HLD, v. 32, n. 5 (May 2004)
U.S. Court In Minnesota Holds Telephone Call By Plan Administrator
Was Formal Denial Of Benefits For ERISA Purposes
Plaintiff Ronald Carey, an employee of Intuit Corporation, participated
in his employer's welfare plan, which is governed by the Employee Retirement
Income Security Act (ERISA), insured by Connecticut General Life Insurance Co.
(CGLIC), and administered by International Rehabilitation Associates, Inc. (Intracorp).
Under the original plan (1999 Plan), plaintiff requested coverage for treatment
of his son Matthew's autism in April 2000. In June 2000, CGLIC denied the request
on the ground the autism treatment program was an educational program and not
a covered medical treatment program. Plaintiff applied for benefits again in
May 2001 after finding a licensed provider, and CGLIC again denied benefits.
The plan was amended on August 1, 2001 (2001 Plan) and provides that CGLIC has
discretionary authority to interpret and apply the terms of the 2001 Plan. Plaintiff
sought judicial review of CGLIC's denial. Both sides moved for partial summary
judgment on the issue of the accrual date of plaintiff's cause of action. The
determination of the date of accrual affects the applicable ERISA standard of
The U.S. District Court for the District of Minnesota granted plaintiff's
motion and denied CGLIC's motion. The court noted that the parties agreed that
the standard of review for CGLIC's decisions was de novo under the 1999 Plan
and an abuse of discretion standard for the 2001 Plan. Because both Plans are
governed by ERISA, plaintiff's cause of action accrued when the benefits were
denied. CGLIC argued it denied benefits in an October 22, 2001 letter to plaintiff
and thus the 2001 Plan was in effect at the time plaintiff's cause of action
accrued. Plaintiff argued the denial occurred on July 5, 2001 in a telephone
call with Intracorp representatives and the claim was under the 1999 Plan.
Through discovery requests plaintiff obtained Intracorp's notes
that detail telephone calls from plaintiff and his wife about their request
for benefits in June 2001. On July 5, 2001, plaintiff was told in various telephone
calls with Intracorp that the request for coverage was denied, and he was given
a verbal explanation of the denial. CGLIC argued the calls did not constitute
clear repudiation. The court rejected CGLIC's argument that its letter of October
22, 2001 was the formal denial because it was in response to plaintiff's repeated
efforts to have the denial in writing with a statement of the reasons for the
denial. The letter references Intracorp's denial of benefits in July 2001, said
the court, and the fact plaintiff hired a lawyer to represent him in September
2001 did "not contradict Intracorp's clear repudiation in July." Therefore,
the court held that the benefits were denied on July 5, 2001 and the court granted
plaintiff's motion for partial summary judgment.
Carey v. Connecticut Gen. Life Ins. Co., No. 02-3642 (D.
Minn. Mar. 8, 2004).