Davis v. Metropolitan Life Ins. C o .

CourtDistrict Court, D. New Hampshire
DecidedSeptember 13, 2004
DocketCV-03-463-JD
StatusPublished

This text of Davis v. Metropolitan Life Ins. C o . (Davis v. Metropolitan Life Ins. C o .) is published on Counsel Stack Legal Research, covering District Court, D. New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Davis v. Metropolitan Life Ins. C o ., (D.N.H. 2004).

Opinion

Davis v . Metropolitan Life Ins. C o . CV-03-463-JD 09/13/04 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

H . Joel Davis

v. Civil N o . 03-463 JD Opinion N o . 2004 DNH 132 Metropolitan Life Insurance Company

O R D E R

Metropolitan Life Insurance Company and UNUM Life Insurance

Company has moved for summary judgment on state law claims by

their insured, H . Joel Davis, on the ground that they are pre-

empted by ERISA. Davis objects.

Background

Davis provides graphic design and related services through

Advantage Promotions, Inc., a New Hampshire corporation owned

entirely by him and his wife. Davis and his wife serve as the

company’s vice president and president, respectively. Advantage

has one other employee, an office manager named Karen Fidler.

Advantage provides health insurance to Davis, his wife, and

Fidler through Blue Cross and Blue Shield.

With the assistance of Andrew Rocco, an insurance agent,

Davis executed a pre-printed application form for disability

insurance with New England Mutual Life Insurance Company on March 6, 1995. 1 Davis sought disability insurance on the advice of his

accountant, who expressed concern that Davis would not be able to

provide for his family if an injury prevented him from working.

Rocco attests that he advised Davis to purchase an individual

disability policy and that they never discussed any employee

welfare benefit plan.

Davis checked the box for “No” in response to a question on

the application, “Will this case be part of a New England

combination group/individual purchase?” He also indicated that

his employer, identified as Advantage, would pay for the coverage

in its entirety, and that this contribution would not be included

in his taxable income. In the application, Davis named himself

as both the insured and the owner with respect to the desired

policy, and requested that all notices be sent to his residential

address. Finally, the application cautions, “[i]f this

application is being used to request Group coverage, then it is

also understood and agreed [that] Group insurance applied for

will not be in force until this application and the Group plan

are approved by The New England.”

A few weeks later, Rocco suggested to Davis and his wife

that if Fidler wanted to purchase a disability insurance policy,

1 New England Mutual Life (“The New England”) later merged with MetLife, one of the defendants in this action.

2 Advantage could raise her pay to cover the amount of the premium.

The premium payments would be reported as Fidler’s income. Rocco

explained that this arrangement would allow Advantage to confer

an additional benefit on Fidler at a relatively low cost. He

then met separately with Fidler, who elected to fill out an

application for disability insurance with The New England on March 3 1 , 1995, using the same form that Davis had used. Like

Davis, Fidler indicated on the application that the policy would

not be part of a combination group/individual purchase and that

Advantage would pay for the coverage in its entirety. Unlike

Davis, however, she stated that Advantage’s contribution would be

included in her taxable income, and asked for notices to be sent

to her employer’s address. Davis’s wife talked to Rocco about

procuring her own disability insurance policy, but they

ultimately concluded that she did not earn enough to justify i t . The New England issued a disability insurance policy to

Davis on April 1 , 1995. There is no evidence suggesting that The

New England evaluated or approved any group plan before extending

this coverage to Davis. The policy identifies itself as a

“preferred professional disability income policy” and Davis as

both its insured and its owner. The policy does not condition

its payment of benefits on Davis’s continued employment with

Advantage. Although the policy lists a “total annual premium” of

3 $1,454, it also lists a “select 20 annual premium” of $1,163.20

and states that Davis “ha[s] a select premium as indicated.”

The parties dispute the significance of this apparent twenty

percent reduction in the premium. The defendants characterize it

as a “multi-life discount,” which MetLife explained in its

deposition given pursuant to Fed. R. Civ. P. 30(b)(6) as a

reduction available to an employer purchasing multiple policies

at the same time.2 The defendants therefore suggest that the

discount resulted from Advantage’s simultaneous purchase of

Davis’s and Fidler’s disability policies.

MetLife’s Rule 30(b)(6) deponent also stated, however, that

she did not know why Davis received the discount, and that the

issuance of policies on just three different lives ordinarily

would not trigger the multi-life discount.3 Furthermore, Davis

points out that he received the discount immediately upon the

issuance of his disability policy on April 1 , 1995, even though

2 MetLife also relies on a document entitled “ESP/PAC Employee Security Transmittal,” listing the “employer’s name” as Advantage and identifying Davis, his wife, and Fidler as “applicants.” According to MetLife’s Rule 30(b)(6) deponent, the document indicates “that there were three employees of Advantage, Inc., who were issued policies that were being billed together through the employer.” It is undisputed, however, that only two Advantage employees, Davis and Fidler, sought disability insurance through The New England. 3 Again, The New England issued disability insurance to just two Advantage employees.

4 Fidler’s application was not received until April 3 , 1995.4

Rocco attests that “he provided no pricing premiums [to Davis]

which would reflect a group policy or an employee benefit plan of

any type.” Accordingly, a factual dispute exists as to whether

the discount Davis received was of the multi-life variety.5

The premiums for both Davis’s and Fidler’s disability

insurance were paid out of Advantage’s corporate bank account,

which is used for business expenses and maintained separately

from the Davises’ personal accounts. Advantage reported the

premiums as regular business expenses on its tax returns.

Although Davis’s accountant had wanted him to pay the premiums on

his disability policy with his own earnings in order to avoid tax

liability on any benefits, the accountant did not communicate

this to Davis until January 2002, at which point he began paying

the premiums out of his personal account. Fidler did not report

Advantage’s payment of the premiums for her disability insurance

as taxable income until 2003, despite the stated intention to the

4 Davis suggests that he received the discount because he already had a life insurance policy with The New England at the time he applied for disability insurance. Both Davis and his wife had applied for split-dollar life insurance policies with The New England on March 6, 1995. Advantage pays the premiums. 5 Neither party points to any evidence indicating whether The New England provided a discount on the premiums for Fidler’s disability policy. Fidler’s policy itself does not appear in the summary judgment record.

5 contrary in her application for the policy.

On June 1 0 , 2002, Davis filled out a form to claim

disability benefits from The New England, stating that “shoulder

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