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Schwartz v. Keolis Commuter Services

United States District Court, D. Massachusetts

March 20, 2018

ROMAN SCHWARTZ, et al., Plaintiffs,
v.
KEOLIS COMMUTER SERVICES, et al., Defendants.

          ORDER ON MOTIONS (DOC. NOS. 47, 49, 55, 57, 73, 75, AND 78)

          Leo T. Sorokin United States District Judge.

         Plaintiffs sue Defendants Keolis Commuter Services, LLC (“Keolis”) and Unum Corporation (doing business as Unum Life Insurance Company of America and referred to herein as “Unum”) under the Employee Retirement Income Security Act of 1974 (ERISA) in relation to an employee benefit plan (the “Plan”) enrolled in by the late Sofiya Schwartz. Keolis moves for summary judgment on Plaintiffs' claims against Keolis, Doc. No. 47, and Plaintiffs cross-move for summary judgment on those claims, Doc. No. 55. Likewise, Unum requests summary judgment on Plaintiffs' claims against Unum, Doc. No. 49, and Plaintiffs cross-move for summary judgment on those claims, Doc. No. 57. Plaintiffs also move to amend their Complaint and to strike testimony in the affidavit of Keolis's expert witness. Doc. Nos. 73, 75.[1]For the reasons set forth herein, the Court DENIES Plaintiffs' motion to amend; DENIES Plaintiffs' motion to strike; ALLOWS Unum's motion and DENIES Plaintiffs' motion with respect to Plaintiffs' claims against Unum; and ALLOWS Keolis's motion and DENIES Plaintiffs' motion with respect to Plaintiffs' claims against Keolis.

         I. BACKGROUND

         Sofiya Schwartz began working as a software programmer in February 2005 for the Massachusetts Bay Commuter Railroad Company, LLC (MBCR), which until 2014 operated Commuter Rail lines for the Massachusetts Bay Transportation Authority (MBTA). Doc. No. 63 ¶¶ 1, 45. At the outset of her employment, she enrolled in a life insurance plan (the “Plan”) sponsored by MBCR and issued by Unum. Id. ¶¶ 2-3. Under the terms of the Plan, Ms. Schwartz was entitled to a life benefit equal to her salary, called the “Basic Benefit” and funded by MBCR. Id. ¶ 5. Participants in the Plan could also purchase additional life benefits (“Supplemental Life Benefits”), up to four-times their annual earnings, at their own expense and subject to the Plan's terms. Id. ¶¶ 6-7. The Plan capped a participant's total amount of coverage at $500, 000. Id. ¶ 7.

         The Plan document (in some instances called the “Summary Plan Document”) provides:

EVIDENCE OF INSURABILITY IS REQUIRED FOR THE AMOUNT OF YOUR INSURANCE (BASIC AND ADDITIONAL BENEFITS COMBINED) OVER:
$425, 000 or over 3 x annual earnings[.]

Doc. No. 31 at 8. The document defines “evidence of insurability” as “a statement of your or your dependent's medical history which Unum will use to determine if you or your dependent is approved for coverage” and notes that “[e]vidence of insurability will be at Unum's expense.” Id. at 52. The Plan also requires evidence of insurability for any amount of coverage applied for by “late entrants” (those employees applying for benefits more than 31 days after their eligibility date[2]). Id. at 23. The Plan document instructs applicants that “[a]n evidence of insurability form can be obtained from your Employer.” Id. at 24.

         In December 2008, Ms. Schwartz requested to enroll for Supplemental Life Benefits in the amount of two times her salary. Doc. No. 63 ¶ 13. Unum received Ms. Schwartz's request through MBCR. Id. Because she was a late entrant, she also submitted to MBCR evidence of insurability, which MBCR forwarded to Unum. Id. ¶¶ 15, 53; Doc. No. 31 at 66-88. Unum denied Ms. Schwartz's request by letter dated March 16, 2009 “due to [her] history of myelopathy.” Id. ¶ 54; Doc. No. 31 at 89-90.

         In February 2014, the MBTA awarded the contract to manage, operate, and maintain the Commuter Rail system to Keolis, a separate and distinct company from MBCR, effective July 2014. Id. ¶¶ 30, 55-56. Keolis's Commuter Rail Operating Agreement (the “Operating Agreement”) with the MBTA required Keolis to establish Commuter Rail positions matching those in existence on December 31, 2012 and to offer such positions to persons who had been members of the Commuter Rail workforce as of that date. Id. ¶ 32. Accordingly, Keolis extended an offer of employment to Ms. Schwartz in May 2014, with her employment with Keolis becoming effective July 2014. Id. ¶ 24. The Operating Agreement also required Keolis to provide the Commuter Rail workforce with certain benefits that MBCR had previously sponsored, including benefits under the Plan. Id. ¶ 34. Consequently, MBCR, Keolis, and Unum executed an Assignment of Group Policies (the “Assignment”) in October 2014, under which MBCR assigned to Keolis “all of its rights, obligations, and liabilities as Policyholder” under the Plan. Id. ¶ 17; Doc. No. 31 at 63.

         Pursuant to the Assignment, the Plan was retitled the “Keolis Commuter Services, LLC Plan” and amended to name Keolis as the Employer. Doc. No. 31 at 55. The “Employer's Original Plan Effective Date” remained unchanged. Id. at 7. The assigned Plan also identifies Keolis as the Plan Administrator and named fiduciary:

Keolis Commuter Services, LLC is the Plan Administrator and named fiduciary of the Plan, with authority to delegate its duties. The Plan Administrator may designate Trustees of the Plan, in which case the Administrator will advise you separately of the name, title and address of each Trustee.

Id. at 51. However, the assigned Plan also retains the existing delegation of discretionary authority to Unum: “The Plan, acting through the Plan Administrator, delegates to Unum and its affiliate Unum Group discretionary authority to make benefit determinations under the Plan.” Id. at 62.

         In October 2014, Keolis emailed all Commuter Rail employees to announce the upcoming open enrollment period. Doc. No. 63 ¶ 61. The “Benefits Enrollment and Change” form that Keolis distributed contained no reference to providing evidence of insurability. Rather, the form included an affidavit for each employee to sign, which stated, “I understand that I am responsible for reading the Summary Plan Documents for each Plan that is provided by Keolis to understand my benefits and any restrictions that may apply to my Benefit Plans.” Doc. No. 64-4 at 56-59.

         In November 2014, during Keolis's open enrollment period, Ms. Schwartz applied for Supplemental Life Benefits coverage for four times her salary by completing the Benefits Enrollment and Change form and faxing it to Keolis per the form's instructions. Id. ¶ 36. Keolis's human resources department acknowledged receipt of Ms. Schwartz's forms and confirmed that her monthly deduction matched her selected level of coverage. Id. ¶¶ 70-75. Between January 2015 and August 2015, Keolis deducted amounts from Ms. Schwartz's paycheck representing premium payments for Supplemental Life Benefits coverage of four times her salary. Id. ¶¶ 37-38. At no time did Keolis request that Ms. Schwartz produce evidence of insurability.

         On a monthly basis, Keolis forwarded premium payments from its employees to Unum and transmitted a “Group Insurance Premium Invoice, ” which detailed the number of employees receiving each coverage amount under the Plan and total amounts of premium payments. Id. ¶¶ 39-40. The invoice for January 2015 showed an increase of two employees receiving Supplemental Life Benefits, but did not identify Ms. Schwartz individually. Unum did not request evidence of insurability or other documentation for these two employees. Id. ¶ 78.

         Ms. Schwartz died on August 28, 2015. Doc. No. 63 ¶ 22. Keolis communicated to Plaintiffs by letters dated September 3, 2015 that Ms. Schwartz had “a life insurance policy for $500, 000 (life insurance limit) with the company.” Doc. No. 64-4 at 96-98. On September 28, 2015, Keolis submitted to Unum an Employer's Statement indicating Ms. Schwartz's Basic Benefit coverage in the amount of $111, 000 and Supplemental Life Benefits in the amount of $442, 000. Doc. No. 63 ¶¶ 23, 83; Doc. No. 31-1 at 14. The Employer's Statement identified the “Date Employee Entered Eligible Class” (her eligibility date) as February 28, 2005. Doc. No. 63 ¶ 24; Doc. No. 31-1 at 14.

         In October 2015, Unum approved payment to Plaintiffs of $111, 000 pursuant to the Basic Benefit, but denied Plaintiffs' claims for Supplemental Life Benefits proceeds. Id. ¶ 27. In its claim denial letter dated October 19, 2015, Unum explained that because Ms. Schwartz “enrolled for coverage more than 31 days after her eligibility date, she was required to submit an evidence of insurability form.” Doc. No. 31-2 at 98. The letter continued:

She submitted the evidence of insurability form but her request for coverage was not approved.
On March 16, 2009, Unum sent your mother a Notice of Adverse Action letter advising that her request for coverage was not approved.
As your mother was not covered under the policy at the time of her death, August 28, 2015, no Supplemental Group Life Insurance benefits are payable.

Id.[3] Unum's claim denial letter made no reference to Ms. Schwartz's November 2014 application for Supplemental Life Benefits.

         Plaintiffs administratively appealed Unum's decision by letter dated October 29, 2015. Doc. No. 31-3 at 54. They argued that Keolis was “an entirely separate employer” from MBCR and that Ms. Schwartz had applied to Keolis for Supplemental Life Benefits “at [the] earliest offering[, ]” such that Ms. Schwartz's policy history with MBCR should not bear on Plaintiffs' claim. Id.

         Unum upheld its denial of benefits by letter dated November 19, 2015. Id. at 90-95. Responding to Plaintiffs' specific concerns, Unum's letter noted:

The policy through Sofiya's employer became effective on July 1, 2003. The Policy was formerly under MBCR, and on July 1, 2014, the company amended the policy to reflect the new name of the company “Keolis Commuter Services, LLC”.
Keolis Commuter Services, LLC is not a new/separate employer, and [Ms. Schwartz's] coverage remained under the original Unum policy with the exception of the company ...

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