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Robert Francis v. Anacomp

September 14, 2011

ROBERT FRANCIS,
PLAINTIFF,
v.
ANACOMP, INC. ACCIDENTAL DEATH DISMEMBERMENT PLAN AND LIFE INSURANCE COMPANY OF NORTH AMERICA, DEFENDANTS.



The opinion of the court was delivered by: Hon. Roger T. Benitez United States District Judge

ORDER:

1. GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR PARTIAL SUMMARY ADJUDICATION [Dkt. No. 21]

2. GRANTING IN PART AND DENYING IN PART DEFENDANTS' CROSS MOTION FOR PARTIAL SUMMARY AND ADJUDICATION [Dkt. Nos. 22 and 23]

Plaintiff Robert Francis moves for partial summary adjudication on two issues: (1) the application of California law; and (2) the standard of review to be applied to the underlying decision of the plan administrator. The Defendants oppose and move for cross-summary adjudication. This Court holds that: (1) California state law is preempted and federal common law will be applied; and (2) the standard of review to be applied to the denial of benefits decision is de novo review.

I. BACKGROUND

While Plaintiff was employed by Anacomp, Inc., Plaintiff's wife was covered by an accidental death insurance policy issued by Defendant Life Insurance Company of North America ("LICNA"). While the policy was in force, Plaintiff's wife passed away. The coroner found the death to be accidental. Plaintiff sought benefits under the policy. LICNA denied benefits. The main issue is whether Plaintiff's wife died of accidental causes, as that is defined by the policy. Because the insurance coverage was based on Plaintiff's employment, this action is governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA") and this Court has jurisdiction.

II. LEGAL STANDARDS

A. Application of State Law

In ERISA cases, federal courts are directed to develop a federal common law of rights and obligations for ERISA-regulated plans. Standard Ins. Co. v. Morrison, 584 F.3d 837, 841 (9th Cir. 2009), cert. denied, 130 S. Ct. 3275 (2010) (citations omitted). This is due to the "broad preemptive force" of ERISA. Id. Relevant to this case, ERISA § 502(a) "'set[s] forth a comprehensive civil enforcement scheme'" that completely preempts state-law "'causes of action within the scope of th[es]e civil enforcement provisions . . . .'" Aetna Health Inc. v. Davila, 542 U.S. 200, 208--09 (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1987); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987)); see also Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 945 (9th Cir. 2009).

Preemption under ERISA § 514 is also governed by a two-prong test. Under § 514(a), ERISA broadly preempts "any and all State laws insofar as they may now or hereafter relate to any [covered] employee benefit plan . . . ." 29 U.S.C. § 1144(a). But this broad preemption provision is tempered by a savings clause in § 514(b), which spares "any law of any State which regulates insurance, banking, or securities." Id. § 1144(b)(2)(A). "To fall under the savings clause, a regulation must satisfy a two-part test laid out in Kentucky Ass'n of Health Plans, Inc. v. Miller, 538 U.S. 329, 342 (2003)." Morrison, 584 F.3d at 842. "'First, the state law must be specifically directed toward entities engaged in insurance.'" Id. (quoting Ky. Ass'n of Health Plans,538 U.S. at 342). Second, "it 'must substantially affect the risk pooling arrangement between the insurer and the insured.'" Id. (quoting Ky. Ass'n of Health Plans, 538 U.S. at 342).

B. Standard for Reviewing the Decision of the Plan Administrator

When a court reviews an ERISA denial of benefits, the "denial of benefits . . . is to be reviewed under a de novo standard" where the administrator is not granted discretionary authority by the plan. Conkright v. Frommert, 130 S. Ct. 1640, 1646 (2010) (citations omitted). As a result, "the standard of review depends on whether the plan explicitly grants the administrator discretion to interpret the plan's terms." Harlick v. Blue Shield of California, ___ F.3d ___, 2011 WL 3796177 *4 (9th Cir. Aug. 26, 2011) (citation omitted). When discretion is granted, courts review benefit decisions for an abuse of discretion. Id. Where the plan administrator has a conflict of interest, such as when an insurer decides benefits under its own insurance policy, the court's review is the abuse of discretion standard "tempered by skepticism." Id. at *5.

III. ...


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