*1 TONGUETTE, Diane Plaintiff-
Appellant,
v.
SUN LIFE AND HEALTH INSUR (U.S.),
ANCE COMPANY De
fendant-Appellee.
No. 14-3095.
United States of Appeals, Court
Sixth Circuit.
Dec. KETHLEDGE,
Bеfore: SUTTON and Judges; ROSENTHAL, Circuit District Judge.* KETHLEDGE, Judge. Circuit Del Tonguette during 91-day pe- died which, riod in under the terms of an ERISA he was entitled to convert his life-insurance to an individual widow, Tonguette, one. His Diane there- after requested payment of Del’s life-in- administrator, plan’s surance benefit. The Sun Life—which is also the insurer that pay would the benefit —denied payment under its reading plan’s terms. Di- * Rosenthal, Judge ignation. Honorable Lee H. for Texas, sitting by Southern District of des-
546 or the decision is not this lawsuit under brought later
ane Co., 1132(a), Am. 587 F.3d ERISA, claiming § that Kovach v. Zurich Ins. 29 U.S.C. (6th Cir.2009). 323, contrary plan to the But a admin denial was Sun Life’s adоpt discretion to granted The district court istrator does not have plan’s terms. Life. re- judgment plan contrary to Sun We of the summary interpretation Anheu terms. Adams v. unambiguous verse. its 743, Inc., 758 F.3d Companies, ser-Busch began work at LoBue Tonguette Del Cir.2014). (6th And “[w]hether 747-48 main- August 2009. LoBue Associates ambiguous legаl ques is a plan language is plan ERISA administered tains an benefits Id. at 747. tion that we review de novo.” bene- by plan, Sun Life. Under that Del’s determining plan whether lan Finally, group life-insurance package fits included federal guage ambiguous, apply “we $95,000. Del coverage in the amount of intеrpre law rules of contractual common 16, 2009, on October employ left LoBue’s Co., Ins. Perez v. Aetna tation[.]” time, group Life per at which the terms (6th Cir.1998) (en banc). 550, F.3d coverage ended. But the policy, his option group Del the to convert his gave dispute heart of the provision The at the policy life-insurance to an individual one. provides here in full: matter, that general As a under the Period Death within Conversion only days. for 81 option remains available may be made for a death benefit Claim days, to 91 howev- period That is extended day period you during die the SI er, if neither LoBue nor Sun Life during your be departing employee a with notice of the (See policy. converted to an individual Privilege”.) section “Conversion Tonguette Del neither received notice of are as follows: The terms of this benefit nor it be- his conversion exercised The Life Insurance 1. amount fore he died. That Del did not receive payable be converted will be notice of his conversion means that No group policy. as a claim under the ran full 91 period his conversion for the Accidental Death and Dismember- 15, Del days, January until 2010. But died benefit, if un- any, ment will be then, January six before on 2010. the terms of this section. der (whom widow, Diane we His or apply 2. This benefit will whether refer thereafter re- “Tonguette”), to as not have: quested payment of his death benefit un- group policy, citing plan provi- der the a a) appliеd policy; for a conversion or sion entitled “Death within the Conversion b) premium. paid the first administrator, The plan’s Period.” Sun has been is- If a conversion Life, provision differently read that sued: payment. denied The court district a) it must be back to the insur- agreed reading. Sun Ton- with Life’s er; and guettе appealed. b) it no claim can be made under plan gives LoBue’s Sun Life discretion than for the return of other respect with to its determinations whether paid. for benefits. participant eligible added.) (Italicization To the extent a administrator exercis plan partici- if a denying provision, es such discretion in a claim for Under benefits, period by described pant we so dies within the uphold its decision language, the italicized pay only will there is in which (in participant’s death the participant benefit Del’s can convert—is absent. $95,000) case under the parties try The to resolve this incoher- policy. dispute here concerns the effect, ency by, in adding one word or length by described the itali- two, subtracting respectively, *3 language. cized Specifically, parties as the italicized language. Sun Life would add a acknowledged argument, at oral ques- word, reading language this to mean “the presented tion is whether the italicized day initial 31 period during your which language to length refers of the appli- insurance may be converted to individu- cable conversion period under the policy.” Tonguette al wоuld subtract the view), (Tonguette’s or instead only refers day”, words “31 reading the language to to the 31 days following first the termi- mean “the period during your [] which group coverage, nation of even the con- insurance be converted to an individu- period longer runs days than 31 policy.” al (Sun view). Life’s isоlation, then, in Read the italicized lan- guage appears ambiguous. ambigui- This . meaning of language is recedes, however, ty when one at looks straightforward in cases where the language of the relevant “Part” of the plan participant given is notice of the conver- аs a language whole. That includes two option: sion Tonguette’s under either view indications as to how to resolve the inco- Life’s, or Sun the italicized language refers herency here—and both of them favor single to a 31-day period that begins on Tonguette’s interpretation. The first the date participant compa- leaves the the provision’s heading, which cannot be ny. But —at least when in considered iso- used ambiguity, to create but can be used language lation—the italicized becomes See, to resolve it. e.g., Int’l Multifoods grammatically where, in incоherent cases Co., Corp. v. Comm’l Union Ins. 309 F.3d here, as period the conversion extends be- (2d 76, Cir.2002). 85 provi- And here the yond days. 31 The language refers to “the heading sion’s resolves the ambiguity day period during your which cleanly, by making clear that the italicized may be policy.” converted to аn individual to, language refers heading says, as the clause, As used in this “the” is a definite “death within period.” the conversion article, meaning only 31-day there is one period in which the participant can con- The second indication comes in a provi- vert. In cases where peri- the conversion sion entitled “Notice of Conversion Peri- however, od[,]” days, od is more than 31 there is which part: relevant more than one in which the “Written notice of the Conversion Privi- participant can convert. For in a and example, lege its duration will be period case where the runs days, days for 33 at least 15 before the end of the 31 there are three such periods: day one period following termination cover- 1-31, 2-32, days from days age Policy.” second from under the Group (Emphasis added). case, days and a third from In 3-33. Del’s This italicized language —which whеre the very ran for 91 comes in the next provision after the days, 31-day peri- there were 61 different conveys exactly at issue here — starting early day as as 1 and as late same meaning give that Sun Life tries to ods— day 61—in which he could have convert- to “the 31 period during Thus, cases, grammatical ed. these be converted to an individu- premise of the language policy” preceding provision. italicized al in the And —that markedly interpretive authority that Sun Life has use dif-
that the proximity, group in such close over this life insurance mean- language, ferent See, differently. е.g., ing accept interpre- reason to read them that the courts will its Industries, Inc., F.2d Smith v. ABS tation so as it is not (6th Cir.1989). They agree that there is some ambiguity over whether the “death facial might respond Tonguette’s One by the life insurance provided benefit” allows her to obtain a reading only to a death that occurs plan applies Del no though death benefit even days separation within 31 after for almost three months after company or extends to a death that occurs terminated, rather group coverage his up separation to 91 after if the em- equi- But that is an just than one month. ployer or Sun Life fails to written one; not a and even point, table textual to convert the *4 terms, equities taken on its own the of that policy policy. they to an individual And dereliction point by greater are offset agree meaning seem to that the search for notice of the conver- failing provide of to merely does not end because a first read- months, rather than option sion for three ing provisions suggests of the relevant fa- in just significant one. That dereliction is ambiguity. cial part person losing because a his insurancе easily policy— could overlook that his attempting ambiguity, In to resolve this might bought years he have earli- which Tonguette focuses on the fault of Sun Life er—even includes a conversion employer failing give and the in to notice option during of the conversion the initial summary, In when read in the broader plan’s provision and the for signifi- context of the there are two extension of the conversion Tonguette’s reading peri- cant reasons to favor given. fa- od when no notice is So as the disputed language, of the and none to Moreover, vor Sun Life’s. there is a dif- employer and vague ference between option days terms —whose within 15 of an vagueness might give employee’s separation company rise to discretion— that, future, out, in poorly Tonguette points and drafted terms after a reading, demonstrably apply only сareful favor one death benefit will to deaths that Here, interpretation days departure over another. a care- within 31 of a from occur reading plan’s ful company. company terms reveals that Tonguette’s interpretation demonstrably key any holds the to undue сonse- short quences by interpretation better than Sun Life’s. As a fiducia- caused this and ry, obligated Sun Life was to read the next time can turn simply around carefully; reject key give problem. and it lacked discretion to notice—and avoid this — Tonguette’s interpretation of the disputed mе, Tonguette’s reading, it seems to language interpretation here. Its there- imposing overstates the value of the risk of fore was and compa- a lack of notice on the insurance judgment
The district court’s is re- ny/employer and understates the nature of versed, pro- mind, and the case remanded for my help- the death benefit. To it is ceedings opinion. consistent with ful to think the relevant about (1) creating things: a death benefit
SUTTON, Judge, dissenting. Circuit happens that is no matter what and require Sun Life and share some is free because it does not a con- ground They policy payment any common or the agree this case. (and requires indeed the return promising form of advertising an insurance (2) any premiums paid) a life insur- company provides. ever Any other ap- (not option ance conversion unlike a proach CO- to the issue assumes thаt Sun Life BRA option) medical insurance conversion has a most unorthodox business for contains a conversion of at an insurance company. days many least 31 and as as 91 if no doubt, No Tonguette’s widow suffered written notice of the conversion couple did not know about the conver- given. they sion and if would have convert- Once separate concepts, we these two an policy ed the to an individual had reality uncomfortable of Tonguette’s they inter- been told of the option before he pretation emerges. day” It reads “the 31 unexрectedly died. But even this perspec- out of existence. Recall the language of tive requires qualification. The Ton- the key sentence: “Claim be made for guettes were not fault free. The employee you a death benefit if die during the 31 handbook warns employees that all indi- period during coverage vidual “terminates ... you when be converted to an policy.” individual Un- leave your employment.” R. 31-1 at 24. Tonguette’s reading, key der phrase And it employees warns that “[i]f (“the work, , day”) interpre- work, does no cease active your supervisor see consequence try tive we to avoid where arrangements, determine what if any, may — *5 States, possible. Loughrin v. United be made to continue coverage beyond -, 2384, 2390, U.S. 134 S.Ct. 189 the date cease active work.” Id. The (2014). L.Ed.2d 411 policy, Part 6 of Del’s record confirms only Tonguette that Del contаins all of the at issue did not receive “written notice” of the con- here, mentions a 31-day time six triggering event for —the times. The other five references concern the extending conversion window— the days immediately following the date not that he did not have actual notice of thе terminates: the date of separa- the company.
tion from the It would not seem Even if we assume Del had to be arbitrary to use that meaning here. notice, written, no whether actual or Nor it obvious how best to account for option, conversion consider what Ton- the parties incentives of the setting. guette’s reading means in other tell, Best I can employer has settings. no skin example Consider for how this game from monetary perspective. a play employee would out for an who had Leaving the death benefit window at 31 actual optiоn, hardly an un- extending or it to up days would usual responsible scenario for a employee not affect employer or way the who voluntarily leaves a company, but no other, as the insurance company pays the “written notice” of the option. He or she (1) clаim. Nor does it seem that Sun Life could do one of things: convert any would have delay incentive to notifying immediately and still receive a three- (2) a former employee of his conversion month free death benefit or wait to rights. company always The has an incen- convert until but bе covered before tive to provide money. notice: an anyway. When then As interpretive conse- insured lapsed group policy converts a into quences go, neither one of possibili- these policy, individual Sun Life collects a ties probable way capturing seems like a stream of new premium payments. Think point of this “death Adding benefit.” right of notice of a conversion my as the most doubts on reality this score is the the death benefit says provision that the you have ... or not apply
will “whether shown, more As premium.” the first
paid in a 91- could be premium
than one As I see it in this scenario.
day window could see it with- I
and as think pol- capricious, being
out 81-day free death benefit
icy needed,
(no asked, no questions needed) and a win-
no conversion (if or Sun employer
dow to convert written notice of
Life fails to majority seeing option). differently, respectfully I dissent.
things America,
UNITED STATES
Plaintiff-Appellee,
v. VELAZQUEZ-GONZALEZ,
Jesus
Defendant-Appellant.
No. 14-1322. Appeals, States
United Court
Sixth Circuit.
Dec.