REYNOLDS v. GREAT WEST LIFE ANNUITY INSURANCE COMPANY (2020)

ORDER

THIS CAUSE comes before the Court on Defendant Great-West Life & Annuity Insurance Company's Motion for Summary Judgment with supporting exhibits (Doc. 30) and supporting Declaration (Doc. 31). Plaintiff Ryan Reynolds filed a Response in Opposition with exhibits (Doc. 34). The Court, having carefully considered the parties' submissions, finds that Defendant's Motion is due to be granted for the reasons that follow.

I. BACKGROUND AND STATEMENT OF FACTS

Plaintiff, Ryan Reynolds, a former beneficiary under a group term life insurance plan (“the Plan”) sponsored by the American Dental Association (“ADA”) and insured by Defendant, Great-West Life & Annuity Insurance Company, brings this one-count action for declaratory relief to restore terminated coverage and to recover insurance proceeds.¹ Plaintiff's father, Dr. Steve Reynolds (“Dr. Reynolds”), a former dentist, originally obtained life insurance under the Plan in 1986. (Goodreau Decl., ¶¶ 2, 8).² Dr. Reynolds opted to make his premium payments for the Plan semi-annually, making them due every January 1 and July 1. (Goodreau Decl., ¶ 11). Until 2006, Dr. Reynolds had in place an optional waiver of premium benefit, which would allow premiums due for the Plan to be waived if he became totally disabled and unable to work in any occupation based on his education and experience. (Goodreau Decl., ¶¶ 9, 12). Dr. Reynolds' coverage under the Plan terminated on August 1, 2018, due to non-payment of the semi-annual premium due July 1, 2018. (Goodreau Decl., ¶ 20). Until that time, his coverage included a basic life benefit of $1,000,000 and an accidental death benefit of $1,000,000. (Doc. 30, Ex. 5). Dr. Reynolds died on October 18, 2018. (Doc. 30, Ex. 11).

A. Relevant Plan Provisions

Regarding premiums, the Plan's insurance certificate states, in relevant part:

Payment

Premiums are payable by the insured Member to the Company at the Company's Executive Offices. Any premium not paid on time will be in default.

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Grace Period

After the first premium has been paid, 31 days are allowed to pay a premium in default. During this time, the insured Member's insurance will remain in force unless the insured Member requests in writing to terminate the coverage. If the premium is not paid by the end of the days of grace, the insured Member's insurance will terminate.

Acceptance of Premiums in Default

The Company, at its sole discretion, may, but is not required to, accept a premium that is in default or extend the time for a premium to be paid. The Company's decision to accept a late premium, or extend the time for a premium payment, if any, shall not be construed as a continuing waiver of the right to enforce the premium payment terms and conditions set forth in the individual Certificate.

(Doc. 30, Ex. 5, p. 6). Under the heading “TERMINATION,” the certificate states, in relevant part:

The insurance of an insured Member will end on the earliest of the following:

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3) the 32nd day after the due date of any unpaid premium ․

(Id. at 13).

B. The June 2018 Premium Notice

The relevant facts concerning the non-payment of premium and termination of the certificate begin with the Premium Notice generated by Defendant's computerized administration system in June 2018 for the semi-annual premium due July 1. (Doc. 30, Ex. 1). The notice sent to Dr. Reynolds was one of many created at that time in separate, carefully monitored batches generated, printed and mailed within a few business days. (Doc. 30, Ex. 1; Goodreau Decl., ¶ 16). All automatically generated notices are printed, folded, and stuffed into pre-metered, window envelopes by a printing mechanism that is part of this integrated administration and document management system. (Goodreau Decl., ¶ 16). The batch of exactly 500 Premium Notices that Dr. Reynolds' notice was among commenced production on June 1, 2018, and mailed on June 11, 2018. (Id.). His notice was addressed to his address of record in place since February 5, 2007, when he submitted his most recent change: 10365 Gifford Dr., Spring Hill, FL, 34608. (Id.). The notice set forth the separately itemized basic member life and accidental death benefit premiums, showed the subtractions for a premium credit and a high volume discount, indicated that the net premium due for the second half of 2018 was $2,013.02, and identified the July 1, 2018 due date. (Id.). This notice was printed and mailed consistent with Defendant's usual business practices for automated mailings and a copy automatically placed and maintained as a record within Dr. Reynolds' account records. (Id.). The original was not returned by the United States Postal Service (“USPS”) as undeliverable. (Id.).

C. The July 2018 Reminder Notice

Since January 2011, it has been Defendant's usual business practice to have its computerized account administration system automatically capture the accounts of any insureds that do not reflect a credited premium payment a few business days after the semi-annual due date has expired and those accounts are automatically programmed to receive follow-up reminder notices. (Goodreau Decl., ¶ 17). Reminder notices encourage insureds to maintain their insurance and reduce the chance of unintended terminations. (Id.). Reminder notices for the July 1, 2018 premium payment were mailed July 17, 2018. (Id.). Dr. Reynolds' account was in this unpaid status, and a reminder notice was printed and mailed to him at the same address to which the earlier premium notice was mailed. (Doc. 30, Ex. 1; Goodreau Decl., ¶ 17). The Reminder Notice repeated the premium amount owed and the expired due date, and informed him that the insurance was in a grace period expiring on July 31, 2018. (Id.). Like the Premium Notice, this one also mentioned online and toll-free telephone payment options. (Id.). This Reminder Notice was generated, printed and mailed consistent with Defendant's usual business practices for automated mailings and a copy was automatically placed and maintained as a record within Dr. Reynolds' account records. (Goodreau Decl., ¶ 17).

In late July 2018, the USPS returned the Reminder Notice to Defendant. (Doc. 30, Ex. 3; Goodreau Decl., ¶ 18). A stamp on the envelope stated that it was being “returned to sender” because the time for forwarding the recipient's mail had expired. (Id.) It also contained the address that Dr. Reynolds' mail was being forwarded to: 12241 Lexington Park Dr. Apt 307, Tampa, FL 33626-2725. (Id.). An employee of Defendant opened the envelope, copied onto the reminder notice the information stamped on the envelope by the USPS, and enclosed the copy with a manually created cover letter dated July 31, 2018, addressed to Dr. Reynolds at this new address. (Id.) Dr. Reynolds' address of record was also updated. (Goodreau Decl., ¶ 18). This cover letter indicated that the enclosed notice had been returned by the USPS and was designed as a form for Dr. Reynolds to sign and return to formally update his address of record. (Id.). This letter and the enclosed reminder notice were mailed on July 31, 2018, and copies of each were retained together by Defendant as a record, placed and maintained within Dr. Reynolds' account records, consistent with Defendant's usual business practices for generating and maintaining manual mailings. (Id.).The original letter that was manually sent to the updated address was not returned by the USPS. (Goodreau Decl., ¶ 18).

D. The August 2018 Lapse Notice

After the contractual grace period has expired without a premium payment, Defendant's computerized account administration system again captures the accounts of insureds that do not reflect a credited premium payment and those accounts are automatically programmed to receive a final notice titled “Lapse Notice.” (Goodreau Decl., ¶ 19). This additional notification process has been Defendant's customary business practice since January 2011. (Goodreau Decl., ¶¶ 17, 19). The Lapse Notice is a final attempt by Defendant to encourage recipients to resurrect terminated insurance. (Doc. 30, Ex. 4; Goodreau Decl., ¶ 19). For the July 1, 2018 semi-annual premium due date, these notices were generated and mailed on August 9, 2018. (Id.). Defendant generated a Lapse Notice for Dr. Reynolds at the new address to which the July 31 letter had been mailed a week earlier. (Id.). It contained the same items of information and looked similar to the original Premium Notice. (Id.). However, unlike prior notices, this one stated that the insurance was terminated. (Id.). As a condition of this offer, it could only be exercised if the insured is alive at the time their payment is received, which cannot be after August 31. (Id.). The Lapse Notice stated, in pertinent part:

Your insurance terminated on August 01, 2018 for nonpayment of the premium due July 01, 2018. Coverage will be reinstated if your payment is received no later than August 31, 2018. Payments received after this date will be refunded without further notification. Please see offer of reinstatement on the reverse side of this notice.

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OFFER OF REINSTATEMENT

Your ADA Annually Renewable Term Life Insurance has been terminated due to nonreceipt of the premium amount due within the thirty-one day grace period. Coverage will be reinstated without evidence of insurability if you are living when your remittance is received by [Great-West] no later than August 31, 2018.

(Doc. 30, Ex. 4).

This Lapse Notice was generated, printed, and mailed consistent with Defendant's usual business practices for automated mailings and a copy was automatically placed and maintained as a record within Dr. Reynolds' account records. (Goodreau Decl., ¶¶ 19). The original was not returned by the USPS as undeliverable. (Id.). This notice did not elicit a payment from Dr. Reynolds and, thus, his life insurance coverage automatically switched to permanently terminated in Defendant's automated administration system on September 1, 2018. (Id.). Defendant never sent anything else to Dr. Reynolds after sending the Lapse Notice. (Goodreau Decl., ¶ 20).

E. Dr. Reynolds' Death Certificate

Dr. Reynolds' death was reported to Defendant by his daughter, the other former beneficiary under the Plan, by phone a few days after his death. (Goodreau Decl., ¶ 26). A death certificate was subsequently provided to Defendant by Plaintiff's attorneys with a December 2018 letter requesting insurance contract documents. (Doc. 30, Ex. 11; Goodreau Decl., ¶ 26). The death certificate indicates that Dr. Reynolds was 63 years old when he died on October 18, 2018, and that he resided at the new address the USPS had provided Defendant. (Id.).

II. STANDARD OF REVIEW

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The Court must draw all inferences from the evidence in the light most favorable to the non-movant and resolve all reasonable doubts in that party's favor. See Porter v. Ray, 461 F.3d 1315, 1320 (11th Cir. 2006)(citation omitted). The moving party bears the initial burden of showing the Court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial. See id. (citation omitted). When a moving party has discharged its burden, the non-moving party must then go beyond the pleadings, and by its own affidavits, or by depositions, answers to interrogatories, and admissions on file, designate specific facts showing there is a genuine issue for trial. See id. (citation omitted).

III. DISCUSSION

Plaintiff's position is that life insurance coverage under the Plan was “in full effect” when Dr. Reynolds died and that Plaintiff is due benefits under the Plan. (Doc.1, Ex. 1, ¶ 8). However, the allegations of the three-page Complaint are minimal and offer no factual basis for the conclusion that the certificate was in full effect at the time of Dr. Reynolds' death. (See Doc. 1, Ex. 1) Defendant seeks the entry of final summary judgment on grounds that the undisputed facts demonstrate that the insurance certificate terminated by its terms after the premium amount due by July 1, 2018, to keep the insurance in force for the second half of 2018, went unpaid and Dr. Reynolds did not attempt, timely or untimely, to remain insured.

In response to Defendant's Motion, Plaintiff asserts that Dr. Reynolds was disabled at the time of his death and that a genuine issue of fact exists as to whether the optional waiver of premium benefit, which would allow premiums to be waived if Dr. Reynolds became totally disabled and unable to work in any occupation based on his education and experience, was still in force when he died. Alternatively, Plaintiff asserts that Dr. Reynolds may not have been in arrears on his premium payment at all because he may have overpaid Defendant, or may have been overcharged by Defendant, at some point in time. Defendant argues that the undisputed facts foreclose Plaintiff's attempts to articulate these alternate theories of recovery for the first time in summary judgment proceedings. The Court finds that Defendant is entitled to the entry of final summary judgment in its favor because the undisputed facts demonstrate that Dr. Reynolds' insurance coverage under the Plan terminated on August 1, 2018, due to his non-payment of the July 1, 2018, semi-annual premium, after he received the June 2018 Premium Notice, the July 2018 Reminder Notice, and the August 2018 Lapse Notice.

The Complaint does not allege that Dr. Reynolds did not receive these three notices, nor does it allege that Defendant failed to comply with any notice or mailing requirements. (See Doc. 1, Ex. 1, ¶¶ 9–11). Plaintiff only raised this claim during discovery, in response to Defendant's interrogatory asking him to disclose the basis for his contention that the Plan was “in full effect.” (See Doc. 30, Ex. 11, Interrogatory No. 4). Nevertheless, Defendant's customary business practices for creating, printing, and mailing premium-related notices under the Plan were specifically approved in 2015 by the United States District Court for the District of Columbia in an order granting summary judgment for Defendant. While recognizing that lapse of insurance deserves serious review, that court observed:

The only evidence Plaintiffs adduce to dispute Great-West's evidence that the notices were mailed, however, is Orchin's assertion that he never received the notice. Great-West submitted a declaration describing in detail its largely-automated system for ensuring that notices are properly mailed ․ and produced a copy of both of those notices ․ Given this evidence and the undisputed evidence that Orchin did not change his address of record with Great-West before he moved, the fact that he did not receive these notices does not create a dispute of material fact as to whether they were ever mailed to his address of record. See Spinelli v. Monumental Life Ins. Co., 476 F.Supp.2d 898, 909 (N.D. Ill. 2007) (quotation marks omitted) (Under Illinois law, ‘[w]hile an insurer is required to provide notice to a policy holder that a premium is overdue before rescinding the policy, it is only required to prove that a legally sufficient notice was addressed and mailed, not that it was received by the policy holder.’) (quotation marks omitted).3

Orchin v. Great-West Life & Annuity Ins. Co., 133 F.Supp.3d 138, 143 n.3 (D.D.C. 2015).⁴

Of note is that that Orchin case only involved two of Defendant's premium-related notices, the initial Premium Notice and the Lapse Notice. The case involved a 2009 termination of insurance under the same group Plan at issue in the instant case and at that time Defendant had not yet implemented its practice of sending the middle notice—the Reminder Notice sent during the grace period—as an additional means to discourage unintended terminations. (Goodreau Decl., ¶ 17). The Orchin court determined that Defendant's production of the copies of notices maintained by its automated system and supporting information provided in a detailed declaration established proof of mailing as a matter of law and that denial of receipt was immaterial. Orchin, 133 F. Supp. 3d at 155. This Court finds that Defendant's enhanced practice of mailing a third automated notice, the Reminder Notice, in addition to the two notices involved in Orchin demonstrates even greater effort on Defendant's part to discourage possible unintended insurance terminations. Gina Goodreau attested in great detail as to Defendant's customary processes for mailing the three premium-related notices to its insureds and to the evidence that these processes were followed with respect to Dr. Reynolds. (Goodreau Decl., ¶¶ 14–22). This establishes as a matter of law that the notices were mailed and, thus, that Dr. Reynolds' insurance coverage under the Plan terminated on August 1, 2018, when he did not submit the July 1, 2018, semi-annual premium payment in response to Defendant's notices. Defendant is, therefore, entitled to the entry of final summary judgment in its favor.

Plaintiff cannot overcome the adverse summary judgment ruling by arguing that a genuine issue of fact exists as to whether the optional waiver of premium benefit was still in force when Dr. Reynolds died. This Court previously ruled, in its Order granting Defendant's Daubert Motion to Exclude Plaintiff's Expert, that delving into the process of how Dr. Reynolds removed the waiver of premium benefit by ceasing to pay for it from 2006 on was immaterial because it involves facts and legal theories never pleaded and because any claim regarding events that occurred in 2006 is time-barred and not actionable. (See Doc. 29, pp. 5– 6). The basis for argument here is that Dr. Reynolds' disability status from 2006 to 2018 remains a genuine issue of fact, yet the Complaint does not allege that Dr. Reynolds was “disabled,” nor does it allege that premiums should have been waived prior to Dr. Reynolds' death. (See Doc. 1, Ex. 1, ¶¶ 9–11). The Complaint also contains no allegations regarding any changes that Dr. Reynolds made to his Plan coverage with respect to the waiver of premium benefit or that any claim was made by Dr. Reynolds for the waiver of premium benefit. (See id.). The sole basis for recovery set forth in the Complaint is the allegation “that the policy was in full effect and that Plaintiff is due benefits under the above noted life insurance policy.” (Id. at 2, ¶ 8). The Court has determined as a matter of law that the Plan life insurance coverage was not in effect when Dr. Reynolds died in October, 2018.

Plaintiff also will not be permitted to argue that Dr. Reynolds may not have been in arrears on his premium payment at all because he may have overpaid Defendant, or may have been overcharged by Defendant, at some unknown time. No such claim was pleaded in the Complaint. (See Doc. 1, Ex. 1, ¶¶ 9–11). Nor was such a claim disclosed during discovery. (See Doc. 30, Ex. 11, Interrogatory No. 4). New claims and theories cannot be launched to oppose summary judgment:

The central issue in this case is whether a non-moving party plaintiff may raise a new legal claim for the first time in response to the opposing party's summary judgment motion. We hold it cannot.

Gilmour v. Gates, McDonald and Co., 382 F.3d 1312, 1313 (11th Cir. 2004) (per curiam). Furthermore, Plaintiff's speculation about whether Dr. Reynolds was in arrears or had been overcharged by Defendant, when there is no basis to dispute that he never paid the second half of the 2018 semi-annual premium, does not create a genuine issue of fact. Cordoba v. Dillard's, Inc., 419 F.3d 1169, 1180 (11th Cir. 2005)(citation omitted)(holding that speculation creates a false issue, the demolition of which is the primary goal of summary judgment).

ACCORDINGLY, it is ORDERED AND ADJUDGED:

Defendant Great-West Life & Annuity Insurance Company's Motion for Summary Judgment (Doc. 30) is GRANTED. The Clerk is directed to enter judgment in favor of Defendant and to close this case.

DONE and ORDERED at Tampa, Florida, this 5th day of February, 2020.

FOOTNOTES

1.   The Plan is association-sponsored, not employer-sponsored, and thus it is not governed by the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq.

2.   Defendant submitted with its Motion for Summary Judgment the Declaration of Gina Goodreau, a Second Vice President within the business unit that administers the subject Plan. She attests that she personally reviewed, and is familiar with, all of Defendant's business records concerning the Plan coverage obtained by Dr. Reynolds. Defendant listed her as a witness in its initial disclosures, but Plaintiff never took her deposition. Plaintiff does not challenge the Declaration.

3.   The Plan's Certificate of Insurance provides that: “[a]t the request of the [ADA], which is headquartered in Chicago, Illinois, and with the agreement of [Defendant], the Policy and any dispute between an insured person or claimant and [Defendant] arising in connection therewith are subject to, governed by, and shall be construed in accordance with the laws of the State of Illinois ․ The Policy and individual Certificates issued are deemed to be issued in the State of Illinois.” (Doc. 18, Ex. 3, p. 20).

4.   Both the Spinelli decision and a decision it relied upon, Hotaling, M.D. v. Chubb Sovereign Life Ins. Co., 241 F.3d 572 (7th Cir. 2001), involved universal life products but adopted a proof of mailing standard contained in an Illinois statute, which those decisions and the Orchin Court followed as well. The statute is not directly applicable to the instant case because it does not apply to group policies. 215 ILCS § 5/234(2). Nonetheless, the proof standard it sets forth states that “the affidavit of any officer, clerk or agent of the company or of anyone authorized to mail such notice that the notice required by this section bearing the required postage has been duly addressed and mailed shall be presumptive evidence that such notice has been duly given.” § 5/234(1). Hotaling also embraced computer/electronically generated processes and records of mailing as preferable to manual processes, which were then becoming and are now obsolete for companies that handle sizeable periodic mailings. 241 F.3d at 580-81.

SUSAN C. BUCKLEW, United States District Judge