STEVEN D. MERRYDAY, District Judge.
An insurance policy in an ERISA employee welfare benefit plan promises to pay the insured, whose "annual salary" was $260,000, a life insurance benefit in "an amount equal to 3 times Your Annual Salary, up to $400,000." After the insured's death in an airplane crash, the insurer paid the beneficiary $400,000, the stated "up to" amount. The beneficiary appealed and demanded $780,000, three times the deceased's annual salary. The insurer rejected the beneficiary's claim on appeal. The beneficiary sued under ERISA for the death benefit of $780,000. Each party moves for summary judgment and contends persuasively that no genuine issue of material fact exists and that one party is entitled to judgment as a matter of law.
Discussing the need for "clear referents" and discussing "miscues" that result from "misplaced modifiers," the leading authority on modern American usage in general and modern American legal usage in particular states, "When a word such as a pronoun points back to an antecedent or some other referent, the true referent should generally be the closest appropriate word." Bryan A. Garner, Garner's Modern American Usage 540 (Oxford 2009). Garner's advises that "[w]hen modifying words are separated from the words they modify, readers have a hard time processing the information. Indeed, they are likely to attach the modifying language first to a nearby word or phrase." Garner's at 540. Garner's illustrates the problem of the misplaced modifier with several examples, including this one: "Both died in an apartment Dr. Kivorkian was leasing after inhaling carbon monoxide." (Read: "After inhaling carbon monoxide, both died in an apartment Dr. Kivorkian was leasing.") Garner's at 540. Confirming that the problem of the misplaced modifier similarly
The effect of properly (or improperly) placing a modifier is palpable, and examples of misplacement are legion, sometimes humorous but sometimes disastrous. See Jacques Barzun, Simple & Direct: A Rhetoric for Writers 56-65 (Harper & Row 1985) ("The congressman sat informally on the carpet and discussed food prices and the cost of living with several women." [Read: "The congressman sat informally on the carpet and discussed with several women food prices and the cost of living."]); William Strunk, E.B. White & Maria Kalman, The Elements of Style 44-49 (The Penguin Press 2005) ("You can call your mother in London and tell her about George's taking you out to dinner for just two dollars." [Read: "For just two dollars, you can call your mother in London and tell her about George's taking you out to dinner."]); Theodore M. Bernstein, The Careful Writer: A Modern Guide to English Usage 281-82 (Atheneum 1985) ("The new facilities will make it possible for babies to be born in Roosevelt Hospital for the first time." [Read: "The new facilities will make it possible for the first time for babies to be born in Roosevelt Hospital."]); Richard M. Weaver, A Rhetoric and Composition Handbook 174-79 (Quill 1967) ("Merchandise was sold by the company that had been damaged by the fire." [Read: "Merchandise that had been damaged by the fire was sold by the company."]).
Often the intended meaning of a mangled sentence becomes clear because of the manifest sense (or nonsense) of the sentence read one way or the other, because of the context of the sentence, or because of the reader's knowledge of the sentence's subject independent of the sentence's content. But sometimes the intended meaning remains obscure. For example, consider the statement, "He spoke of death in a gruesome manner." Two possible meanings contend: "He spoke in a gruesome manner of death" and "He spoke of death in a gruesome manner." Owing to the forceful influence of proximity, the sentence undoubtedly and undeniably means the latter: "He spoke of death in a gruesome manner," meaning the manner of dying, not the manner of speaking, was gruesome. Or consider: "The President received a demand to support the recognition of Palestine by twenty foreign governments." Did the president receive one demand about twenty nations' support for the recognition of Palestine or did the president receive twenty demands about one nation's (the United States') support for the recognition of Palestine? As these last few examples attest, ambiguity arises most forcefully and vexingly when each alternative referent for a modifier results in an equally plausible reading of a sentence. For example: "The dog bit the child, not the cat."
The proximity of a modifier to a word or phrase is the primary determinant of meaning. Joining Garner's and the unanimous authorities, Bernstein advises, "There is no rule about the placement of modifying phrases except perhaps the very general one that they should be as close as possible to the things they modify."
The misplaced modifier and the force of proximity in determining meaning present
Reading Law cites, as an example of the "nearest reasonable referent canon," Carroll v. Sanders, 551 F.3d 397 (6th Cir. 2008), which decides whether a provision in the Bankruptcy Code bars a second discharge of debt for four years after filing an earlier petition or for four years after a receiving an earlier discharge of debt. The statute provides that a debtor may not receive a discharge if the debtor "received a discharge ... in a case filed under chapter 7 ... of this title during the 4-year period preceding" the filing of the debtor's present chapter 13 petition. In other words, does the phrase "during the 4-year period preceding" refer to the remote term "received a discharge" or to the more proximate term "filed under chapter 7"? The Sixth Circuit followed the "nearest reasonable referent" rule, applied the four-year bar to the earlier filing, and held:
551 F.3d at 399.
The role of proximity in grammatical modifying and the "rule of the last antecedent" are recognized, as well, in the interpretation of an insurance policy. 2 Steven Plitt, Daniel Maldonado & Joshua Rogers, Couch on Insurance 3d § 22:5 at 22-16 (West Group 2010). Using words similar to the authorities in other disciplines and other areas of the law, Couch adds that "reasonable intent governs, regardless of strict rules of grammatical accuracy in the language used, or of punctuation." (The allusion to a "strict" rule is a slyly planted pejorative; this dissent from applying the "strict" rule evokes the image of a baseball player, called "out" on a third strike, who denies to his adoring fans that he "struck out" and insists that he is a blameless victim of the umpire's "strict" application of the rules of baseball.)
The parties' summary judgment motions present the issue whether the phrase "an amount equal to 3 times Your Annual Salary, up to $400,000" actually means, as the insurer contends, "an
The insurer's monthly billing notice (Doc. 22-1 at 48) to the employer beginning with the initial bill in March, 2008, and continuing through August, 2008, identifies the deceased as a "participant" entitled to a $400,000 life insurance benefit. Additionally, the billing notice displays that $26.00 of the monthly billing is attributable to the $400,000 coverage for the deceased. A simple and obvious multiplication confirms that the contractual rate of $0.065 for each $1000 in coverage (Doc. 22-1 at 11) yields a billing of $26.00 for $400,000 in coverage. A review of each insured listed in the insurer's monthly billing statement to the employer confirms that $400,000 was the maximum life insurance benefit for which the insurer charged a premium. Undoubtedly, the conspicuous and simple billing formula and the schedule of benefits showing a maximum benefit of $400,000 among the covered employees strongly suggest that the insurer and the employer each understood that the coverage purchased was an amount of coverage "up to" $400,000. After August, 2008, the employer assumed responsibility for the computation of the aggregate monthly premium, and the employer's computation of the premium confirms that the employer, like the insurer, assumed an "up to" amount of $400,000 in life insurance coverage for each employee, even if "3 times Your Annual Salary" was a greater amount.
The deceased was killed in an airplane crash in February, 2009. Consequently, the employer prepared, and both the employer — through the employer's "H.R. Director" — and the beneficiary signed, a statement (Doc. 22-1 at 88) certifying to the insurer the salary of the deceased and stating:
The phrase "$400,000 LIFE/$400,000 AD & D" is handwritten on the statement. As
The beneficiary cites the "Living Benefits Option" (Doc. 22 at 26), which provides — for an insured with either a "terminal condition" expected to result in death within six months or an illness or injury with no reasonable prospect of recovery — a lump sum benefit equal to "80% of the amount of life insurance in force on Your life, but not to exceed $500,000." The beneficiary, consistent with the beneficiary's interpretation of the clause centrally disputed in this action, interprets "$500,000" to modify the proximate term "life insurance," but the insurer, consistent with the insurer's interpretation of the clause centrally disputed in this action, interprets "$500,000" to modify the remote "80%." Accordingly, the beneficiary argues (Doc. 23 at 5) that, unless the words of the Living Benefits Option are meaningless, which is a disfavored interpretive result, the provision's mentioning $500,000 in life insurance evidences that the beneficiary's coverage exceeds the "up to" amount of $400,000.
The beneficiary's argument neglects the fact that the insurer employs a "form" insurance policy that is selectively modified to suit an individual circumstance. This general purpose clause, applicable to every policy regardless of the amount of the particular life insurance benefit payable to a particular insured, fixes a generic maximum on the benefit but carries no interpretive force with respect to the deceased's actual death benefit in this case. In any event, because both the insurer's and the beneficiary's interpretation of the Living Benefits Option adheres in form to their respective interpretation of the death benefit at issue in this case, the parties' dispute about the Living Benefits Options merely re-states indecisively and in different terms each party's argument about the clause centrally disputed in this action. In other words, the Living Benefits Option is evidence of the problem, not the solution.
As stated earlier, soon after the insured was killed in an airplane crash in February, 2009, the employer prepared and both the employer — through the employer's "H.R. Director" — and the beneficiary signed a statement (Doc. 22-1 at 88) certifying
The insurer paid the beneficiary, who is the insured's widow and the plaintiff in this action, $400,000 plus accumulated interest. By a letter six days later from the beneficiary's lawyer, the beneficiary demanded $780,000, which the record suggests is the first mention of $780,000 by either party or anyone else in the history of the coverage. About two weeks later, July 30, 2009, the insurer responded:
On October 27, 2009, again through her lawyer, the beneficiary demanded $780,000. The insurer responded on November 17 and questioned whether the beneficiary's October 27 letter was an appeal from the earlier determination that the insurer owed only $400,000. By a letter three days later, the beneficiary confirmed that the earlier letter was an appeal.
On February 16, 2010, the insurer sent to the beneficiary a denial of the appeal and explained:
The insurer's denial of the beneficiary's claim receives deference under the "arbitrary and capricious" standard of review and is affirmed if reasonable.
A useful summary of the application of the governing standard of review appears in Capone v. Aetna Life Ins. Co., 592 F.3d 1189, 1195-96 (11th Cir.2010):
As observed in Colardo v. Metropolitan Life Ins. Co., 2011 WL 1899253 *6 (M.D.Fla.2011), and acknowledged in Capone, "the heightened arbitrary and capricious review called for at step six was implicitly overruled in [Glenn]." The heightened arbitrary and capricious review mentioned in step six was explicitly overruled in Doyle. After Glenn, Doyle, and Capone step six becomes:
Applying the de novo standard of review and deciding whether the insurer's determination is right or wrong presents a close question. The policy's plain words ("an amount equal to 3 times Your Annual Salary, up to $400,000"), which offer the primary or initial indicator of meaning, express a limit on the more proximate phrase "annual salary," as contended by the beneficiary, and not on the more remote phrase "an amount," as contended by the insurer.
However, the billing statements from the insurer to the employer include both (1) the conspicuous display of a designation of the deceased by name as an insured with $400,000 in life insurance coverage and (2) a conspicuous computation of the premium based on $400,000 ($0.065 per $1000 in coverage times 400) in life insurance coverage. These two factors, considered together, present persuasive evidence that the insurer and the employer understood that the policy granted $400,000 in coverage to the insured (and some other employees) and that the employer paid for $400,000 in coverage.
Similarly, after the fatal airplane crash, the mutual statement from the employer and the beneficiary requested a death benefit for the deceased of $400,000, which also evinces that the insurer and the employer shared an understanding of the meaning of the policy provision at issue.
However, even if the insurer decided incorrectly, the insurer in this instance enjoyed discretion to resolve issues of coverage and policy interpretation, and enough evidence gravitates in support of the insurer's determination to satisfy easily the deferential "arbitrary and capricious" standard.
In this instance, the insurer operated under a conflict of interest. Adding that factor against the insurer and in favor of the beneficiary results in no change. The record reveals no evidence sufficient to show that financial self-interest or other impediments marred the insurer's decision or that the conflict of interest is any sharper or any more intrusive than is inherently present.
Because the record presents no genuine issue of material fact and because the defendant is entitled to judgment as a matter of law, the defendant's summary judgment motion is
