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Dollarhide v. Usable Life

United States District Court, E.D. Arkansas, Western Division

October 20, 2014

BARBARA DOLLARHIDE, Plaintiff,
v.
USABLE LIFE, Defendant.

OPINION AND ORDER

SUSAN WEBBER WRIGHT, District Judge.

Plaintiff Barbara Dollarhide ("Dollarhide") seeks review of Defendant USAble Life's ("USAble") decision to deny her benefits under a life insurance policy. Dollarhide argues she is entitled to a de novo review of the benefits denial. USAble asserts that the denial decision should be affirmed based upon the abuse of discretion standard of review. In the alternative, USAble contends that Dollarhide failed to exhaust administrative remedies. The Court affirms the decision based on an abuse of discretion review.

Background

Dollarhide is the widow of Roy Dollarhide who died on July 9, 2013. He worked for Service Professionals, Inc. ("Service Professionals") as a Laundry Operations Manager. Mr. Dollarhide had a group life insurance policy ("Policy") through Service Professionals that was insured by USAble. When Mr. Dollarhide became disabled in November 23, 2002, he filed a claim for extended life insurance benefits. USAble approved the claim and waived his premiums under the waiver of premium provision of the Policy. AR at 43-44, 109-110. USAble continued to approve Mr. Dollarhide's applications for waiver of premium every year until October 2012, when USAble discovered through an audit that Mr. Dollarhide's waiver claim should have been terminated on May 1, 2009, when Service Professionals cancelled its group life insurance contract with USAble.

USAble wrote Mr. Dollarhide a letter on October 8, 2012, telling him about the mistake. USAble also told Mr. Dollarhide that he might be eligible to convert his coverage to an individual policy and thereby maintain his life insurance coverage. USAble instructed him to complete an enclosed application within thirty-one days. The letter further provided that if Mr. Dollarhide disagreed with the decision terminating his group life insurance policy, he could request a re-evaluation by writing to USAble within 180 days of the date of the letter. AR at 5-6. USAble did not send Mr. Dollarhide the annual request for medical documentation in the first quarter of 2013 as it had done in the previous years. USAble did not receive any written appeal of the policy cancellation from Mr. Dollarhide or his family until after he died.

The Arkansas Insurance Department sent a letter to USAble dated July 30, 2013, informing it that Dollarhide had filed a complaint against USAble on July 18, 2013, and seeking a response. AR at 65-67. USAble responded that Dollarhide contacted it on July 17, 2013, and USAble advised her that it no longer carried coverage for Service Professionals and, therefore, she had no claim for benefits. AR at 69. On December 12, 2013, Dollarhide's attorney wrote USAble, challenging its denial of coverage. Her attorney says Mr. Dollarhide never received the letter of October 8, 2012, which explained that his waiver claim was terminated and notified him of conversion rights. Her attorney also stated Mr. Dollarhide would have been too sick to understand the meaning of the letter even if he had received it. AR at 130. USAble denied coverage on the basis that the request for appeal was untimely.

Dollarhide filed a complaint against USAble on February 14, 2014 in the Circuit Court of Pulaski County, Arkansas. USAble removed the case to federal court based upon the Employee Retirement Income Security Act of 1974, 29 U.S.C. ยง 1001 et seq. ("ERISA"). USAble asks the Court to affirm its ruling. Dollarhide asks the Court to review additional medical information and reverse USAble's decision.

Discussion

The standard by which the Court reviews an ERISA benefits decision is dictated by the terms of the ERISA plan in question. Denial of ERISA benefits is reviewed on a de novo standard "unless the benefit plan gives the administrator or fiduciary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v, Bruch, 489 U.S. 101, 115 (1989). When an ERISA plan authorizes the claims administrator to determine eligibility for benefits, the Court must decide whether the administrator abused its discretion in making its determination. Darvell v. Life Ins. Co. of North America, 597 F.3d 929, 934 (8th Cir. 2010).

The Policy states:

Claim Review

If a claim is denied, you will be given written notice of:

1. The reason for the denial; and
2. The policy provision that relates to the ...

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