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8 United States District Court 9 Central District of California

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11 CHLOE BIRD, Case № 2:20-cv-08902-ODW (AGRx)

12 Plaintiff, v. FINDINGS OF FACT AND 13 CONCLUSIONS OF LAW

METROPOLITAN LIFE INSURANCE

14 COMPANY,

15 Defendant.

16 17 This is an action under the Employee Retirement Income Security Act 18 (“ERISA”) to recover supplemental life insurance benefits. On August 2, 2021, the 19 parties lodged the Administrative Record and Plan Documents with the Court. (Not. 20 Lodging, ECF No. 31.) On September 17, 2021, the Court held a bench trial and took 21 the matter under submission. (Mins. One Day Ct. Trial, ECF No. 46.) Based on the 22 Administrative Record, the briefs submitted by the parties, and the evidence and 23 arguments presented at the trial of this matter, the Court issues the following findings 24 of fact and conclusions of law. 25

I. MOTION IN LIMINE

26 Prior to trial, Defendant Metropolitan Life Insurance Company (“MetLife”) 27 moved to exclude evidence Plaintiff Dr. Chloe Bird obtained by way of a subpoena 28 served on non-party The RAND Corporation. (Mot. Limine, ECF No. 38.) At trial, 1 the Court tentatively granted MetLife’s motion. (See Mins. of One Day Ct. Trial.) 2 The Court adopts this ruling as its Order and hereby GRANTS MetLife’s Motion in 3 Limine. 4 II. FINDINGS OF FACT 5 1. Dr. Bird is the surviving spouse of her late husband Dr. Alan Fremont. 6 Dr. Fremont was a RAND employee from February 2000 up to the date of his death. 7 2. RAND established and maintained the RAND Employee Benefits 8 Program (the “Plan”) to provide basic and supplemental life insurance benefits to 9 eligible Plan participants, including Dr. Fremont. 10 3. The Plan is an employee welfare benefit plan governed by ERISA, 11 29 U.S.C. §§ 1001–1461, and RAND is the Plan administrator. 12 4. Dr. Bird is the named beneficiary of Dr. Fremont’s RAND-sponsored life 13 insurance benefits. 14 5. MetLife issued a group certificate of insurance dated August 1, 2010, to 15 RAND entitled “YOUR EMPLOYEE BENEFIT PLAN / THE RAND 16 CORPORATION / All Full-Time and Part-Time Employees / Basic Life Benefits / 17 Supplemental Life Benefits / Voluntary Accidental Death or Dismemberment 18 Benefits” (“Certificate”). The Certificate describes the basic and supplemental life 19 insurance benefits of the Plan and sets forth the conditions and terms of Dr. Fremont’s 20 life insurance coverage. 21 6. Under the Plan, MetLife calculates basic and supplemental life insurance 22 benefit amounts as a multiple of the employee’s salary, as determined and reported by 23 RAND. 24 7. The Plan provides: 25 Your earnings on the date you become covered under This Plan will 26 determine your benefits on that date. Any increase or decrease in your benefits will take place on the date of change in your earnings provided 27 you are Actively at Work on that date. If you are not Actively at Work on 28 the date of change in your earnings, the change in your benefits will take place when you return to Active Work. 1 2 8. The Plan defines “Actively at Work” or “Active Work” as follows: 3 “Actively at Work” or “Active Work” means that you are performing all of the material duties of your job with the Employer where these duties 4 are normally carried out. If you were Actively at Work on your last 5 scheduled working day, you will be deemed Actively at Work: 6 1. on a scheduled non-working day; 7 2. provided you are not disabled. 8 9. At some point before October 2019, RAND decided to change the 9 method it used to determine an employee’s earnings for the purpose of calculating life 10 insurance benefit amounts. Specifically, as of October 1, 2019, RAND would no 11 longer use part-time employees’ full-time equivalent salary to determine their 12 benefits, but instead would determine their benefits based on their part-time scheduled 13 hours. 14 10. As part of this earnings calculation change, RAND employees, including 15 Dr. Fremont, were given several options regarding the continuation of their life 16 insurance benefits. These options were provided on a personalized Enrollment Form 17 that RAND, as the Plan administrator, prepared and distributed. 18 11. Dr. Fremont’s Enrollment Form presented him with four options for life 19 insurance coverage under the new earnings calculation method: 20 Option 1: Be “grandfathered”—i.e., keep the current total coverage amount in 21 place by paying for supplemental life insurance to cover the gap created by RAND’s change in earnings calculation method. 22

23 Option 2: Add an additional 1x earnings of supplemental life coverage.

24 Option 3: “Accept adjusted coverage,” which in Dr. Fremont’s case would have 25 meant continuing with 1.5x basic and 1x supplemental life insurance (at a lower total coverage amount due to the change in earnings calculation method). 26

27 Option 4: Decline or drop supplemental coverage. 28 1 None of these options required Dr. Fremont to submit a Statement of Health or other 2 health qualification. 3 12. The Enrollment Form indicated that any changes would go into effect on 4 October 1, 2019. 5 13. Dr. Fremont’s earnings based on his full-time equivalent hours were 6 $189,000 and his earnings based on his part-time scheduled hours as of June 24, 2019 7 were $165,128.69. Prior to the October 2019 election period, Dr. Fremont had basic 8 life insurance in the amount of 1.5x his earnings and supplemental life insurance in 9 the amount of 1x his earnings, for total coverage of $472,000. RAND paid the 10 premiums for Dr. Fremont’s basic life insurance, and Dr. Fremont paid the premiums 11 for his supplemental life insurance. 12 14. Dr. Fremont selected Option 2. Under this option, RAND would 13 continue to pay the premium for basic life insurance at 1.5x his newly-calculated 14 earnings ($165,000 x 1.5 ≈ $248,000 (rounding rules omitted)). Dr. Fremont would 15 continue to pay the premium for supplemental life insurance at 1x his 16 newly-calculated salary, and he would pay an additional premium for new 17 supplemental life insurance at an additional 1x his newly-calculated salary. The total 18 amount of the requested supplemental benefit was $165,000 x 2 = $330,000. 19 15. Next to the space for selecting Option 2, the Enrollment Form indicates, 20 “I elect to increase my current supplemental life coverage by 1x my basic annual 21 earnings (calculated using scheduled hours). My RAND-provided and supplemental 22 coverage both will adjust based on changes to my scheduled hours or rate of pay in the 23 future.” 24 16. The Enrollment Form contains the following additional provisions: 25 (1) “All charts are based on your pay rate and scheduled hours as of July 9, 2019. 26 Rates may differ if you had a pay change since July 9.” (2) “In the event of any 27 discrepancy, the Plan Document governs all coverage.” 28 17. Regarding the option Dr. Fremont selected (Option 2), a Frequently 1 Asked Questions document RAND sent Dr. Fremont along with the Enrollment Form 2 indicates: 3 If you wish, you can elect an additional 1x basic annual earnings in coverage over what you currently have without providing a statement of 4 health . . . if you do so by September 20. Starting October 1, basic 5 annual earnings for part-time staff will be determined by scheduled hours 6 on record, and supplemental life coverage amounts will be calculated accordingly. 7 8 18. Dr. Fremont submitted his enrollment form on September 8, 2019. 9 19. Dr. Fremont’s last scheduled working day was September 25, 2019, and 10 he worked no other days beyond that date. 11 20. Dr. Fremont did not work on or after October 1, 2019. He remained an 12 employee of RAND, collecting long-term disability benefits until the date of his death. 13 Between October 1, 2019 and the date of Dr. Fremont’s death, he used three 14 intermittent sick days (October 9, October 10, and November 20, 2019) and one 15 floating holiday (December 20, 2019). 16 21. Dr. Fremont died on February 26, 2020. 17 22. MetLife determined that, because Dr. Fremont was not “Actively at 18 Work” on or after October 1, 2019, he was not eligible for the increase in 19 supplemental life insurance coverage that would have taken effect on October 1, 2019. 20 23. At first, MetLife agreed to pay Dr. Bird a total life insurance benefit of 21 $414,000. This was calculated using Dr. Fremont’s reported part-time rounded 22 earnings of $166,000, with a 1.5x basic benefit and a 1x supplemental benefit. 23 24. At RAND’s request, MetLife increased Dr. Bird’s total benefit to 24 $473,000. MetLife calculated this increased benefit based on Dr. Fremont’s full-time 25 equivalent earnings of $189,000, with a 1.5x basic benefit and a 1x supplemental 26 benefit. 27 25. MetLife actually paid Dr. Bird a total of $473,000 in basic and 28 supplemental life insurance benefits. 1 26. MetLife did not pay Dr. Bird the additional 1x supplemental benefit Dr. 2 Fremont requested when he selected Option 2 on the Enrollment Form. 3 27. Dr. Bird appealed MetLife’s decision, requesting that MetLife pay the 4 supplemental benefit Dr. Fremont selected when he selected Option 2 on the 5 Enrollment Form. 6 28. MetLife denied Dr. Bird’s appeal. 7 29. Dr. Bird has exhausted her administrative remedies. 8 30. Dr. Bird filed this ERISA action to recover the unpaid additional 9 supplemental benefit, asserting causes of action against MetLife for breach of 10 insurance contract, 29 U.S.C. § 1132(a)(1)(B) and for breach of fiduciary duty, 11 29 U.S.C. § 1132(a)(3). 12 III. CONCLUSIONS OF LAW 13 1. Under ERISA, a participant in an ERISA-governed welfare benefit plan 14 may bring a civil action “to recover benefits due to him under the terms of [the] plan, 15 to enforce [his or her] rights under the terms of the plan, or to clarify [his or her] rights 16 to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). 17 2. “[I]nterpretation of ERISA insurance policies is governed by a uniform 18 federal common law.” Evans v. Safeco Life Ins. Co., 916 F.2d 1437, 1439 (9th Cir. 19 1990). In interpreting ERISA policies in this manner, courts should “refer[] to” and 20 be “guided by principles of state contract law.” Menhorn v. Firestone Tire & Rubber 21 Co., 738 F.2d 1496, 1500 (9th Cir. 1984). 22 3. “A denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed 23 under a de novo standard unless the benefit plan gives the administrator or fiduciary 24 discretionary authority to determine eligibility for benefits or to construe the terms of 25 the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). The 26 parties agree that this case is to be decided on a de novo basis. 27 4. Under a de novo standard of review, courts interpret the terms of an 28 ERISA-governed benefit plan “in an ordinary and popular sense as would a person of 1 average intelligence and experience.” Evans, 916 F.2d at 1441 (internal brackets and 2 quotation marks omitted). Under this approach, “courts will protect the reasonable 3 expectations of applicants, insureds, and intended beneficiaries regarding the coverage 4 afforded by insurance carriers even though a careful examination of the policy 5 provisions indicates that such expectations are contrary to the expressed intention of 6 the insurer.” Saltarelli v. Bob Baker Grp. Med. Trust, 35 F.3d 382, 386 (9th Cir. 7 1994). Courts should resolve any material ambiguities in the Plan in favor of the 8 insured. Patterson v. Hughes Aircraft Co., 11 F.3d 948, 950 (9th Cir. 1993). 9 5. Based on the foregoing findings of fact, Dr. Fremont was not “Actively at 10 Work” or “Actively Working” on or after October 1, 2019. 11 6. As of October 1, 2019, Dr. Fremont was “disabled” as that term is used 12 in the Plan’s definition of “Actively at Work” or “Actively Working.” 13 7. Based on the conclusion of law set forth in paragraph 6, Dr. Fremont was 14 not “Actively at Work” or “Actively Working” on or after October 1, 2019. 15 8. A reasonable insured1 would expect that any changes made as part of the 16 October 2019 special enrollment period would go into effect on October 1, 2019, and 17 that MetLife would calculate benefit amounts based on employee earnings as of that 18 date. 19 9. A reasonable insured would not expect that an employee with zero 20 scheduled work hours on or after a given date is “Actively at Work” or “Actively 21 Working” as of that date. 22 10. A reasonable insured would expect that an employee on long-term 23 disability was “disabled” as that term is used in the Plan’s definition of “Actively at 24 Work” or “Actively Working,” and that the employee therefore was not “Actively at 25 Work” or “Actively Working” while on long-term disability. 26 11. A reasonable insured would not expect that an employee who was not 27

28 1 All findings related to the insured’s reasonable expectations are limited to the factual presentation in this case. 1 “Actively at Work” or “Actively Working” (as those terms are defined in the Plan) on 2 or after October 1, 2019, would be eligible for newly added, recently selected benefits 3 that were to become effective on October 1, 2019. 4 12. Under the terms of the Plan, Dr. Fremont was not eligible for the 5 additional supplemental benefit he requested because he was not “Actively at Work” 6 or “Actively Working” on or after October 1, 2019, the date the change he requested 7 would have gone into effect. 8 13. Because Dr. Fremont was not “Actively at Work” or “Actively Working” 9 on or after October 1, 2019, it is just, logical, and equitable for Dr. Bird to receive a 10 benefit amount equaling what she would have received had RAND never decided to 11 change its earnings calculation method (a change that took place on October 1, 2019). 12 14. At bottom, MetLife ultimately paid Dr. Bird a total life insurance benefit 13 equaling what it would have had to pay Dr. Bird had RAND never decided to change 14 its earnings calculation method. Accordingly, MetLife correctly paid the benefits due 15 and correctly denied benefits not due. 16 15. MetLife’s claim determination was in accordance with the express terms 17 of the Plan and was supported by substantial, credible evidence in the Administrative 18 Record. 19 16. MetLife owes Dr. Bird no further benefits, and accordingly, her claim in 20 the First Amended Complaint to recover additional Plan benefits fails. (First Am. 21 Compl. (“FAC”) ¶¶ 1–23.) 22 17. MetLife did not breach its fiduciary duty to Dr. Bird, and accordingly, 23 her claim in the First Amended Complaint for breach of fiduciary duty fails. (FAC 24 ¶¶ 24–28.) 25 18. Whether or not the Court considers the Enrollment Form as part of the 26 operative Plan documents, these conclusions of law remain the same. 27 19. Whether or not Dr. Fremont received a separate certificate of insurance 28 for the additional supplemental benefits at issue, these conclusions of law remain the 1 || same. Dr. Fremont wished to avail himself of an opportunity to increase his 1x 2 || supplemental benefit under the old earnings calculation method to a 2x supplemental 3 || benefit under the new earnings calculation method. Dr. Fremont was not required to 4|| submit a statement of health, and the additional supplemental benefit would have been 5 || subject to the same terms and conditions governing the supplemental benefit already 6 || in effect prior to the events of this case. A reasonable insured who received no separate certificate would expect that the certificate and other documents that 8 | governed the insured’s supplemental benefits up to the change would be the 9 || documents that would also govern the new increased supplemental benefits. 10 20. To the extent the requirement that Dr. Fremont be “Active at Work” or 11 | “Actively Working” on or after October 1, 2019 is a condition subsequent of 12 | supplemental coverage, MetLife has met its burden of establishing this condition 13 || subsequent. Searle v. Allstate Life Ins. Co., 38 Cal. 3d 425, 437-38 (1985). 14 21. The Court finds in favor of MetLife. MetLife shall be dismissed, and 15 | Dr. Bird shall recover nothing from MetLife. 16 IV. CONCLUSION 17 For the reasons discussed above, the Court ORDERS that MetLife be 18 | DISMISSED from this lawsuit. The Court will issue a judgment. 19 20 IT IS SO ORDERED. 21 22 September 29, 2021 “5 23 Gedi

UNITED STATES BISTRICT JUDGE

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