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Tom v. Hartford Life and Accident Insurance Co.

United States District Court, N.D. California

February 28, 2017

ARLENE TOM, Plaintiff,




         Defendant in this diversity action contends that plaintiff's causes of action in connection with a cutoff of her long-term disability benefits are preempted by the Employee Retirement Income Security Act. This order agrees based upon findings of fact and conclusions of law after a one-day bench trial, as set forth below.


         Plaintiff Arlene Tom worked as an accounting partner/principal for non-party Grant Thornton LLP from 2007 to 2009. In March 2016, she brought this action against defendant Hartford Life and Accident Insurance Company in connection with Hartford's decision to cut off her long-term disability (LTD) benefits. The complaint asserted only state law causes of action for breach of contract and breach of the covenant of good faith and fair dealing. Hartford moved for summary judgment on the ground that the Employee Retirement Income Security Act preempted this action. Tom, however, contended that she received LTD benefits under a separate plan that covered only partners/principals, and that ERISA thus did not apply. After supplemental discovery, briefing, and oral argument, the undersigned denied summary judgment in favor of a bench trial on the limited issue of ERISA preemption.

         At trial, the Court heard testimony from Lou Ann Hutchison, a regional Director of Human Resources and then national Director of Operations at Grant Thornton during the relevant time period; John Choi, a National Account Executive at Hartford; and Karen Suller, an Implementation Manager at Hartford during the relevant time period. Each side then submitted proposed findings of fact and conclusions of law. Any proposal expressly agreed to by the opposing side at least in part shall be deemed adopted to the extent agreed upon, even if not expressly adopted herein. Citations to the record herein are provided only as to particulars that may assist the court of appeals. All declarative statements herein are factual findings.


         The factual dispute in this case centers around two apparent inconsistencies in the record. First, certain documents generated by Hartford seemed to refer to a plan numbered 501 whereas Grant Thornton's documents referred to the Plan number as 509. Second, different documents sported what appeared to be different versions of Hartford's LTD policy number. This order concludes that the use of 501 in Hartford's documents was due to a clerical error; that Grant Thornton maintained a comprehensive multi-benefit ERISA plan - numbered 509 - that encompassed LTD benefits funded by Hartford's policy; and that differences in how various documents identified Hartford's LTD policy are immaterial, as discussed below.

         1. Grant Thornton established and maintained the Grant Thornton LLP Health and Welfare Benefits Plan (the “Plan”) to provide various benefits - including LTD insurance - to its employees and partners/principals. Grant Thornton funded these benefits through piecemeal group insurance contracts with different insurers.

         2. During the relevant time period, Grant Thornton administered the Plan, reviewed claims and appeals, and made decisions regarding the design of the Plan. Grant Thornton worked off of a “wrap document” titled, “Grant Thornton LLP Health & Welfare Benefits Plan Amended and Restated Effective January 1, 2002.” The cover page of the wrap document contained a notation that read, “DRAFT 9/15/2003” (Exh. 21). Despite bearing the legend “DRAFT, ” this wrap document functioned as a plan document within the meaning of ERISA.

         3. The wrap document stated, “This Plan is intended to constitute a welfare plan under section 3(1) of ERISA, ” and noted that the Plan might include various “health and welfare benefit programs, ” including LTD benefits (id. at 6). The wrap document incorporated by reference the Plan's participating benefit programs, among other things (id. at 14).

         4. In June 2007, Grant Thornton - which had previously funded its LTD benefits through a group policy from Life Insurance Company of North America - decided to switch to a new insurer for said benefits. Through its consulting firm, then named Towers Perrin, Grant Thornton issued a request for proposal (RFP) to different insurers, including Hartford, to initiate the process of selecting “qualified vendors to administer and insure the Life, AD&D [accidental death and dismemberment], and LTD plans for Grant Thornton Employees and Partners effective January 1, 2008” (Exh. 2 at 3).

         5. The RFP explained that Grant Thornton's LTD program was “fully-insured and 100% employee-funded with . . . high level plan provisions, ” including three classes of beneficiaries for (1) full equity partners and principals, (2) equity partners and principals, and (3) employees. The RFP also contained a questionnaire that asked over one hundred questions of potential insurers.

         6. In response to the RFP, Hartford prepared and submitted a proposal of benefits that included LTD insurance for two classes of beneficiaries - (1) employees and (2) all partners/principals. The two classes had different elimination periods and definitions of disability, such ...

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