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Coats v. Reliance Standard Life Insurance Co.

United States District Court, N.D. Oklahoma

June 11, 2019

JENNIFER COATS, Plaintiff,
v.
RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendant.

          OPINION AND ORDER

          TERENCE C. KERN UNITED STATES DISTRICT JUDGE

         Before the Court are (1) Plaintiff's Motion for Judgment on the Administrative Record (Doc. 28); (2) Defendant's Response to Plaintiff's Motion for Judgment on the Administrative Record and Cross-Motion (Doc. 31); and (3) Plaintiff's Response to Defendant's Cross-Motion for Judgment on the Administrative Record and Reply to Defendant's Response to Plaintiff's Cross Motion for Judgment. (Doc. 32).

         I. Background

         The facts of this case are largely undisputed. On April 2, 2012, Plaintiff Jennifer Coats was hired as a staff nurse with Cottage Health Care (“Cottage”), and became a participant in Cottage's employee welfare benefit plan (the “Plan”), which is governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). The Plan includes long-term disability (“LTD”) benefits funded by Defendant Reliance Standard Life Insurance Company (“Reliance”) through Group Policy No. LSC 97, 200. The Plan provides that Reliance “shall serve as the claims review fiduciary with respect to the insurance policy and the Plan”; shall “determine eligibility for benefits”; and shall make “complete, final and binding decisions on all parties.” (AR 18.)

MONTHLY BENEFIT: The Monthly Benefit is an amount equal to:
CLASS 1:
CORE: 50% of Covered Monthly earnings, payable in accordance with the section entitled Benefit Amount.
BUY-UP: 60% of Covered Monthly earnings, payable in accordance with the section entitled Benefit Amount.
AR 9.
ELIGIBLE CLASSES: each employee of Cottage Health system . . . . according to the following classifications:
CLASS 1: active, Full-time and Part-time employees except an employee included in any other class and a Traveling Nurse.
CLASS 2: active, Full-time Director or above employee CLASS 1: “Part-time” means working for you for a minimum of 18 hours during a person's regular work week, or a minimum of 36 hours bi-weekly but less than 72 hours bi-weekly.

         Ibid (emphasis added). The Plan Policy contains the following pertinent definitions:

         DEFINITIONS

CLASS 1: “Covered Monthly Earnings” means the Insured's monthly salary received from you on the first of the Policy month just before the date of Total disability. Covered Monthly earnings does not include commissions, overtime pay, bonuses or any other special compensation not received as Covered Monthly earnings.
If hourly paid employees are insured, the number of hours worked during a regular work week, not to exceed forty (40) hours per week, times 4.333, will be used to determine Covered Monthly Earnings.

         AR 12 (emphasis added). The term “regular work week” is not defined.

         Reliance uses a standardized form titled “Integrated Disability Benefit Initial Statement of Claim, RS-1971-A, ” to initiate and process disability claims. AR 195-201. RSL claims personnel refer to it as the “EE App.” See AR 122. Submission of a completed EE App formally initiates a disability claim. The EE App has five sections, some to be completed by the employee, some by the employer and some by a treating physician. AR 195-201.

         On October 19, 2013, Plaintiff suffered an on-the-job back injury, and she has not worked for Cottage since then. Reliance fixed that date as the “date of loss” (“DOL”). AR122. On March 24, 2015, Plaintiff submitted to Reliance an EE App for long term disability (“LTD”) benefits. AR 195-201, supra.

         Three text fields in the EE App, as completed by Cottage, are pertinent to this dispute. The first asks the method of Claimant's' compensation. Cottage stated that Plaintiff was “Hourly.” AR197. The second requires the employer to state “Weekly earnings (as defined in policy)” (emphasis in original). Id. Cottage inserted the figure “1, 287.49.” Id. The third asks for “Work schedule at time of disability ___ day/week ___ hrs/day. Cottage indicated that Plaintiff worked 2 days a week for 12 hours a day.” Id.

         On May 5, 2015, RSL's claims examiner, Spencer Wright, requested that Cottage provide “payroll for the period of 07/01/2013 - 01/15/2014 and timecards for the period of 10/01/2013-01/15/2014.” AR 308. Cottage supplied these records. AR 311-347. On May 21, 2015, Wright made an extended entry into the claim log, in which he concluded, based on Plaintiff's payroll records and timecards, that she averaged 23.70 hours of work per week in the last 12 weeks (three months) before she became disabled (July 22, 2013-October 13, 2013), [1] and was therefore eligible for benefits. AR 122.[2]

         On June 4, 2015, Wright sent an email to Kreuger, asking six questions. On June 5, 2015, Kreuger responded to the questions, as follows:

a. Is Ms. Coats an hourly or salaried employee? Hourly b. If hourly, please provide rate per hour on 10/01/13. $52.7361 hourly, plus a separate night shift differential rate of $5.00 hourly for hours ...

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