United States District Court, N.D. Illinois, Eastern Division
KATHLEEN A. BRUBAKER, Plaintiff,
HARTFORD LIFE AND ACCIDENT INSURANCE CO. D/B/A THE HARTFORD, Defendant.
MEMORANDUM OPINION AND ORDER
A. Brubaker brought this suit under the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C.
§ 1001 et seq., against Hartford Life and
Accident Insurance Company, challenging its termination of
long-term disability benefits allegedly due to her under an
employer-sponsored plan. Doc. 1. Brubaker moves the court to
(1) determine the standard that will govern its review of
Hartford's termination decision and (2) grant her leave
to take discovery. Doc. 14. The court will apply the
arbitrary and capricious standard, and Brubaker will be
permitted to take limited discovery concerning what she
alleges is the conflict of interest that infected
Brubaker worked for Quad Graphics, Inc., until early May
2015. Doc. 1 at ¶ 16. At all relevant times,
Brubaker's workplace and residence were in Illinois. Doc.
14 at ¶ 5. Quad Graphics is headquartered and
incorporated in Wisconsin and maintains offices throughout
the world. Doc. 16 at 5.
was insured for disability benefits under the Quad Graphics
disability plan (“the Plan”). Doc. 1 at ¶
12. The insurance policy (“the Policy”) by which
the Plan was issued to Quad Graphics included a clause
providing that Hartford would “have full discretion and
authority to determine eligibility for benefits and to
construe and interpret all terms and provisions of The
Policy.” Doc. 16-1 at 22. The Policy listed the
“Policyholder” as Quad Graphics and the
“Place of Delivery” as Wisconsin, and it covered
all Quad Graphics employees who were citizens or permanent
residents of the United States. Id. at 8, 10, 43.
Hartford issued and paid benefits under the Policy, and it
administered the Policy as well. Doc. 1 at ¶ 15.
ceasing work, Brubaker filed a claim for long-term disability
benefits, which Hartford approved in August 2015.
Id. at ¶ 17. Hartford paid long-term disability
benefits to Brubaker from August 2015 through August 2017, at
which point it terminated the benefits. Id. at
¶ 18. Brubaker asked Hartford to reconsider,
id. at ¶ 19, and Hartford denied her appeal in
March 2018, Doc. 17 at 6.
Standard of Review
precedent holds that the “denial of benefits challenged
under [29 U.S.C.] § 1132(a)(1)(B) is to be reviewed
under a de novo standard unless the benefit plan
gives the administrator or fiduciary discretionary authority
to determine eligibility for benefits or to construe the
terms of the plan, ” in which case “a deferential
standard of review” is applied. Conkright v.
Frommert, 559 U.S. 506, 512 (2010) (quoting
Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
101, 115 (1989)). Under deferential review, “the
plan's decision must be sustained unless arbitrary and
capricious, ” with the court's review
“limited to the administrative record.”
Krolnik v. Prudential Ins. Co. of Am., 570 F.3d 841,
843 (7th Cir. 2009).
does not dispute that the Policy has a discretionary clause.
Doc. 15 at 2. This ordinarily would result in deferential
review of Hartford's termination decision. But the matter
is complicated by the fact that an Illinois regulation
prohibits discretionary clauses in disability plans and other
health insurance contracts that are “offered or issued
in this State”:
No policy, contract, certificate, endorsement, rider
application or agreement offered or issued in this State, by
a health carrier, to provide, deliver, arrange for, pay for
or reimburse any of the costs of health care services or of a
disability may contain a provision purporting to reserve
discretion to the health carrier to interpret the terms of
the contract, or to provide standards of interpretation or
review that are inconsistent with the laws of this State.
50 Ill. Admin. Code § 2001.3 (2010). The express purpose
of § 2001.3 is to ensure that courts apply a de
novo standard in ERISA cases where the denial of
benefits is challenged. See 29 Ill. Reg. 10172,
10173 (“The legal effect of discretionary clauses is to
change the standard for judicial review of benefit
determinations from one of reasonableness to arbitrary and
capricious. By prohibiting such clauses, the amendments aid
the consumer by ensuring that benefit determinations are made
under the reasonableness standard.”); see also
Fontaine v. Metro. Life Ins. Co., 800 F.3d 883, 886-91
(7th Cir. 2015) (holding that ERISA does not preempt §
2001.3). So, if the Policy was “offered or issued
in” Illinois, § 2003.1 would govern and require
the court to review de novo Hartford's
termination decision. Cf. Krolnik, 570 F.3d
at 843 (observing that “‘de novo
review' is a misleading phrase, ” and suggesting
that it be replaced by “‘independent
Policy, however, was not “offered or issued in”
Illinois. The Policy's named policyholder is Quad
Graphics, which is headquartered and incorporated in
Wisconsin. Doc. 16-1 at 8, 35. The Policy lists its
“Place of Delivery” as Wisconsin. Id. at
43. Given these undisputed facts and the ordinary meaning of
the words “offer, ” “issue, ” and
“in, ” it cannot be said that Hartford
“offered or issued” the Policy “in”
Illinois. See Meyer v. Group Long Term
Disability Plan for Emps. of Edward D. Jones & Co.,
L.P., 2018 WL 3186923, at *2 (C.D. Ill. June 28, 2018)
(holding that § 2001.3 did not govern a policy that was
issued and delivered to the employee policyholder in
Missouri); Nasalroad v. Standard Ins. Co., 182
F.Supp.3d 879, 880-81 (S.D. Ill. 2016) (same, where the
policy was delivered to the employer policyholder in
Pennsylvania); Rogers v. Reliance Standard Life Ins.
Co., 2015 WL 2148406, at *7 (N.D. Ill. May 6, 2015)
(same, where the policy stated it was delivered in Texas to
the Texas-based employer policyholder).
enough, the Policy broadly provides coverage to Quad Graphics
employees “who are citizens or legal residents of the
United States, ” Doc. 16-1 at 10, 42, including
Brubaker, who resided in Illinois and worked at a Quad
Graphics facility in Illinois, Doc. 1 at ¶ 11; Doc. 15
at 3. But the mere fact that the Policy covered an employee
who lived and worked in Illinois does not mean that it was
“offered or issued in” Illinois, particularly
given that “[t]here is nothing in the record before the
Court suggesting that any of the negotiations or policy
decisions regarding the policy at issue occurred in
Illinois.” Meyer, 2018 WL 3186923, at *2;
see also Nasalroad, 182 F.Supp.3d at 880-81
(similar); Rogers, 2015 WL 2148406, at *7 (rejecting
the proposition that § 2001.3 ...