The opinion of the court was delivered by: John F. Walter United States District Judge
FINDINGS OF FACT AND CONCLUSIONS OF LAW
With the agreement of the parties, the Court found this matter appropriate for submission on the papers without oral argument and vacated the Court Trial calendared for November 27, 2012. / / /
After considering the administrative record, evidence, and briefs filed by the parties, the Court makes the following findings of fact and conclusions of law:
Plaintiff and counter-defendant The Guardian Life Insurance Company of America ("Guardian") filed this declaratory relief action seeking an order from this Court confirming its rescission of the group disability insurance policy issued by Guardian to "Gabrielian & Associates" ("G&A") insuring G&A's employees. Leo Gabrielian ("Gabrielian") and Gabrielian and Associates Insurance Services, Inc. filed a counterclaim seeking disability benefits under the group policy. This action is governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq.
A. The Application On January 31, 2011, Gabrielian, as "CEO and President of G&A," applied for a group disability insurance policy to be issued by Guardian insuring G&A's employees. (AR 00006). Gabrielian represented on the Application that G&A was a corporation that employed two eligible employees who worked more than 30 hours per week, and that G&A sought insurance for both of these employees. (AR 0005). Gabrielian signed the Application, and represented that he "reviewed the statements made by [him] on this application, and they are true and complete." (AR 00006). He also acknowledged that"[i]t is understood that no individual shall become insured while not actively at work on a full-time basis, and only full-time employees shall be eligible. Full-time employee means one who regularly works the number of hours in the normal work week established by this planholder (but not less than 30 hours per week) at his Planholder's place of business." (AR 00006).
In addition to the Application, G&A submitted "Evidence of Insurability" for its two alleged "employees" - Gabrielian and Melissa Alexanians. (AR 00183-00187). G&A represented that Melissa Alexanians was a full time employee of G&A as of January 1, 2011. (AR 00183). The "Evidence of Insurability," submitted by G&A, stated that Alexanians was an insurance agent, that her annual earnings were $100,000, and that she had been actively working for G&A full time for full pay at least 30 hours per week, year round. (AR 00183).
Based on the information provided in the Application, Guardian issued G&A the Group Policy with an Employer Rider group plan number G-00761339-GN (the "Group Policy."). (AR 00012). The Group Policy was issued under the Trustees of the Finance, Insurance, and Real Estate Industry Insurance Trust Fund. (AR 00012, 00026). G&A became a participating employer covered by the Group Policy effective February 1, 2011 (AR 00012, 00026). The Group Policy identifies the G&A's two covered employees as "President" and "Vice President." (AR 00014).
The Group Policy states: "For purposes of this plan, we will treat partners and proprietors like employees if they meet this plan's conditions of eligibility." (AR 00014). The Group Policy also states that it is governed by ERISA. (AR 00078-00079).
C. Gabrielian's Claim for Disability Benefits On March 18, 2011, according to Gabrielian's treating physician, Gabrielian became totally disabled. Gabrielian submitted his claim to Guardian on July 8, 2011. (AR 00464).
D. Guardian's Rescission of the Group Policy As part of Guardian's investigation of Gabrielian's claim for disability benefits,*fn2 on January 4, 2012, Guardian's investigator, Robert Grandolfo, interviewed Melissa Alexanians, one of G&A's alleged "employees." (AR 00389). Melissa Alexanians advised Mr. Grandolfo that, in or around March 2011, she had considered going into business with Gabrielian as a partner. (AR 00389). She advised Mr. Grandolfo that she worked with Gabrielian on a part-time, trial basis to become familiar with insurance sales. (AR 00389). However, after about one month, she changed her mind about working and decided to be a "stay at home mom." (AR 00389). According to Alexanians, she never finalized any partnership arrangements with Gabrielian or entered into a written partnership agreement and never ...