Clarcor, Inc. v. Madison National Life Insurance, 491 F. App'x 547

Clarcor obtained an excess loss insurance policy from Madison to cover Plan expenses above a $250,000 deductible for 2009.
The Plan restricts eligibility to regular full-time employees and certain exceptions; I.K. lost eligibility when she began short-term disability after FMLA leave.
Clarcor continued to deduct premiums and listed I.K. as a Plan beneficiary, while Madison questioned coverage for post-FMLA expenses.
Clarcor sought reimbursement for I.K.’s medical expenses incurred after January 12, 2008; Madison denied coverage on eligibility grounds.
The district court ruled Clarcor was not entitled to coverage for expenses after I.K. became ineligible due to short-term disability, and denied COBRA-based recovery.
Clarcor appealed, arguing COBRA coverage should apply and that I.K. remained eligible during COBRA or that the plan’s conditions were misapplied.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is I.K. eligible for Plan coverage during short-term disability?	Clarcor argues she remained eligible under the Plan during disability.	Madison contends eligibility ended when I.K. went on short-term disability.	I.K. was not eligible during short-term disability; coverage was not recoverable.
Should COBRA coverage have been offered timely and reimbursed?	Clarcor contends timely COBRA could have covered post-FMLA expenses.	Madison argues COBRA was not timely offered and the expenses are excluded if not timely offered.	COBRA was not timely offered; expenses incurred during untimely COBRA are excluded.
Do Plan enrollment rules allow maintaining coverage after a change in status like short-term disability?	Clarcor relies on general enrollment provisions allowing changes due to status changes.	Madison asserts full-time employment eligibility and specified exceptions control continuing eligibility.	Plan terms control; I.K. lost eligibility upon short-term disability, so changes in enrollment could not revive eligibility.

Blaine Const. Corp. v. Ins. Co. of N. Am., 171 F.3d 343 (6th Cir. 1999) (claimant bears burden to show policy coverage; insurer bears burden to show exclusions)
State Farm Fire & Cas. Co. v. White, 993 S.W.2d 40 (Tenn. Ct. App. 1998) (strict construction of ambiguous policy terms against drafter; ordinary meaning governs when unambiguous)
Tenn. Farmers Mut. Ins. Co. v. Tait, 20 F. App’x 503 (6th Cir. 2001) (ambiguity resolved against the drafter; strict construction of policy terms)
Jordan v. Tyson Foods, Inc., 257 F. App’x 972 (6th Cir. 2007) (FMLA leave can constitute a qualifying event for COBRA if conditions are met)
Kiser v. Wolfe, 353 S.W.3d 741 (Tenn. 2011) (parol evidence cannot contradict unambiguous written contract terms)