United States District Court, S.D. Alabama, Southern Division
THE ESTATE OF EMMA PRASSENOS, deceased, by and through its Administrator, Ronald Jeffery Hester, Plaintiff,
E.I. duPONT de NEMOURS and CO., and BENEFLEX EMPLOYEE LIFE INSURANCE PLAN of E.I. duPONT NEMOURS and CO., Defendants.
KRISTI K. DuBOSE, District Judge.
This matter is before the Court on Plaintiff's Motion for Summary Judgment (Docs. 32-36, 38), Defendants' Response (Doc. 41, 42, 44), and Plaintiff's Reply (Doc. 46); Defendants' Motion for Summary Judgment (Docs. 50-53), Plaintiff's Response (Doc. 56) and Defendants' Reply (Doc. 57); and Court Orders (Docs. 64, 65), Defendants' Responses (Docs. 67, 68), Plaintiff's Second Amended Complaint (Doc. 66), and Plaintiff's Response (Doc. 69).
I. Findings of Fact
This case against E.I. DuPont De Nemours and Co. (DuPont) and the Beneflex Employee Life Insurance Plan of E.I. DuPont De Nemours and Co. (Life Insurance), concerns a spouse's claim for $100, 281 in additional life insurance benefits from her late husband's policy; and cancellation of her $100, 000 Beneflex Dependent Life Insurance Plan (Dependent Life Insurance) and a demand for reinstatement of same. After exhausting her administrative remedies, Prassenos filed a Complaint in this Court asserting a claim for recovery of ERISA welfare benefits, pursuant to Section 1132(a)(1)(B), against both Defendants; and a breach of fiduciary duty claim, pursuant to Section 1132(a)(3), against DuPont.
Emma Prassenos (Prassenos) was married to Mr. William Prassenos (Mr. Prassenos) for 30 years before he passed away on August 9, 2012. (Doc. 33 (Aff. Prassenos)). Mr. Prassenos was employed with ChemFirst, Inc. (ChemFirst) from April 1983 to June 1, 2012. (Doc. 33 (Aff. Prassenos); Doc. 42-1 at 1 (Aff. Bilson); Doc. 30 at 3). While Mr. Prassenos' was employed, in 2002, DuPont acquired ChemFirst. (Doc. 42-1 at 1 (Aff. Bilson); Doc. 42-2 at 156). DuPont's acquisition did not change the post-retirement benefits available to ChemFirst employees, such that ChemFirst employees and DuPont employees had different benefits both before and after DuPont's acquisition. (Doc. 42-1 at 1-2 (Aff. Bilson)).
As an employee, Mr. Prassenos' participated in the DuPont BeneFlex Employee Life Insurance Plan (Life Insurance plan),  and was provided with life insurance "1x pay" paid by the company so long as his employment continued. (Doc. 42-1 at 3-4 (Aff. Bilson; Doc. 30 at 3; Doc. 34 at 5-26 (SPD), 47-58 (full plan); Doc. 42-2 at 72-92). Mr. Prassenos purchased additional coverage, "2x pay." (Id.) Prassenos was Mr. Prassenos' beneficiary. (Doc. 30 at 3).
Mr. Prassenos also participated in the DuPont BeneFlex Dependent Employee Life Insurance plan (Dependent Life Insurance plan), through which he selected $100, 000 in coverage on Prassenos' life. (Doc. 42-1 at 3-4 (Aff. Bilson); Doc. 30 at 3; Doc. 34 at 30-45 (SPD), 60-64 (full plan); Doc. 42-2 at 93-108). Mr. Prassenos was Prassenos' beneficiary. (Id.)
On April 3, 2012, DuPont mailed the Total and Permanent Disability Income Plan (T&P) Summary Plan Description (SPD) to Mr. Prassenos. (Doc. 34 at 66-68; Doc. 42-1 at 4 (Aff. Bilson); Doc. 42-2 at 56-71). The T&P SPD provides an employee is automatically enrolled in the disability plan on the date of eligibility, and states as follows:
This Plan provides income protection in the event you become disabled. Benefits begin the first of the month following your termination if your disability has been found to be total and permanent. Benefits will continue, as long as you remain totally and permanently disabled and continue to meet the requirement of the Plan....
You will need to satisfy the requirements described in this SPD to receive Total and Permanent Disability Income benefits.
(Doc. 42-2 at 58, 59).
On April 9, 2012, Mr. Prassenos was contacted by a MyInfo Service Center representative who discussed the T&P benefits with him. (Doc. 34 at 66-68; Doc. 42-2 at 1-3).
ChemFirst also sent Mr. Prassenos a letter dated May 2, 2012, an "Informational Notice, " which contained details and further calculations and information regarding his retirement/pension benefit from the "Retirement Plan for Employees of ChemFirst Inc." (Doc. 42-2 at 19-50). This Notice explained that under the disability provisions of the plan, Mr. Prassenos could choose to commence his benefit any time between his disability date and his normal retirement date, and included an estimate packet "assuming you want to defer your [retirement/pension benefit] commencement to age 65." (Id. at 19). On May 31, 2012, a COBRA enrollment packaged was mailed to Mr. Prassenos. (Doc. 34 at 73).
Mr. Prassenos was diagnosed with cancer and effective June 1, 2012, separated from ChemFirst earning $100, 281/year. (Doc. 30; Doc. 34 at 191, 194). Mr. Prassenos separated from ChemFirst on disability under DuPont's T&P plan (the disability plan) (versus retired at that time). (Doc. 42-1 at 4 (Aff. Bilson); Doc. 30; Doc. 41 at 4). Because Mr. Prassenos separated from ChemFirst on disability under the T&P disability plan, his retirement would later take effect and would be governed by Title V of the DuPont Pension and Retirement Plan (PRP) (Doc. 42-2 at 109-232), but not the entire PRP:
Effective December 31, 2007.... the Retirement Plan for the Employees of ChemFirst, Inc. were merged into the Plan. The Plan was amended effective January 1, 2008 to add Title IV and Title V.... Title V consists of the provisions of the Retirement Plan for the Employees of ChemFirst, Inc. in effect on January 1, 2008.
(Id. at 112). Title V is the "Retirement Plan for Employees of ChemFirst, Inc." (Id. at 155-232).
Following Mr. Prassenos' separation from ChemFirst on disability, the couple received a June 1, 2012 DuPont "Confirmation of Lost Coverage" letter notification which indicated that because Mr. Prassenos lost his eligibility (as he was no longer an active employee), the benefits coverage had been cancelled and ended officially on May 31, 2012 ( i.e., that both Mr. Prassenos' "2x pay" life insurance, and Prassenos' $100, 000 dependent life insurance canceled). (Doc. 33 at 3 (Aff. Prassenos); Doc. 34 at 79; Doc. 38 at 15; Doc. 42-2 at 54). According to Prassenos, as a result of receiving this letter, neither she nor her husband contacted the insurance company (Prudential) or paid any monthly premiums "since the letter did not inform us that we could continue our life insurance, despite our desire to do so, because we were both diagnosed with cancer. We did continue with medical coverage." (Id.)
On August 9, 2012, Mr. Prassenos died at 58 years old. (Doc. 30 at 3; Doc. 34 at 184).
According to DuPont, as Mr. Prassenos separated from ChemFirst under DuPont's T&P plan as a ChemFirst disabled employee, he received "1x pay" life insurance ($100, 281), and so DuPont paid Prassenos that benefit. (Doc. 42-1 at 4 (Aff. Bilson); Doc. 41 at 4). See also (Doc. 42-2 at 60). However, Prassenos sought the "2x his pay" life insurance benefits from the Defendants and the ability to continue her dependent life insurance, which was denied.
On September 18, 2012, DuPont denied Prassenos' Level 1 Appeal concerning the amount of life insurance in which Mr. Prassenos was enrolled, and the claim that he had wished to continue the Dependent Life Insurance for Prassenos. (Doc. 34 at 66-68; Doc. 42-2 at 1-3). Specifically, DuPont explained its decision and quoted certain provisions from Page 3 of the T&P SPD, and from Page 12 of the Life Insurance SPD, as the denial basis, as follows:
This letter is in response to your Level 1 Appeal received on September 17, 2012, appealing the amount of life insurance in which your husband, William Prassenos, was enrolled. You state that he was enrolled in 2 × Pay of Employee Life Insurance, not the 1 × Pay. You also state that he wished to continue Spousal Life Insurance at $100, 000.
DuPont has directed the Benefit Determination Review Team to review your Level 1 Appeal. In reviewing your Level 1 Appeal, we considered the information submitted with your written Level 1 Appeal, the records at Mylnfo, and the relevant plan provisions. Your appeal has been denied.
Records indicate that Mr. Prassenos was enrolled in 2 × Pay of Employee Life Insurance as an active employee. Mr. Prassenos separated from the company on June 1, 2012, under the provisions of the Total and Permanent Disability Income Plan (T&P) and his Employee Life Insurance was reduced to 1 × Pay as of that date. Records show that he was mailed the 2008 Total and Permanent Disability Income Plan Summary Plan Description on April 3, 2012. On the April 9, 2012, he was contacted by a representative of the Mylnfo Service Center who discussed with him the T&P benefits, including the continuation of medical coverage and the reduction of the life insurance. A COBRA Enrollment Package was mailed to Mr. Prassenos on May 31, 2012, which would have included the life insurance conversion notice. Mr. Prassenos had the right to convert the lx Pay of additional life insurance and the Spouse Life Insurance by contacting Prudential within 31 days of the loss. Converted life insurance is maintained and premiums are collected directly by Prudential and would not have been part of the benefit paid by DuPont. Mr. Prassenos was correctly enrolled in 1 × Pay of Employee Life Insurance that was provided by DuPont as part of the T&P plan; therefore, your request for coverage to be reinstated at a total of 2 × pay in Employee Life Insurance or to continue Spouse Life Insurance through DuPont is denied.
The following can be found on page 3 of the 2008 Total and Permanent Disability Income Plan Summary Plan Description, in pertinent part:
If you become disabled and are not eligible for DuPont retiree benefits:
Life Insurance: The Company provides continued life insurance equal to one times your pay, subject to age reductions at age 65, at no cost to you for as long as you receive Total and Permanent Disability Income payments. Any Contributory Group Life insurance or supplemental life insurance that you purchased under BeneFlex Employee Life Insurance is discontinued upon employment termination.
The following can be found on page 12 of the 2008 BeneFlex Employee Life Insurance Summary Plan Description, in pertinent part:
To exercise your conversion rights, you must be enrolled in BeneFlex Employee Life Insurance Plan coverage at the time of the event that results in the loss of or reduction in coverage. You must contact the insurance company within 31 days of the end of your coverage under this Plan to exercise your conversion rights for BeneFlex Employee Life Insurance Plan coverage.
You may convert the entire amount of your current BeneFlex Employee Life Insurance Plan coverage. Premiums for the converted policy are determined by the insurance company and are based on the amount of coverage, your age and the type of plan you apply for.
Dependent Life Insurance: Your BeneFlex Dependent Life Insurance coverage ends at the end of the month in which you leave the Company, for any reason, including retirement. With some restrictions, your spouse/partner may be eligible to apply for coverage under the portability feature of the Plan if your coverage ends for reasons other than disability.
Your spouse/partner must contact the insurance company within 31 days of the loss of coverage under this Plan to obtain a portability application. The application must be completed within 31 days of the date it is mailed, or the opportunity to port coverage is lost.
(Doc. 42-2 at 1-2 (emphasis in original)).
DuPont concludes Mr. Prassenos terminated on disability under the T&P SPD and relies upon same for the discontinuation of supplemental life insurance upon termination. DuPont then relies upon the Life Insurance SPD's 31 day conversion requirement (which it claims Mr. Prassenos failed to do) to deny both the additional life insurance and dependent life insurance.
Further, while DuPont did not specifically state that Mr. Prassenos was a "ChemFirst" employee (versus a DuPont employee) in the Level 1 denial, DuPont quoted the portion of the T&P SPD providing for what happens if an employee becomes disabled and is "not eligible for DuPont retiree benefits." (Doc. 42-2 at 2).
On October 9, 2012, Prassenos' niece/financial advisor, Debbie Morris, faxed a letter to the DuPont Level 2 Appeal Benefit Determination Review Team, responding to the Level 1 appeal decision, detailing the history of the Prassenos' communications with DuPont. (Doc. 34 at 75). Per Morris, in addition to DuPont sending the Prassenos couple "incorrect" DuPont (versus ChemFirst) packets, Mr. Prassenos requested paperwork for the right to convert/port his additional life insurance and Prassenos' dependent life insurance but never received any. (Id.)
On November 2, 2012, DuPont denied Prassenos' Level 2 appeal explaining that when Mr. Prassenos became disabled he was no longer eligible for certain benefits such as life insurance in excess of "1x his pay, " and that the dependent life insurance coverage ...