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The Guardian Life Insurance Company of America v. Shavor

United States District Court, S.D. Mississippi, Northern Division

April 10, 2018

THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA PLAINTIFF
v.
MISTY SHAVOR, CECELIA GILES, SEAN CHILDERS, THE ESTATE OF DUANE CHILDERS DEFENDANTS

          ORDER

          CARLTON W. REEVES, UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendants' Motion for Payment of Interest, Attorneys' Fees, and Costs. For the reasons below, the Motion is denied.

         I. Background

         On October 18, 2016, Duane Childers died when he crashed his motorcycle into a bridge. At that time, Childers was enrolled in his employer's group life insurance plan. The Guardian Life Insurance Company of America (“Guardian”) administered the plan.

         The plan included two different types of benefits: (1) life insurance and (2) accidental death and dismemberment (“AD&D”). For life insurance benefits, a claimant had to show only that an insured died. But for AD&D benefits, a claimant had to provide proof of loss showing that death was the “direct result of the accident, independent of all other causes.” The plan was governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §1001, et seq.

         Childers had named his wife Misty Shavor as his sole beneficiary. Following his death, Childers's mother and son, Cecilia Giles and Sean Childers (“the Giles Defendants”), challenged the validity of this designation. Guardian determined that life insurance benefits were payable but, in light of the competing claims, filed this interpleader on December 22, 2016.

         Months later, the parties reached a settlement agreement as to how they would divide life insurance benefits. On August 1, 2017, this Court granted the parties' Agreed Motion for Interpleader, and Guardian paid $341, 000 of life insurance benefits, including approximately $20, 600 of interest.

         Guardian had not yet determined whether AD&D benefits were also payable. Beginning in November 2016, Guardian sent Defendants letters, requesting additional proof of loss information, including the medical examiner's report and toxicology report. Guardian advised Defendants that they were responsible for providing adequate proof of loss.

         On January 26, 2017, the 90-day deadline to a make a claim determination, pursuant to ERISA, expired with no decision by Guardian. Five days later, Guardian notified Defendants that it needed a 90-day extension to review the claim.

         In March 2017, Defendants raised separate counterclaims seeking AD&D benefits. But Defendants agreed to stay their counterclaims until completion of the administrative claims process.[1]

         On May 15, 2017, Defense counsel gave verbal permission to extend the deadline beyond the 180 days, as all parties were awaiting the toxicology report and medical examiner's report. Later that month, Shavor's counsel informed Guardian that the medical examiner said the toxicology report was not ready. On August 7, 2017, the medical examiner again advised that the results would not be ready for another 14 days. Guardian eventually received a toxicology report on August 30, 2017, but no medical evaluation.

         Because of this delay, Guardian filed a Motion to Stay All Deadlines. On October 5, 2017, Magistrate Judge Linda R. Anderson held a telephonic hearing. She issued the stay and directed Guardian to subpoena the remaining reports, though the examiner had ignored a previous subpoena issued by Shavor.

         On October 10, 2017, the medical examiner finally provided his report. Guardian issued the AD&D benefits, without interest, to all Defendants on November 2, 2017. Two weeks later, Defendants jointly filed the instant motion. They seek prejudgment interest on the AD&D payment from the date of death on October 18, 2016, to November 2, 2017, attorneys' fees of $7, 500, and other costs.

         II. ...


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