Estate of: Gallagher, S. Appeal of: Hallman, J.

J-A05011-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
ESTATE OF: STEPHEN T. GALLAGHER, : IN THE SUPERIOR COURT OF
DECEASED : PENNSYLVANIA
:
:
APPEAL OF: JOSEPH A. HALLMAN : No. 1125 EDA 2014
Appeal from the Decree March 5, 2014
In the Court of Common Pleas of Philadelphia County
Orphans’ Court at No(s): O.C. No. 891 DE OF 2011
BEFORE: GANTMAN, P.J., SHOGAN, J., and ALLEN, J.
MEMORANDUM BY GANTMAN, P.J.: FILED JULY 23, 2015
Appellant, Joseph A. Hallman, appeals from the decree entered in the
Philadelphia County Court of Common Pleas, which granted summary
judgment in favor of Appellees Michael J. Gallagher, Jr., Administrator of the
Estate of Stephen T. Gallagher, Joann P. Gallagher, and Michael J. Gallagher,
Sr. (collectively “Gallagher Appellees”), and denied Appellant’s cross-claim
against Appellee Aetna Life Insurance Company (“Aetna”). We affirm in
part, reverse in part, and remand for further proceedings.
The relevant facts and procedural history of this case are as follows.
In April 2003, the University of Pennsylvania (“Penn”) contracted with Aetna
to provide group life insurance coverage to Penn employees. Stephen T.
Gallagher (“Decedent”) became a Penn employee in September 2003 and
purchased two Aetna life insurance policies through the Penn Health &
Welfare Program group coverage plan, GP-811778 (“Plan”). The Plan
J-A05011-15
provided in relevant part as follows:
Beneficiaries
You may name or change your beneficiary by filing [a]
written request at your Employer’s headquarters or at
Aetna’s Home Office. Ask your Employer for the Forms.
The naming or any change will take effect as of the date
you execute the request. Aetna will be fully discharged of
its duties as to any payment made by it before your
request is received at its Home Office.
Any amount payable to a beneficiary will be paid to those
you name. Unless you state to the contrary, if more than
one beneficiary is named, they will share on equal terms.
* * *
If no named beneficiary survives you or if no beneficiary
has been named, payment will be made as follows to those
who survive you:
 Your spouse, if any.
 If there is no spouse, in equal shares to your children.
 If there is no spouse or child, to your parents, equally or
to the survivor.
 If there is no spouse, child, or parent, in equal shares to
your brothers and sisters.
 If none of the above survives, to your executors or
administrators.
(Exhibit 10 of the Gallagher Appellees’ Motion for Summary Judgment, filed
4/25/13; R.R. at 192b-193b). ADP, Inc. administered the Plan and its online
database, Enterprise.
Decedent and Appellant were in a relationship and began to live
together in early 2005. In May 2005, they executed a lease addendum
which added Appellant to Decedent’s lease. Decedent and Appellant
subsequently moved into a house they jointly owned and took out a
-2-
J-A05011-15
mortgage. They registered as same-sex domestic partners with Penn on
January 26, 2006. At some point following that registration, Decedent
added Appellant as a dependent under Decedent’s medical insurance.
Decedent and Appellant separated in late 2008 or early 2009, at which
point Appellant moved out of their jointly-owned home. Appellant continued
to stay in touch with Decedent after the separation. For example, Appellant
states he cared for Decedent’s dogs while Decedent was on an international
business trip and drove Decedent home from the hospital after Decedent
had outpatient surgery. On December 3, 2008, however, Decedent removed
Appellant from Decedent’s medical insurance coverage. On that same date,
Decedent also electronically added Appellee Joann Gallagher as his
contingent life insurance beneficiary under the Plan. Decedent made no
change to his primary life insurance beneficiary at that time. Decedent died
on May 27, 2011.
Upon Decedent’s death, Appellant became sole owner of the jointly-
owned house subject to a substantial mortgage. Decedent’s life insurance
policies were payable at a combined value of $354,000.00. Aetna received
information from ADP identifying Appellant as Decedent’s primary life
insurance beneficiary. On May 31, 2011, Aetna received separate death
claims from Appellant and from Decedent’s brother, Appellee Michael J.
Gallagher, Jr. On June 24, 2011, Appellee Michael Gallagher, Jr., in his
capacity as administrator of Decedent’s estate, filed a petition for citation
-3-
J-A05011-15
against Appellant and Aetna, which sought an award to the estate of the
benefits under Decedent’s life insurance policies. The Orphans’ court initially
denied the petition on July 6, 2011. Appellee Michael Gallagher, Jr. filed
exceptions on July 26, 2011. On July 29, 2011 the court vacated the July 6,
2011 decree and issued a citation directing Appellant and Aetna to show
cause why the court should not grant the relief requested in the petition for
citation.
On September 20, 2011, Aetna filed a petition for interpleader of the
proceeds of Decedent’s life insurance benefits. Appellant filed a motion for
summary judgment on March 30, 2012. Appellee Michael Gallagher, Jr. filed
a petition for leave to file a substituted petition for citation on April 4, 2012.
On July 17, 2012, the court denied Appellant’s summary judgment motion,
granted Appellee Michael Gallagher, Jr.’s request to file a substituted
petition, and denied Aetna’s interpleader petition. The Gallagher Appellees
filed an amended petition for citation on July 31, 2012.1 On August 21,
2012, Appellant filed an answer and a cross-claim against Aetna for failure
to pay out Decedent’s life insurance benefits to Appellant.
The Gallagher Appellees filed a motion for summary judgment against
1
Decedent’s parents, Appellees Joann P. Gallagher and Michael J. Gallagher,
Sr., joined in the amended petition. The petition sought the award of
Decedent’s life insurance benefits to his parents as default beneficiaries
under the Plan, or to Appellee Joann Gallagher individually. In the
alternative, the petition sought to impose a constructive trust on any
benefits paid to Appellant to preserve the benefits during the litigation, so
the benefits could be transferred to Decedent’s parents.
-4-
J-A05011-15
Appellant on April 25, 2013. On April 26, 2013, Appellant filed a cross-
motion for summary judgment against the Gallagher Appellees, and a
motion for summary judgment against Aetna on the cross-claim. On March
5, 2014, the court denied Appellant’s cross-motion for summary judgment;
granted summary judgment in favor of the Gallagher Appellees; denied
Appellant’s cross-claim against Aetna; and awarded the proceeds of
Decedent’s life insurance policies under the Plan to Appellees Joann
Gallagher and Michael Gallagher, Sr., pursuant to the default provisions of
the Plan. Appellant filed a timely notice of appeal on April 1, 2014. The
court did not order Appellant to file a concise statement of errors complained
of on appeal pursuant to Pa.R.A.P. 1925(b); and Appellant filed none.
Appellant raises the following issues for our review:
DID THE [ORPHANS’] COURT ERR AS A MATTER OF LAW
AND/OR ABUSE[] ITS DISCRETION BY ENTERING
SUMMARY JUDGMENT IN FAVOR OF THE [GALLAGHER
APPELLEES]…AND AGAINST APPELLANT BY:
DETERMINING THAT AS A MATTER OF LAW THE
ELECTRONIC LIFE INSURANCE BENEFICIARY
DESIGNATIONS UTILIZED BY [PENN] AND
ACCEPTED BY AETNA…, NAMING [APPELLANT] AS
THE PRIMARY BENEFICIARY OF TWO POLICIES
TOTALING $354,000.00, WERE INVALID;
DISREGARDING COMPETENT EVIDENCE IN THE
FORM OF SCREEN SHOTS OF THE COMPUTER
RECORDS WHICH SHOW UNEQUIVOCALLY THAT THE
LIFE INSURANCE BENEFICIARY DESIGNATION OF
[DECEDENT], NAMING [APPELLANT] AS THE
PRIMARY BENEFICIARY WAS INVALID;
DETERMINING THAT THE ELECTRONIC
-5-
J-A05011-15
DESIGNATION OF LIFE INSURANCE BENEFICIARY IS
A “PROGRAM MODALITY BY DEFAULT” AND RELYING
UPON…THE HEARSAY LETTER DATED MARCH 8, 2012
FROM HELEN C. LOGAN; AND
DETERMINING THAT [APPELLANT] IS NOT ENTITLED
TO LEGAL FEES AND COSTS UNDER ERISA
PURSUANT TO 29 U.S.C. § 1132(a)(1)(B) FOR
AETNA’S REFUSAL TO PAY THE LIFE INSURANCE
PROCEEDS TO THE DESIGNATED PRIMARY
BENEFICIARY.
(Appellant’s Brief at 3).
In his sub-issues one through three, Appellant argues Aetna and
Penn’s records established Appellant was named as primary beneficiary
under Decedent’s life insurance policies when Decedent died. Appellant
contends Penn’s screen shots of information in the Enterprise system, which
constituted Aetna’s official record of beneficiary information, unequivocally
identified Appellant as primary beneficiary. Appellant asserts the Gallagher
Appellees failed to present evidence indicating Decedent named anyone
other than Appellant as primary beneficiary or that the designation was
somehow improper. Appellant insists he had no obligation to produce a
paper form that Decedent had originally submitted to name Appellant as
primary beneficiary. Appellant claims the Plan permitted electronic
designation of beneficiaries as early as 2006, and ever since then. In
support, Appellant states the language from the 2010 Aetna Plan Summary,
which provided the policyholder “may” name or change a beneficiary via
written request, was optional not mandatory. Appellant further contends the
-6-
J-A05011-15
court improperly relied on a letter from Penn’s Office of General Counsel,
which suggested Appellant had somehow been “inadvertently” designated as
a primary beneficiary by default when Decedent added Appellant to
Decedent’s medical insurance coverage. Appellant asserts this letter is
hearsay and speculation. For these reasons, Appellant concludes this Court
should reverse the summary judgment entered in favor of the Gallagher
Appellees and enter judgment in favor of Appellant or, alternatively, remand
for trial. We agree with Appellant that summary judgment on this issue was
in error.
Our standard of review of an order granting summary judgment
requires us to determine whether the trial court abused its discretion or
committed an error of law. Mee v. Safeco Ins. Co. of Am., 908 A.2d 344,
347 (Pa.Super. 2006). Our scope of review is plenary. Pappas v. Asbel,
564 Pa. 407, 418, 768 A.2d 1089, 1095 (2001), cert. denied, 536 U.S. 938,
122 S.Ct. 2618, 153 L.Ed.2d 802 (2002). In reviewing a trial court’s grant
of summary judgment,
[W]e apply the same standard as the trial court, reviewing
all the evidence of record to determine whether there
exists a genuine issue of material fact. We view the record
in the light most favorable to the non-moving party, and
all doubts as to the existence of a genuine issue of
material fact must be resolved against the moving party.
Only where there is no genuine issue as to any material
fact and it is clear that the moving party is entitled to a
judgment as a matter of law will summary judgment be
entered. All doubts as to the existence of a genuine issue
of a material fact must be resolved against the moving
party.
-7-
J-A05011-15
Motions for summary judgment necessarily and directly
implicate the plaintiff’s proof of the elements of [a] cause
of action. Summary judgment is proper if, after the
completion of discovery relevant to the motion, including
the production of expert reports, an adverse party who will
bear the burden of proof at trial has failed to produce
evidence of facts essential to the cause of action or
defense which in a jury trial would require the issues to be
submitted to a jury. In other words, whenever there is no
genuine issue of any material fact as to a necessary
element of the cause of action or defense, which could be
established by additional discovery or expert report and
the moving party is entitled to judgment as a matter of
law, summary judgment is appropriate. Thus, a record
that supports summary judgment either (1) shows the
material facts are undisputed or (2) contains insufficient
evidence of facts to make out a prima facie cause of action
or defense.
Upon appellate review, we are not bound by the trial
court’s conclusions of law, but may reach our own
conclusions. The appellate Court will disturb the trial
court’s order only upon an error of law or an abuse of
discretion.
Judicial discretion requires action in conformity with
law on facts and circumstances before the trial court
after hearing and consideration. Consequently, the
court abuses its discretion if, in resolving the issue
for decision, it misapplies the law or exercises its
discretion in a manner lacking reason. Similarly, the
trial court abuses its discretion if it does not follow
legal procedure.
Chenot v. A.P. Green Services, Inc., 895 A.2d 55, 61 (Pa.Super. 2006)
(internal citations and quotation marks omitted).
The Employee Retirement Income Security Act2 (“ERISA”) governs
“any employee benefit plan if the plan is established or maintained by any
2
29 U.S.C.A. §§ 1001-1461.
-8-
J-A05011-15
employer engaged in commerce or in any industry or activity affecting
commerce.” Tatterson v. Koppers Co., 458 A.2d 983, 985 (Pa.Super.
1983) (citing 29 U.S.C.A. § 1003(a)(1)). “Under ERISA, plan administrators
and fiduciaries are required ‘to discharge [their] duties with respect to a plan
solely in the interest of the participants and beneficiaries,… in accordance
with the documents and instruments governing the plan….’” In re
Estate of Sauers, 613 Pa. 186, 205, 32 A.3d 1241, 1253 (2011) (quoting
29 U.S.C.A. § 1104(a)(1)(D)) (emphasis in original).
Instantly, the Orphans’ court reasoned as follows:
Based on the record presented, and in particular the
documents and instruments governing the plan,
[Appellant] has failed to sustain his burden of establishing
that he was designated by [Decedent] as a beneficiary
under the procedures established by [the Plan]. The
relevant provisions of that “Your Group Plan” sponsored by
the University of Pennsylvania require a specific
designation of a beneficiary as follows:
Beneficiaries
You may name or change your beneficiary by filing
written request at your Employer’s headquarters or
at Aetna’s Home Office. Ask your Employer for the
Forms. The naming or any change will take effect as
of the date you execute the request. Aetna will be
fully discharged of its duties as to any payment
made by it before your request is received at its
Home Office.
Any amount payable to a beneficiary will be paid to
those you name. Unless you state to the contrary, if
more than one beneficiary is named, they will share
on equal terms.
* * *
-9-
J-A05011-15
If no named beneficiary survives you or if no
beneficiary has been named, payment will be made
as follows to those who survive you:
 Your spouse, if any.
 If there is no spouse, in equal shares to your
children.
 If there is no spouse or child, to your parents,
equally, or to the survivor.
Throughout the long pendency of this dispute, [Appellant]
has failed to present any designation—written or
electronic—of a beneficiary selected by [Decedent] in
compliance with the relevant procedures set forth in the
Aetna policy. Instead, [Appellant] relies on 2 sets of
computer screen shots, one produced by Penn and the
other by Aetna…. These documents, however, are merely
post-mortem records reflecting Penn and Aetna’s computer
files, which, the record demonstrates, were dependent on
information received from ADP. This is made clear in
Aetna’s response to [Appellant’s] first set of
interrogatories[,] which he presents in support of his
summary judgment [motion]. When asked if it maintains
“a record of the primary beneficiary for life insurance
policies and coverage provided to [Decedent] under the
[Plan],” Aetna replied:
Aetna does not maintain (i.e. store) historical
information or records of beneficiary designations
made by [Decedent]. Aetna has access only to
current beneficiary designations which it receives
through a file feed from ADP, the Plan Sponsor’s
contracted vendor for administration of the technical
aspects of the Plan.
The deposition testimony [Appellant] relies on to support
his summary judgment motion likewise admits a lack of
knowledge and deferral to ADP. The deposition of
Geraldine Zima, Manager of Benefits Administration for
Penn, is illustrative. In her deposition, Ms. Zima
repeatedly emphasizes her limited knowledge of the
procedures and information stored by ADP for life
insurance beneficiaries. For instance, when she was asked
- 10 -
J-A05011-15
to interpret the three screenshots produced by Penn
regarding [Decedent’s] designation of life insurance
beneficiaries and more specifically “what information does
this screenshot tell you about the beneficiary designation
of [Decedent’s] life insurance policy,” Ms. Zima candidly
replied: “You would have to talk to ADP about that. I don’t
use this screen that much. I’m not familiar enough with
it.” To her knowledge, these 3 screen shots constitute the
entire and only record of the beneficiaries of [Decedent’s]
life insurance. They were stored electronically in ADP’s
Enterprise System and then [sent] directly to Aetna.
In addition to this dearth in background information about
the Penn and Aetna screenshots, [Appellant’s] summary
judgment [motion] is undermined by the internal
contradictions between these documents. While the Aetna
screenshot gives an effective date for the beneficiary
designation of [Appellant] of “7/1/10,[”] Ms. Zima was
asked to explain the Penn screenshot’s effective date of
“12/3/08.” At first she deferred, stating “You would have
to ask ADP how to read that,” but then offered her opinion
that [Appellant] had been named a beneficiary before
12/3/08. This conjecture, however, is unsupported by any
hard evidence. When specifically asked whether there was
“any writing signed by [Decedent] designating [Appellant]
as primary beneficiary that you have seen or have
knowledge,” [Ms. Zima] replied: “I haven’t seen any
paper” nor was she aware of “any document signed by
[Decedent] designating [Appellant] as primary
beneficiary.” Aetna likewise stated that it had never
received any electronic signatures by [Decedent] and the
“computer documents do not show when a designation was
made. Aetna’s records show online designation as of
7/01/10 of [Appellant].”
There is no dispute that [Decedent] had named [Appellant]
as beneficiary of his medical insurance or that he
subsequently removed him in December 2008. In the
dearth of a clear electronic or written beneficiary
designation for [Decedent’s] life insurance, Ms. Zima was
asked to speculate on how [Appellant’s] name came to
appear as a beneficiary. In response, she suggests a
computer default:
- 11 -
J-A05011-15
Q: Well, isn’t that in contradiction of your
statement that [Decedent] elected—isn’t this
statement saying that he elected to give medical
benefits to [Appellant], and that the Enterprise
system, through some programming—some
programming modality by default named [Appellant]
in the life insurance beneficiary field?
A: It did not name him. It populated the name
field. There was no designation as to primary or
contingent. It was up to the employee to make that
election or change it.
This suggestion that [Appellant’s] name appears on the
computer printouts by default contravenes the explicit
terms of the insurance policy requiring a designation by
the insured as to his life insurance beneficiary. The lack of
any evidence of beneficiary designation is fatal to
[Appellant’s] claim. Although he counters that the
[Gallagher Appellees have] never produced any
documentation of a different beneficiary designation, to
maintain [their] burden of proof, the [Gallagher Appellees]
do not have to do this. Under the explicit terms of [the]
policy or plan, if the insured fails to designate a
beneficiary, there is a default provision clearly mapped
out. Under that default provision, the [Gallagher
Appellees] prevail[] and the benefits should be awarded to
the parents of [Decedent].
The other documents offered by [Appellant] to support his
claim are irrelevant. The 2006 Amendment to the Master
Services agreement between Penn and ADP as well as the
Contract between Aetna and Penn effective April 1, 2006
concerning ADP’s management of data merely define the
relationship among these parties but were not incorporated
into the Plan applicable to [Decedent]. The plan
summaries that [Appellant] presented likewise were
irrelevant to determination of the designated beneficiary
but ironically those summaries would not have found
computer screen shots sufficient to designate a
beneficiary. The Summary Plan Description as of July
2006, for instance, provides at page 38 as follows:
Enrollment and Beneficiary Designation
- 12 -
J-A05011-15
When you enroll for coverage you complete an
enrollment form and name a beneficiary to receive
benefits in case of your death. You may name
anyone as your beneficiary and can change your
beneficiary at any time via the online enrollment
system at www.upenn.edu/u@penn.
No enrollment form, in paper or in electronic form, has
been provided. The computer screen shots presented by
Aetna as well as the screenshots and the touch logs
produced by Penn as explained by Geraldine Zima in her
deposition seriously contradict each other.
Alternatively, the [Gallagher Appellees have] sustained
[their] burden of showing that there was no designation of
a beneficiary of [Decedent’s] life insurance policy under
the terms of the relevant insurance policy. Normally, the
[Gallagher Appellees] would have faced a daunting task in
trying to establish this “negative.” [They were] assisted,
ironically, by the failure of [Appellant] to present any
documentation—electronic or otherwise—that he had been
designated by [Decedent] as his life insurance beneficiary
under the terms of the policy that the [Gallagher
Appellees] presented as Ex. 10 in support of [their]
summary judgment motion. The deposition testimony by
Geraldine Zima, as previously analyzed, revealed that she
was unaware of any designation of a beneficiary other than
the three screen shots. At one point, in fact, she
hypothesized that [Appellant’s] name had appeared as a
life insurance beneficiary by computer default. The letter
exchange the [Gallagher Appellees] presented with Helen
C. Logan, Administrator of Legal Services at Penn’s [O]ffice
of the General Counsel likewise buttresses Ms. Zima’s
suppositions. When asked whether [Penn] had a
document designating [Appellant] as a beneficiary of
[Decedent’s] life insurance—either on paper or
electronically, Ms. Logan responded by letter dated March
8, 2012[:]
Penn refers questions about the ADP process to ADP,
but it is Penn’s understanding that having just added
[Appellant] to [Decedent’s] medical insurance as a
domestic partner, [Decedent’s] screen defaulted to
[Appellant’s] name in the life insurance beneficiary
- 13 -
J-A05011-15
field. One can simply erase the default name and
type in another.
Designation of a life insurance beneficiary by computer
default is not an alternative to the personal selection of a
life insurance beneficiary under [the Plan] that the
[Gallagher Appellees] rel[y] upon in seeking summary
judgment. While it is conceivable—though far from
certain—that such a personal designation might be found
among ADP’s documents, [Appellant] failed to pursue that
route. In fact, [Appellant] does not seek to raise that
argument in the present summary judgment. Moreover,
the period for discovery is over. There is therefore no
issue of fact nor one for trial. The [Gallagher Appellees
have] met [their] burden of proof that no designated
beneficiary can be proven, so that the default provisions of
the insurance policy intended for such instances should be
invoked.
(Orphans’ Court Opinion, filed March 5, 2014, at 12-16). We cannot fully
agree with the court’s analysis for the following reasons.
Decedent took out life insurance policies under the Plan in 2003. As
early as 2006, Decedent had a personal key and password he could use to
log into the Enterprise database. Once in the system, Decedent was able to
name or change his primary and contingent life insurance beneficiaries.
Decedent could also submit a paper beneficiary designation form to Penn or
Aetna. In either case, current beneficiary information was stored in
Enterprise. Ms. Zima stated during her deposition that the information in
Enterprise constituted Penn’s official and entire record of the beneficiaries for
Decedent’s life insurance policies. Screen shots of Decedent’s record in
Enterprise taken after his death displayed Appellant’s name as the primary
beneficiary for Decedent’s life insurance policies. Both Penn and Aetna
- 14 -
J-A05011-15
produced these screen shots. Ms. Zima testified the Penn screen shots were
received from ADP, which administers Enterprise. Likewise, in answers to
interrogatories, Aetna stated it has access only to current beneficiary
designations, and it receives this information in an electronic file feed from
ADP. Aetna confirmed that the file feed it received from ADP listed Appellant
as the primary beneficiary for Decedent’s life insurance policies.
The “touch logs” of Decedent’s activity in Enterprise show no electronic
designation of a primary life insurance beneficiary, which might suggest the
designation was done on paper. Nevertheless, the absence of a paper form
signed by Decedent, naming Appellant as primary beneficiary, is not
automatically fatal to Appellant’s case. Aetna stated it stores no historical
information or records of beneficiary designations. The up-to-date
beneficiary information in the screen shots, however, suggests Decedent
named Appellant as the primary beneficiary for the life insurance policies at
some point in the past. Furthermore, the touch logs of Decedent’s activity in
Enterprise showed he logged into the system in December 2008 to add
Appellee Joann Gallagher as a contingent life insurance beneficiary,3 and to
remove Appellant from medical coverage. Ms. Zima testified that it was her
understanding Appellant was already designated as Decedent’s primary life
insurance beneficiary at that time. According to the touch logs, however,
3
In Enterprise, Joann Gallagher’s name is misspelled as “Joan Gallagher”
and her birthdate is incorrect, but the parties do not dispute that the entry is
intended to refer to Decedent’s mother, Appellee Joann Gallagher.
- 15 -
J-A05011-15
Decedent did not alter, change or remove Appellant as the primary
beneficiary then or at any other time that Decedent logged into Enterprise.
The Gallagher Appellees’ assertion, that designating a medical dependent in
Enterprise can automatically populate the primary life insurance beneficiary
field with the same name, fails to establish what actually occurred in this
case and is conjecture at this point.
Viewing the evidence in the light most favorable to Appellant, as the
nonmoving party in the Gallagher Appellees’ motion for summary judgment,
we conclude a genuine issue of material fact exists as to whether Decedent
designated Appellant primary beneficiary of Decedent’s life insurance
policies. See Chenot, supra. At the summary judgment stage, any doubts
concerning the reason Appellant is listed as Decedent’s primary beneficiary
in Enterprise must be resolved in Appellant’s favor as the nonmoving party.
See id. Summary judgment for either party would be inappropriate at this
juncture in light of the conflicting claims regarding the identity of the
primary beneficiary of the life insurance policies. The factfinder should have
an opportunity to resolve this issue, which includes any questions regarding
alleged inaccuracies in the screen shots as well as the knowledge and
credibility of the witnesses.4
4
Likewise, the Gallagher Appellees’ objection to the screen shots as
unauthenticated is properly an issue for trial. Assuming without deciding the
touch logs and Ms. Zima’s deposition testimony were insufficient to
authenticate the screen shots, Appellant should have an opportunity to
present testimony or other authentication evidence if the case proceeds to
- 16 -
J-A05011-15
In his fourth sub-issue, Appellant argues Aetna failed to comply with
ERISA when it deferred action on Appellant’s claim for Decedent’s life
insurance benefits. Appellant contends Aetna’s decision to file an
interpleader petition, rather than approve Appellant’s claim, was
unsupported by substantial evidence. Appellant asserts that even if Aetna
acted reasonably when it filed the interpleader petition, it unjustifiably
ignored evidence (including the screen shots) that subsequently became
available. Appellant concludes Aetna breached its fiduciary duty under
ERISA when it continuously refused to pay Decedent’s life insurance benefits
to Appellant, the designated primary beneficiary. We cannot agree.
Section 1132 of ERISA provides in relevant part as follows:
§ 1132. Civil enforcement
(a) Persons empowered to bring a civil action
A civil action may be brought—
(1) by a participant or beneficiary—
* * *
trial. Additionally, the Gallagher Appellees’ “best evidence rule” objection
misconstrues the evidentiary purpose of the screen shots, which was to
show Decedent’s act of naming Appellant as a primary life insurance
beneficiary. See Pa.R.E. 1002 (stating: “An original writing, recording, or
photograph is required in order to prove its content unless these rules, other
rules prescribed by the Supreme Court, or a statute provides otherwise”)
and Comment (stating “writings are not usually treated as subject to the rule
if they are only evidence of the transaction, thing or event”). Rule 1002 did
not require Appellant to produce the original beneficiary designation form,
which would only be additional evidence of this “event.” See id.
- 17 -
J-A05011-15
(B) to recover benefits due to him under the terms
of his plan, to enforce his rights under the terms of
the plan, or to clarify his rights to future benefits
under the terms of the plan;
* * *
29 U.S.C.A. § 1132(a)(1)(B). “Under Section 1132…plan administrators are
subject to federal liability should a court find they acted in an arbitrary and
capricious manner by interpreting an ERISA plan document in a manner
which is improper as a matter of federal law.” Estate of Sauers, supra at
210, 32 A.3d at 1256. “In deciding whether a fiduciary’s interpretation was
arbitrary and capricious, we review only the materials available to [the
fiduciary] during the decision-making process.” Pilieri v. Cont’l Cas. Co.,
718 A.2d 1255, 1259 (Pa.Super. 1998). “[U]nder the ‘arbitrary and
capricious’ standard, a fiduciary’s interpretation of a plan will not be
disturbed if it is reasonable, supported by substantial evidence, and proper
as a matter of law.” Id. “A decision is supported by substantial evidence if
there is sufficient evidence for a reasonable person to agree with the
decision.” Courson v. Bert Bell NFL Player Ret. Plan, 214 F.3d 136, 142
(3d Cir. 2000).
Instantly, Decedent died on May 27, 2011. On May 31, 2011, Aetna
received separate claims to Decedent’s life insurance benefits from Appellant
and Appellee Michael Gallagher, Jr. On June 1, 2011, after Aetna accessed
records showing Appellant was the named primary beneficiary, Aetna sent
Appellant a letter acknowledging receipt of his life insurance claim and
- 18 -
J-A05011-15
requesting a copy of Decedent’s certified death certificate in order to process
the claim. During the ensuing two weeks, Aetna received numerous
telephone calls from members of Decedent’s family seeking information
regarding Decedent’s designated life insurance beneficiary. Decedent’s
sister believed her mother was the beneficiary. Aetna received an email
from Penn on June 14, 2011, while Appellant’s claim remained on hold
pending Aetna’s receipt of the death certificate. That email indicated
Decedent’s family might contest the beneficiary designation. On June 17,
2011, Appellee Michael Gallagher, Jr. sent a letter to Aetna contesting the
beneficiary designation. The letter stated in part:
Aetna has informed the family that an online change of
beneficiary was made in July of 2010. [Decedent’s]
relationship with [Appellant] ended approximately four
years ago. [Appellant] expressed (in writing) his desire to
be removed from [Decedent’s] life. Having [Appellant]
listed as [Decedent’s] beneficiary is contradictory to
[Decedent’s] intentions, statements, direction and efforts.
* * *
[D]uring the past several months, [Decedent] made many
statements to several individuals that Joann Gallagher is
the primary beneficiary of his life insurance. We also
believe there is written evidence of such.
As Administrator of the Estate, I am writing to determine
what change was made in July, what the policy was before
the change, and where the change originated from. It is
possible [Appellant] knew [Decedent’s] login user name
and password.
I am also writing to ask if Aetna will accept a written
statement, made by [Decedent] in the recent time before
his death, [in] which Joann Gallagher is designated as
- 19 -
J-A05011-15
primary beneficiary? Additionally, will Aetna accept sworn
and certified affidavits by [Decedent’s] attending
professionals and health care providers asserting
[Decedent] intended and believed Joann Gallagher was the
primary beneficiary? Lastly, will Aetna accept a written
statement from me, as Power of Attorney, and made while
[Decedent] was alive, designating Joann Gallagher as
beneficiary?
(Appendix to Aetna’s Opposition to Appellant’s Motion for Summary
Judgment, filed 5/29/13; R.R. at 523a-524a). On June 24, 2011, Aetna
received a copy of the petition for citation against Appellant and Aetna,
which sought the award of Decedent’s life insurance benefits to Appellee
Michael Gallagher, Jr., as administrator of Decedent’s estate. Appellant
provided Aetna with a copy of Decedent’s death certificate on July 6, 2011.
Aetna proceeded to investigate the claim. Aetna discovered, inter alia,
Decedent and Appellant had separated in 2009, and Decedent had removed
Appellant as a medical dependent around that time. On July 27, 2011, the
Orphans’ court issued a decree directing Appellant and Aetna to show cause
why Appellee Michael Gallagher Jr.’s petition for citation should not be
granted. In September 2011, Aetna filed its petition for interpleader and a
response to the petition for citation.
Under the circumstances, Aetna acted reasonably when it decided to
interplead Decedent’s life insurance benefits. Aetna was faced with
competing claims to the benefits, and the issue was hotly contested. Even
after Appellant produced the Enterprise screen shots, the case continued and
genuine factual disputes remain regarding the identity of Decedent’s primary
- 20 -
J-A05011-15
life insurance beneficiary. Aetna’s decision to defer payment on the
competing life insurance claims pending the outcome of the litigation was
reasonable and supported by substantial evidence. See Pilieri, supra.Based upon the foregoing, we conclude Appellant presented facts
sufficient to overcome summary judgment at this juncture. We further
conclude under these circumstances Aetna’s decision to defer payment on
the competing insurance claims did not violate ERISA. Accordingly, we
affirm the Orphans’ court decree to the extent it denied Appellant’s cross-
claim against Aetna. We reverse that part of the decree which granted
summary judgment in favor of the Gallagher Appellees and awarded the
benefits of Decedent’s life insurance policies under the Plan to Appellees
Joann Gallagher and Michael Gallagher, Sr. and remand for further
proceedings.
Decree affirmed in part and reversed in part; case remanded for
further proceedings. Jurisdiction is relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/23/2015
- 21 -