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Spies v. Life Insurance Company of North America

United States District Court, N.D. California

May 7, 2018

BRENDA SPIES, Plaintiff,
v.
LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.

          ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT RE: DKT. NO. 33

          PHYLLIS J. HAMILTON, UNITED STATES DISTRICT JUDGE

         Defendant Life Insurance Company of North America's (“LINA”) motion for summary judgment came on for hearing before this court on April 25, 2018. Plaintiff Brenda Spies appeared through her counsel, P. Randall Noah. Defendant appeared through its counsel, Anna Martin. Having read the papers filed by the parties and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby GRANTS defendant's motion, for the following reasons.

         BACKGROUND[1]

A. The Genesis of This Action

         LINA contracted with Staples Inc. to provide short term and long term disability insurance (“STD” and “LTD, ” respectively). Staples employed Spies between September 3, 2013, and February 4, 2014. Dkt. 33-3, Maria Medina Decl. ¶¶ 11, 19. On February 5, 2014, Spies was hospitalized and diagnosed with ischemic colitis and lupus. Shortly thereafter, Spies submitted a claim for STD benefits. Medina Decl. ¶ 19.

         On June 26, 2014, LINA approved plaintiff's STD claim through July 18, 2014. LINA later extended Spies' STD benefits through August 10, 2014, the 6-month maximum duration afforded by the STD plan. On August 21, 2014, LINA advised plaintiff that she was eligible for LTD benefits under the “regular occupation” definition of disability, with payments retroactively commencing on August 11, 2014. Though LINA reviewed medical records and physician opinions before making that determination, through an administrative mistake LINA failed to verify plaintiff's enrollment in and eligibility for benefits under the LTD plan. See Ex. G (“Eligibility Verification” form showing employee failed to verify existence of LTD “enrollment card”); Martin Decl. ¶ 3. As a result of this mistake, Spies received LTD benefits for nearly two years between August 2014 and June 2016.

         In June 2016, because the definition of disability was set to change from “regular occupation” to “any occupation, ” LINA requested that plaintiff attend an independent medical examination. That examination concluded that plaintiff could work full time in a sedentary occupation. Accordingly, LINA determined that plaintiff was not entitled to further LTD benefits, notified her of that decision on July 28, 2016, and subsequently notified her that the decision had been upheld on appeal.

         Plaintiff subsequently initiated this suit under 29 U.S.C. § 1132(a) challenging LINA's decision. While investigating plaintiff's claims, LINA discovered, and Staples confirmed, that Spies had never elected voluntary LTD coverage and had never paid LTD insurance premiums. Medina Decl. ¶ 20; Downey Decl. ¶ 3. Despite this undisputed fact and despite plaintiff receiving two-years' worth of LTD benefits that she was not entitled to, plaintiff argues that the court should require LINA to continue Spies' LTD benefits. LINA contends that it has no continuing obligations to Spies because she never enrolled in the LTD plan and, additionally, principles of equitable estoppel do not apply in this case.[2]

         B. Staples' Benefits Plan and Spies' Benefits Elections

         Staples offers a portfolio of health and welfare benefits for its full-time, non-exempt employees. Staples automatically enrolls its non-exempt employees in the following benefits: (1) basic life insurance; (2) accidental death & dismemberment insurance; and (3) short-term disability insurance. Medina Decl. ¶ 4.

         Employees may also voluntarily elect other benefits. Id. ¶ 5. Long-term disability insurance is one such benefit. Id. To enroll in that benefit, an employee must affirmatively elect the LTD coverage either when first hired or during Staples' annual open enrollment. Id. LINA's LTD policy with Staples states that “An Employee . . . may elect to be insured only by authorizing payroll deduction in an electronic format . . . [and] [t]he effective date of this insurance depends on the date coverage is elected.” Dkt. 33-2, Ex. A at 21. In other words, an employee must affirmatively elect to enroll in LTD insurance, may only do so by authorizing payroll deductions, and that deduction will appear as a deduction on the employee's paychecks. See id.; see also Medina Decl. ¶ 5; Ex. B at 27 (“You pay $0.364 per $100 of covered pay per month for LTD. When you enroll, you will see your specific paycheck cost.”).

         Staples' open enrollment period occurs between May and June each year. See Medina Decl. ¶ 6. In conjunction with open enrollment, Staples distributes a corresponding “Benefits Guide” that describes the benefits available and the procedures for enrolling in or modifying coverage. Id. ¶¶ 6-8. That Benefits Guide states that Staples provides STD coverage for free but employees must elect and purchase LTD coverage. Id.; Ex. B at 27 (2013-2014 Benefits Guide). It also states that if an employee elects LTD coverage, the premium payment will be deducted from the employee's paycheck. Ex. B at 27. After each enrollment period, regardless of whether the employee made benefits changes, Staples sends a “Confirmation of Elections Statement” that documents the employees' benefits (“Confirmation Statement”). Medina Decl. ¶¶ 10, 15, 17; Medina Reply Decl. ¶ 9.

         Eligible employees also have an opportunity to review and elect voluntary benefits when first hired. Medina Decl. ¶¶ 10, 13. Newly hired employees receive a worksheet that describes coverage options and the costs of those options. Id. The employee is also provided access to Staples' benefits website, which contains information about voluntary and automatic benefits. Id. After an employee elects coverage options through an online portal, Staples mails the employee her Confirmation Statement. Id.; Dkt. 35-1, Medina Reply Decl. ¶¶ 4-6.

         When Staples hired Spies on September 3, 2013, Spies participated in the above process. Medina Decl. ¶ 13, 14. Plaintiff's initial employment paperwork included a personalized benefits worksheet, which included the option to elect LTD insurance. Id. ¶ 13. Plaintiff does not dispute that Staples provided her that worksheet. Indeed, it would be hard for her to do so because on the same day-September 3, 2013-plaintiff elected several other voluntary benefits, including dental and vision insurance. Id. ¶ 14; Ex. C; Medina Reply Decl. ¶ 6. The same records indicate that Spies “waived” LTD insurance. Ex. C; Medina Reply Decl. ¶ 5. On September 19, 2013, Staples sent plaintiff her Confirmation Statement showing the benefits she selected. Ex. D; Medina Decl. ¶ 15; Medina Reply Decl. ¶ 7. And once plaintiff became eligible to receive benefits, plaintiff's paychecks reflected premium payment deductions for the additional benefits Spies elected, but no deduction for LTD coverage. Medinal Decl. ¶ 16; see, e.g., Ex. E at 50 (Spies' paychecks).

         Spies was on STD leave during Staples' 2014 open enrollment. Medina Decl. ¶ 17. Spies nevertheless received the 2014 Benefits Guide and, though she made no benefits changes, also received a subsequent Confirmation Statement. Medina Decl. ¶ 17; Ex. F. In any event, even if plaintiff had elected to enroll in LTD insurance at that time-and the evidence shows that she did not-that coverage would not have become effective because Spies never returned to Staples as a full-time employee. Ex. A. at 21 (“If an Employee is not in Active Service on the date insurance would otherwise be effective, it will be effective on the date he or she returns to any occupation for the employer on a full time basis.”); see also Ex. A at 32 (defining “Active Service”).

         The best plaintiff musters in response to this evidence does not come close to creating a dispute of material fact about whether Spies enrolled in the LTD plan. Spies' declaration, the only evidence plaintiff submitted, merely states that Spies neither remembers being asked to opt in or out of LTD ...


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