Diane Tonguette v. Sun Life and Health Insurance
595 F. App'x 545
6th Cir.2014Background
- Tonguette died within the 91-day conversion window after his group life policy terminated.
- The plan allowed a conversion to an individual policy; the window extends to 91 days if notice was not provided.
- Tonguette did not receive notice of the conversion option, so his conversion period ran for the full 91 days, ending January 15, 2010.
- Diane Tonguette, as beneficiary, sought payment of the death benefit under the Death within the Conversion Period provision.
- Sun Life denied the death benefit, interpreting the disputed language to require a narrower 31-day window.
- The district court granted summary judgment for Sun Life; the Sixth Circuit reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Death within the Conversion Period language refer to the full conversion period or only the initial 31 days? | Tonguette argues the language covers the entire 91-day period when no notice is given. | Sun Life argues the language refers only to the initial 31-day death window. | Tonguette's reading controls; the clause covers the whole conversion period. |
| Is Sun Life's interpretation permissible under the plan's terms and governing contract-interpretation standards? | Plan language, read in context, favors Tonguette; Sun Life's reading is arbitrary and capricious. | Sun Life has interpretive authority; at least some ambiguity allows deference unless unreasonable. | Sun Life lacked discretion to adopt a reader unfounded in unambiguous terms; interpretation was arbitrary and capricious. |
Key Cases Cited
- Kovach v. Zurich Am. Ins. Co., 587 F.3d 323 (6th Cir. 2009) (deference to plan administrator if decision not arbitrary or capricious)
- Adams v. Anheuser-Busch Companies, Inc., 758 F.3d 743 (6th Cir. 2014) (administrative discretion limited by unambiguous plan terms)
- Perez v. Aetna Life Ins. Co., 150 F.3d 550 (6th Cir. 1998) (en banc; standard for interpreting plan language under federal contract law)
- Int'l Multifoods Corp. v. Comm'l Union Ins. Co., 309 F.3d 76 (2d Cir. 2002) (use of heading to resolve ambiguity in contract interpretation)
- Smith v. ABS Industries, Inc., 890 F.2d 841 (6th Cir. 1989) (differences in proximity of language indicating intent in contract)