance during the administrative proceedings.
9 The district court also suggested that Reliance's failure
to disclose the portability rationale in a timely fashion deprived
the plaintiff of the opportunity to conduct discovery into this
matter during litigation. See Ministeri, 523 F. Supp. 3d at 176;
cf. Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510, 520 (1st
Cir. 2005) (explaining that it may be appropriate for courts to
consider "evidence outside the administrative record" if plaintiff
claims "prejudicial procedural irregularity in the ERISA
administrative review procedure"). We do not read the court's
decision as incorporating this purported deprivation into its
prejudice finding.
- 27 -
underpinning the district court's finding to the contrary.
Reliance does not develop any argument, for example, that the
plaintiff suffered no prejudice because — under any reasonable
reading of the policy and interpretation of the record — Ministeri
could not have been within the eligible class in October of 2014.
Although Reliance argues at length that Ministeri lost eligibility
after May 2, 2014, it has nothing to say about why — if that
argument is incorrect and Ministeri was still within the class in
August (as we already have determined) — the plaintiff could not
plausibly have contended that Ministeri remained in the class well
into October. We therefore deem any such argument waived. See
United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990)
(reiterating "the settled appellate rule that issues adverted to
in a perfunctory manner, unaccompanied by some effort at developed
argumentation, are deemed waived"). And in light of that waiver,
Reliance has failed to show that the district court's finding of
prejudice was clearly erroneous.
There is one loose end. Instead of attacking the
district court's articulated theory of prejudice, Reliance argues
that the plaintiff was not prejudiced by detrimental reliance on
a post-mortem letter, sent by Reliance and addressed to Ministeri,
in which Reliance suggested that he was fully covered at the time
of his death. The district court stated that this letter
"compound[ed] the harm of Reliance's failure to timely disclose
- 28 -
its [portability-application] rationale." Ministeri, 523 F. Supp.
3d at 178. That statement, however, was merely a prelude to the
district court's prejudice determination — a determination that
rested entirely on its independent finding that the ERISA violation
"deprived [the plaintiff] of a meaningful opportunity to
challenge" the portability rationale during the claims process and
"engendered detrimental reliance" by the plaintiff in foreclosing
"a different litigation strategy." Id. When the wheat is sorted
from the chaff, the post-mortem letter is immaterial.
To say more about this issue would be pointless. We
detect no clear error in the district court's finding of prejudice
and, therefore, uphold that finding.
3
This brings us to the question of the district court's
chosen remedy. We review that choice of remedy for abuse of
discretion, mindful that the "district court enjoys considerable
latitude" in selecting a remedy. Colby, 705 F.3d at 68. Under
that "highly deferential" standard, we will reverse "only 'when a
material factor deserving significant weight is ignored, when an
improper factor is relied upon, or when all proper and no improper
factors are assessed, but the court makes a serious mistake in
weighing them.'" González-Rivera v. Centro Médico del Turabo,
Inc., 931 F.3d 23, 27 (1st Cir. 2019) (quoting Indep. Oil & Chem.
- 29 -
Workers of Quincy, Inc. v. Procter & Gamble Mfg. Co., 864 F.2d
927, 929 (1st Cir. 1988)).
Section 502(a)(3)(B) of ERISA grants courts the
authority to provide "other appropriate equitable relief (i) to
redress [ERISA] violations or (ii) to enforce any provisions of
this subchapter or the terms of the plan." 29 U.S.C.
§ 1132(a)(3)(B). "[T]his power encompasses an array of possible
responses when the plan administrator relies in litigation on a
reason not [previously] articulated to the claimant." Glista, 378
F.3d at 131. In selecting an appropriate remedy, a court should
abjure one-size-fits-all rules and instead evaluate the features
of each particular case. See Bard, 471 F.3d at 236.
In some cases, the most appropriate remedy will be "to
remand to a plan administrator for reconsideration." Id. at 245-
46 (citing Buffonge v. Prudential Ins. Co. of Am., 426 F.3d 20,
31-32 (1st Cir. 2005)). In other cases, though, the most
appropriate remedy will be barring the insurance company from
raising an improperly withheld defense. See id. at 244-46; Glista,
378 F.3d at 131-32. Everything depends on context, but "[w]e
typically have only barred a plan from asserting defenses to
coverage not articulated to the insured when the lack of notice
resulted in prejudice to the insured." Martinez, 948 F.3d at 68;
cf. CIGNA Corp. v. Amara, 563 U.S. 421, 443 (2011) ("[W]hen a court
exercises its authority under § 502(a)(3) to impose a remedy
- 30 -
equivalent to estoppel, a showing of detrimental reliance must be
made. But this showing is not always necessary for other equitable
remedies.").
The district court appropriately conducted a prejudice
inquiry before deciding to cure the ERISA notice violation by
foreclosing Reliance from raising the defense. It found prejudice,
and Reliance has waived any challenge to that finding. See supra
Part II(B)(2).
The district court considered the possibility of a
remand but rejected that possibility, concluding that Reliance's
violation "engendered detrimental reliance" and that a remand
would "creat[e] a situation in which Reliance might very well
benefit from its failure to comply with ERISA's requirements."
Ministeri, 523 F. Supp. 3d at 178. A remand here would serve only
to lock the barn door after the horse had galloped away. In the
circumstances of this case, we are satisfied that the district
court weighed the appropriate factors and adopted a remedy
consistent with its view of the equities and with our precedents.
Reliance does not go quietly into this dark night.
Taking aim at the district court's chosen remedy, Reliance
brandishes our decision in Watson v. Deaconess Waltham Hospital
for the proposition that "[t]echnical violations of ERISA's notice
provisions generally do not give rise to substantive remedies
outside § 1132(c) unless there are some exceptional circumstances,
- 31 -
such as bad faith, active concealment, or fraud." 298 F.3d 102,
113 (1st Cir. 2002). Watson, however, does not move the needle.
There, we contrasted such "[t]echnical violations" with cases in
which the plaintiff has shown "prejudice." Id. (citing Terry v.
Bayer Corp., 145 F.3d 28, 39 (1st Cir. 1998) and Govoni v.
Bricklayers, Masons & Plasterers, 732 F.2d 250, 252 (1st Cir.
1984)). Because we have upheld the district court's finding of
prejudice due to the ERISA notice violation, see text supra, our
precedent plainly permits the remedy of pretermitting Reliance's
belated rationale. See Martinez, 948 F.3d at 68. It makes no
difference whether Reliance acted in good faith. See Bard, 471
F.3d at 244 & n.21.
Reliance tries to place one more landmine in the
plaintiff's path. It argues that barring it from raising a defense
is inconsistent with our decision in Glista. Once again, we
disagree.
In Glista, part of our justification for barring the
insurer from invoking a late-blooming rationale was that this
rationale was an exclusion for which the insurer ordinarily bears
the burden of proof. See 378 F.3d at 131. Here, in contrast, the
absence of a portability application is a defense, not an
exclusion. Reliance is correct that this case differs somewhat
from Glista. But that is a distinction without a material
difference. Glista does not hold that the equitable remedy of
- 32 -
barring a line of argument applies only to exclusions. And we
have since repeatedly approved the deployment of this remedy to
bar ordinary defenses, not only exclusions. See, e.g., Lavery,
937 F.3d at 84; Bard, 471 F.3d at 244-45. The district court acted
comfortably within the encincture of its discretion in doing so
here.
That ends this aspect of the matter. We hold that the
district court did not abuse its discretion under section
503(a)(3)(B) by barring Reliance from raising the absent
portability application as a defense to the plaintiff's claim for
supplemental coverage. And because that missing application was
the only obstacle to the availability of supplemental coverage
here, we affirm the district court's decision entitling the
plaintiff to recover the supplemental life insurance proceeds.
C
All that is left of Reliance's assault on the district
court's judgment is the insurance-cap provision. That provision,
Reliance says, precludes any recovery of supplemental insurance
proceeds in this instance.
The paragraph containing the insurance-cap provision
states in relevant part:
The amount of Supplemental Insurance coverage
available under the Portability provision will
be the current amount of coverage the
Insured . . . is insured for under this Policy
on the last day he/she was Actively at Work.
- 33 -
However, the amount of coverage will never be
more than . . . a total of $500,000 from all
[Reliance] group life and accidental death and
dismemberment insurance combined . . . .
According to Reliance, the second sentence means that once its
coverage exceeds a total of $500,000 from all Reliance insurance
policies, it is impossible to add to that amount through
portability. Thus, Reliance says, "[b]ecause Mr. Ministeri
already had [$624,000] in Basic Life coverage, which is above the
$500,000 cap, there were no Supplemental Life benefits to port."
The district court demurred. It read this sentence, in
context, as capping only the total supplemental coverage amount at
$500,000, without regard to how much was due under the basic life
insurance. See Ministeri, 523 F. Supp. 3d at 181.
We have little difficulty in rejecting Reliance's
interpretation of the insurance-cap provision. Even if that
interpretation was reasonable — a matter on which we take no view
— it is served up with a generous helping of ambiguity. Read in
light of the immediately preceding sentence, the insurance-cap
provision reasonably can be read as stating that the total amount
of supplemental coverage available through portability (that is,
the sum of portable coverage "from all [Reliance] group life and
accidental death and dismemberment insurance combined") will never
be more than $500,000 — without implicating any coverage outside
portability, such as the basic life insurance amount. At a
- 34 -
minimum, then, there are two "reasonable but differing
interpretations" of the cap provision, and so the doctrine of
contra proferentem tips the scales in favor of the insured.
Martinez, 938 F.3d at 69 (quoting Rodriguez-Abreu, 986 F.2d at
586).
We conclude that the $500,000 insurance-cap provision
refers only to the amount of supplemental insurance available
through portability. Because Ministeri's supplemental insurance
was less than $500,000, this cap does not reduce the plaintiff's
recovery.
III
We turn next to the plaintiff's cross-appeal, which
implicates the district court's choice of a prejudgment interest
rate. ERISA does not expressly provide for an award of prejudgment
interest. But we have held that whether to provide such a remedy
and, if so, what interest rate should be applied are questions
that lie within the discretion of the district court. See Gross
v. Sun Life Assurance Co. of Can., 880 F.3d 1, 19 (1st Cir. 2018)
(citing Cottrill v. Sparrow, Johnson & Ursillo, Inc., 100 F.3d
220, 223 (1st Cir. 1996), abrogated on other grounds by Hardt v.
Reliance Standard Life Ins. Co., 560 U.S. 242 (2010), and Enos v.
Union Stone, Inc., 732 F.3d 45, 50 (1st Cir. 2013)). We "have
identified two primary considerations" that inform the choice of
rate: "making the plan participant 'whole for the period during
- 35 -
which the fiduciary withholds money legally due'" and
"prevent[ing] unjust enrichment." Id. at 19-20 (quoting Cottrill,
100 F.3d at 224). We review the district court's chosen rate for
abuse of discretion. See Enos, 732 F.3d at 50.
The plaintiff asked the district court to apply the
Massachusetts statutory prejudgment interest rate of 12%. See
Mass. Gen. Laws ch. 231, § 6C. Reliance countered by asking the
district court to use the average federal prime interest rate,
which it maintained (without contradiction) was approximately 4.5%
during the relevant time frame. In an unpublished order, the
district court said that — on the one hand — it was "unconvinced"
that the plaintiff would have achieved a 12% return had Reliance
promptly paid out the claim and that she "failed to establish to
the [district court's] satisfaction the rate of return Reliance
enjoyed from its wrongful use of her funds." The court added that
— on the other hand — it was "unsatisfied with Reliance's proposal"
because "the federal prime interest rate . . . understates actual
market conditions." In the end, the court split the baby: it
boosted the average federal prime interest rate by three percentage
points and applied a prejudgment interest rate of 7.5%.
The plaintiff argues that this number is too low given
her speculations as to Reliance's actual rate of return on its
investments. To fuel this guesswork, the plaintiff points to a
12.5% gain in the Dow Jones Industrial Average for the period and
- 36 -
to an 18% return on shares of stock in Reliance's parent company.
The district court, she contends, should have used a prejudgment
interest rate no less robust than 12%. Anything less would allow
Reliance to get away with unjust enrichment. See Gross, 880 F.3d
at 20 ("Awarding interest at a rate that does not recapture the
lost value of the money during the period it was withheld 'would
create a perverse incentive' for a defendant to delay payments
while it earned interest on those funds." (quoting Pacific Ins.
Co. v. Eaton Vance Mgmt., 369 F.3d 584, 590 n.8 (1st Cir. 2004))).
We reject the plaintiff's importunings. The district
court, we think, acted within its discretion in refusing to base
its interest-rate determination on the plaintiff's conjectural
tabulation, absent more specific evidence of Reliance's actual
rate of return.10
The plaintiff has a fallback position: she argues that
the district court did not adequately explain its reasoning for
selecting its chosen rate. This argument lands closer to the mark.
The district court simply added three percentage points to the
average federal prime interest rate without explaining why it chose
10The plaintiff suggests that she was blocked from adducing
evidence of Reliance's actual rate of return by the district
court's denial of her motion for discovery beyond the
administrative record. This suggestion is baseless. Her motion
for discovery was extremely narrow, relating only to specific
questions that she had about the administrative record. The motion
had no bearing on the performance of Reliance's investments.
- 37 -
three points instead of, say, one point or five points. In at
least one instance, we have vacated and remanded an award of
prejudgment interest when we were "unable to evaluate the court's
judgment call because it did not explain its reasoning, and its
rationale [was] not apparent from the record." Id. at 21.
Although more explicit reasoning would have been
helpful, we think that the court's rationale for selecting the
rate is sufficiently "apparent from the record." Enos, 732 F.3d
at 50. The court first tried to ascertain either Reliance's actual
rate of return on its investments during the relevant period or
the rate the plaintiff could have realized. On both fronts, it
supportably found the evidence before it wanting. In that void,
the court was left to approximate. It narrowed the range to
somewhere between the federal prime rate suggested by Reliance
(which it found too skimpy) and the Massachusetts statutory rate
suggested by the plaintiff (which it found too rich). In the end,
the court landed upon a rough midpoint — albeit one tilted slightly
toward Reliance's position.
A district court acts within its discretion when it
selects a rate that "could be expected to 'approximate the likely
return on the funds withheld.'" Gross, 880 F.3d at 22 (alteration
omitted) (quoting Cottrill, 100 F.3d at 225). The court below
evidently aimed for that mark, and we cannot say that it missed
the mark by so great a margin as to exceed the broad scope of its
- 38 -
discretion. With respect to prejudgment interest as an equitable
remedy, we have never required absolute precision. Cf. Fox v.
Vice, 563 U.S. 826, 838 (2011) (explaining, in context of
determining reasonable attorneys' fee under fee-shifting statutes,
that "trial courts need not, and indeed should not, become green-
eyeshade accountants" and that their goal "is to do rough justice,
not to achieve auditing perfection"). And we must bear in mind
that abuse-of-discretion review generally measures the decision
below against "the existing record before the district court when
it ruled." United States v. Velazquez-Fontanez, 6 F.4th 205, 221
(1st Cir. 2021); see Crawford v. Clarke, 578 F.3d 39, 44 (1st Cir.
2009) (similar). The fuzzier the evidence before the district
court, the rougher its approximation may turn out. On this record,
we conclude that the court did not abuse its broad discretion in
selecting a prejudgment interest rate of 7.5%. See, e.g., Spears
v. Liberty Life Assurance Co. of Bos., No. 11-1807, 2020 WL
2404973, at *5-6 (D. Conn. May 12, 2020) (rejecting similar
arguments for application of state statutory interest rate in ERISA
action and selecting federal prime rate of 4.27%); Smith v.
Jefferson Pilot Fin. Ins. Co., No. 07-10228, 2010 WL 818788, at *3
(D. Mass. Mar. 5, 2010) (selecting prejudgment interest rate of 6%
in ERISA action, based on federal prime rate).
- 39 -
IV
We need go no further. We direct that three-fourths
costs be taxed in favor of the plaintiff. And for the reasons
elucidated above, the judgment of the district court is
Affirmed.
- 40 -