Snow was a participant in an ERISA plan sponsored by his employer, Meadowcraft, Inc. Under a group policy issued to Meadowcraft by Boston Mutual, Snow was provided life insurance of approximately $115,000.
Snow worked at Meadowcraft from 1993 until he became disabled in 2002. He died in 2009 at the age of 66 years and nine months. His widow and beneficiary, Dorothy Snow, submitted a claim for life insurance benefits. Boston Mutual denied the claim, because Snow's coverage had terminated when he reached "Normal Retirement Age" of 65.
Mrs. Snow sued Boston Mutual, alleging that she was owed a death benefit under the group policy, and that Boston Mutual had breached certain fiduciary duties it owned to Snow. She also sued Meadowcraft, which was no longer in business.
The district court held that Snow's life insurance coverage was not in force, because he died after attaining "Normal Retirement Age," and that Boston Mutual did not owe fiduciary duties to Snow, because it was not the plan administrator. Mrs. Snow appealed, and the Eleventh Circuit affirmed.
Under the group policy's waiver of premium provision, a disabled employee's life insurance would remain in effect, but not "beyond the Normal Retirement date in effect as of the date of ... disability." Additionally, the policy provided that an employee's coverage would terminate "when he leaves his job," but that the coverage could remain in force "until the employee's normal retirement date" if he left his job due to disability.
The plan defined "Normal Retirement Date" as the "normal retirement date provided for by the Policyholder's published or accepted personnel practices." The Eleventh Circuit first held that the district court did not err in considering extrinsic evidence to construe the term "Normal Retirement Date" in the group policy. "Courts routinely examine extrinsic evidence to determine the meaning of contract terms even while holding that the contract is unambiguous."
"[N]ot only was the term not ambiguous," the court said, "but the district court did not clearly err in construing the Normal Retirement Date to be 65 years old. This age was found in a summary of Meadowcraft's 401(k) plan, which provided that 'your normal retirement age is the date you reach age sixty-five,' and in testimony from Meadowcraft human resources employees... Although Mr. Snow was not a 401(k) participant, the record shows that the summary was made available to all salaried employees, and that Mr. Snow attended open-enrollment meetings where attendees received the 401(k) summary..."
Consequently, the court held that "the district court did not err in concluding that Mr. Snow's life insurance lapsed prior to his death at age 66, and that [Mrs.] Snow was not entitled to any benefits under the Plan."
The court also rejected Mrs. Snow's claim that Boston Mutual breached fiduciary duties by failing to provide Snow with a summary plan description and with other information related to benefits and coverage. "Because these disclosure obligations are statutorily vested with Plan Administrators, the district court looked to the Plan documents and the ERISA statute to determine which entity – Boston Mutual or Meadowcraft – was the administrator of Meadowcraft's Plan." The court affirmed the district court's holding that Boston Mutual was not the plan administrator.
Nevertheless, Mrs. Snow argued that Boston Mutual qualified as a plan administrator because it "drafted all plan documents" and had to "consent" to any amendments to the plan. The court disagreed, noting that Boston Mutual did not unilaterally design the plan. "Meadowcraft, as the Plan Sponsor, negotiated the terms of the coverage and crafted the design of the Plan as reflected in the application," the court said. Additionally, "the design and adoption of an ERISA Plan is a settlor function, not a fiduciary act." Citing Lockheed Corp. v. Spink, 517 U.S. 882, 890 (1996).
Finally, the court stated that "the design of the Plan has nothing to do with [Mrs.] Snow's claim for equitable relief; rather, her grievance lies with Meadowcraft's alleged failure to provide her late husband with a plan description or other meaningful disclosures regarding the Plan. Again, Boston Mutual, the Plan insurer, was not responsible for making those disclosures."
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