Golson v. Provident Life and Accident Insurance Company

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

GEORGE R. GOLSON, on behalf of )

himself and all others similarly situated )

)

Plaintiff, )

)

v. ) Case No. 2:19-CV-00127-RAH

) (WO)

PROVIDENT LIFE AND ACCIDENT )

INSURANCE COMPANY, et al., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

This class action lawsuit concerns Defendant Provident Life and Accident

Insurance Company’s (“Provident”) practice of allegedly underpaying cost-of-living

adjustments (“COLA”) on a long-term disability income insurance policy (“Policy”)

purchased by Plaintiff George R. Golson (“Golson”) in 1984. According to Golson,

as to himself specifically and a class generally, Provident has “employed a

systematic nationwide practice of miscalculating insureds’ COLA benefits that

results in a shortage of benefits to insureds on a monthly basis and in violation of

Provident[’s] . . . contractual obligations.” (Doc. 41 at 3.) This shortage, which

amounted to between $1.29 and $2.85 per month, stemmed from Provident’s use of

a consumer price index from 1967 instead of 1988 when it calculated the annual

COLA escalation under the Policy.

Pending before the Court are the motions for summary judgment filed by

Provident and Defendant Unum Group, (Docs. 34, 47), which are directed to the sole

issue of Golson’s Article III standing to bring this suit against the Defendants.1 This

standing issue turns strictly on whether Golson has suffered injury or harm because,

according to the Defendants, Golson actually has been overpaid on the Policy.

After reading the parties’ submissions and hearing oral argument, the Court

concludes that the motions are due to be DENIED.

LEGAL STANDARD

A court should grant a motion for summary judgment “if the movant shows

that there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a). It is the movant who bears the

initial burden of “identifying for the district court those portions of the record ‘which

it believes demonstrates the absence of a genuine issue of material fact.’” Cohen v.

United Am. Bank of Cent. Fla., 83 F.3d 1347, 1349 (11th Cir. 1996) (quoting Cox v.

Adm’r U.S. Steel & Carnegie, 17 F.3d 1386, 1396, modified on other grounds, 30

1 Unum Group also filed a Motion to Dismiss under Rule 12(b)(6). (See Doc. 45.) This motion is

unrelated to the issue of standing, and instead addresses merits-related issues. Because the parties

requested the Court to proceed in a bifurcated manner and defer merits-related discovery and issues

until after the Court has resolved the issue of standing, (Doc. 17), the Court will defer ruling on

Unum’s motion and will therefore deny the motion with leave to refile. The Court also notes that

at oral argument, Plaintiff’s counsel suggested a possible willingness to voluntarily dismiss Unum

as a defendant in this suit. As such, the Court encourages the parties to discuss whether it is

necessary for Unum to remain a defendant especially since it appears that Unum is not an obligated

party under the Policy.

F.3d 1347 (11th Cir. 1994)). In the case in which the non-movant bears the burden

of proof at trial, the movant may carry its initial burden by either negating an

essential element of the non-movant's case or by demonstrating the absence of

evidence to prove a fact necessary to the non-movant's case. Fitzpatrick v. City of

Atlanta, 2 F.3d 1112, 1115-16 (11th Cir. 1993) (citation omitted).

Once the movant carries its initial burden, the non-movant may avoid

summary judgment by demonstrating an issue of material fact. Id. at 1116. If the

movant demonstrates the absence of evidence of a material fact for which the non-

movant bears the burden of proof, then the non-movant must either show that the

record contains evidence that the movant “overlooked or ignored” or “come forward

with additional evidence sufficient to withstand a directed verdict motion at trial

based on the alleged evidentiary deficiency.” Id. at 1116-17 (citation omitted). The

non-movant must provide more than a “mere scintilla of evidence” supporting its

position, and “there must be enough of a showing that the jury could reasonably find

for that party.” Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citation

omitted).

Further, when analyzing a motion for summary judgment, a court draws all

inferences from the evidence in the light most favorable to the non-movant and

resolves all reasonable doubt in the non-movant's favor. Porter v. Ray, 461 F.3d

1315, 1320 (11th Cir. 2006). Notwithstanding this inference, “[t]here is [still] no

genuine issue for trial unless the non-moving party establishes, through the record

presented to the court, that it is able to prove evidence sufficient for a jury to return

a verdict in its favor.” Cohen, 83 F.3d at 1349.

BACKGROUND

A. The Policy

Golson, a former optometrist, purchased the Policy from Provident in 1984.

(Doc. 1-1.) In June 1989, Provident amended the Policy to increase the base

monthly benefit amount from $3,000 to $4,600. (Doc. 1-2.) As an additional benefit

under the Policy, the Policy provided for an annual cost-of-living adjustment (also

called a COLA). (Doc. 1-1 at 3, 11.)

The COLA was determined by multiplying a benefit factor against the base

monthly benefit amount ($4,600). (Doc. 1-1 at 11.) The benefit factor was based

on a comparison of the Consumer Price Index for All Urban Consumers (CPI-U) for

the “current” year against a “base” year. The base year was “the last CPI-U index

published in the calendar year before disability begins.” (Id.) The current year, or

“Current Index”, was defined as “the last CPI-U index published in the calendar year

before each payment is made.” (Id.)

The Policy also provided that monthly benefits would be provided “for life”

if Golson’s total disability began before age 65. (Id. at 3.) However, the COLA

benefit ended when Golson turned 65. (Id. at 10.)

B. Golson’s Claim

In 1993, Golson was diagnosed with post-polio syndrome and made a claim

for disability benefits under the Policy. Golson’s claim was approved, and Golson

began receiving his monthly disability benefit on August 1, 1994. (Doc. 37-1 at 8,

RFA No. 2; Doc. 37-1 at 42, INT No. 8.)

In November 1999, Provident ceased paying Golson his monthly benefit,

which resulted in litigation between the parties that was settled in 2001. That

litigation was resolved with Provident paying a large settlement sum and resuming

payment of the monthly benefit in August 2002. (Doc. 37-1 at 2; Doc. 36-4 at 6.)

Since that time, Provident has paid Golson monthly benefits under the Policy and

has escalated the monthly benefit with a COLA up to 2016 when he turned 65. (Doc.

36-4 at 10, 15-16.)

C. The COLA Calculation

In calculating the benefit factor used for the annual COLA, Provident used a

CPI-U index from 1967. (Doc. 37-1 at 8, RFA No. 3; Doc. 37-1 at 45, INT No. 12.)

“The rub”, according to Golson, is that Provident should not have used the 1967

CPI-U index; instead, Provident should have used the 1988 CPI-U index. (Doc. 37

at 5.)

According to Golson’s calculations, by using the incorrect index, Provident

shorted Golson between $1.29 to $2.85 every month since 2002. Between January

2003 and September 2019, Golson was underpaid by $518.73. (Doc. 33-3 at 9, 13-

15.) For the period from January 2013 to 2019, Golson claims this underpayment

was less than $60. (Doc. 33-3 at 14-15.)

Golson filed this class action lawsuit on February 15, 2019 against Provident

and Unum2 to right the “[w]rongs created by Provident and Unum’s ‘across-the-

board’ miscalculation and misapplication of COLA benefits for insureds.” (Doc. 41

at 6.)

DISCUSSION

Distilled to its simplest, Provident contends that Golson has suffered no injury

or harm and therefore lacks standing, not because he has not been damaged by the

particular dispute over which index to apply, but because Golson overall has been

overpaid on the Policy. This overpayment, according to Provident, primarily stems

from one source.3 That is, in January of every year, Provident actually paid Golson

an extra day of COLA benefits (between $82.44 to $94.27 from 2013 to 2019). (Doc.

12 at 2-3; Doc. 39 at 7-8.) In other words, Golson lacks standing because the amount

of the extra day (i.e., overpayment) paid every January exceeds the total amount of

2 For the remainder of this Opinion, the Court will jointly refer to Provident and Unum as

Provident.

3 Provident also claims that Golson’s expert witness “made a data entry mistake” by “inadvertently

omitting a whole month’s payment from his calculation.” (Doc. 35 at 2; Doc. 39 at 2-4.) Golson

disputes this assertion. (Doc. 36-3 at 6; Doc. 37 at 2-3.) The Court chooses to ignore this argument

as it is neither pertinent nor dispositive of the standing issue.

the underpayments during the other eleven months of each year. Therefore, even if

Golson is correct about Provident’s use of an incorrect index factor and is correct

that Provident has breached the Policy in that regard, any resulting damage is offset

by the unrelated overpayment every January.

As the parties recognize, Article III standing is a threshold inquiry. Steel Co.

v. Citizens for a Better Env’t, 523 U.S. 83, 94-95 (1988). Article III of the

Constitution limits federal courts to adjudicating actual “cases” and “controversies.”

See, e.g., Allen v. Wright, 468 U.S. 737, 750 (1984), abrogated on other grounds by

Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014). “The

party who invokes a federal court’s authority must show, at an ‘irreducible

minimum,’ that at the time the complaint was filed, he has suffered some actual or

threatened injury resulting from the defendant’s conduct, that the injury fairly can

be traced to the challenged action, and that the injury is likely to be redressed by

favorable court disposition.” Atlanta Gas Light Co. v. Aetna Cas. & Sur. Co., 68

F.3d 409, 414 (11th Cir. 1995).

As the Eleventh Circuit has said:

Under elementary principles of standing, a plaintiff must allege and

show that he personally suffered injury. If he cannot show personal

injury, then no article III case or controversy exists, and a federal court

is powerless to hear his grievance. This individual injury requirement

is not met by alleging that injury has been suffered by other,

unidentified members of the class to which the plaintiff belongs and

which he purports to represent. Thus, a plaintiff cannot include class

action allegations in a complaint and expect to be relieved of personally

meeting the requirements of constitutional standing, even if the persons

described in the class definition would have standing themselves to sue.

A named plaintiff in a class action who cannot establish the requisite

case or controversy between himself and the defendants simply cannot

seek relief for anyone—not for himself, and not for any other member

of the class.

Griffin v. Dugger, 823 F.2d 1476, 1482-83 (11th Cir. 1987) (multiple citations,

quotation marks, and brackets omitted).

Standing is a low threshold. Ross v. Bank of America, N.A., 524 F.3d 217,

222 (2d Cir. 2008). To establish Constitutional, or Article III, standing, a plaintiff

must show: “1) that he personally has suffered an actual or prospective injury as a

result of the putatively illegal conduct; 2) that the injury can be fairly traced to the

challenged conduct; and 3) that the injury is likely to be redressed through court

action.” Saladin v. City of Milledgeville, 812 F.2d 687, 690 (11th Cir. 1987).

“[T]he fact that an injury may be outweighed by other benefits, while often

sufficient to defeat a claim for damages, does not negate standing.” FW/PBS, Inc.

v. City of Dallas, 493 U.S. 215, 231 (1990).

Here, the parties have contrasting positions regarding whether Golson has

Article III standing. Provident’s primary legal argument is that when an insurance

company has “paid all benefits in full ... [t]here is no case or controversy[.]” (Doc.

35 at 8 (citing Harrison v. United Mine Works of Am. 1974 Ben. Plan & Trust, 941

F.2d 1190, 1193 (11th Cir. 1991); Neighborhood Health P’ship Inc. v. Fischer, 913

So. 2d 703, 705 (Fla. 3d DCA 2005); Ramon v. Aries Ins. Co., 769 So. 2d 1053 (Fla.

3d DCA 2000).). Furthering this point, Provident repeatedly directs this Court to

the Eleventh Circuit’s decision in A&M Gerber Chiropractic LLC v. GEICO

General Insurance Company, 925 F.3d 1205 (11th Cir. 2019), as dispositive

precedent on the issue before the Court. This Court disagrees.

In A&M Gerber, the plaintiff sued his automobile insurance carrier over its

handling of his claim for personal injury protection (PIP) benefits. Under the

automobile insurance policy, the insured could obtain up to $2,500 in PIP if he was

not diagnosed by an authorized health care provider with an emergency medical

condition (EMC) or up to $10,000 if he had such a diagnosis. 925 F.3d at 1208.

There, pre-suit, the insured received $7,311 in PIP benefits even though he had not

been diagnosed with an EMC. Id. Despite receiving nearly three times the capped

amount, the insured’s assignee filed suit anyway, claiming that the insurance

company maintained a general practice of underpaying PIP benefits. Id. The

assignee did not seek monetary damages; instead, it sought classwide declaratory

relief. Id. at 1209. The carrier moved for summary judgment, arguing that the

assignee lacked standing because it was undisputed that the insured had received

more than he was entitled to receive under the insurance policy. Id.

On appeal to the Eleventh Circuit after the district court denied the insurer’s

summary judgment motion, the Eleventh Circuit reversed. The appellate court,

noting that the case did not involve damages for past harm, recognized that when a

plaintiff seeks declaratory relief, the plaintiff must allege facts from which it appears

that there is a substantial likelihood that he will suffer injury in the future. Id. at

1210-1211. In that circumstance, because the insured already had received the

maximum payout under the policy ($2,500), for declaratory relief purposes, it did

not matter how the court interpreted the policy. Id. at 1212. In other words, all

benefits had been exhausted.

A&M Gerber is inapplicable for several reasons. First, unlike there, Golson

is seeking monetary damages due to Provident’s alleged breach of the Policy. This

is not a case, as was A&M Gerber, that concerned standing in the context of a claim

for declaratory relief.

More importantly, A&M Gerber was “an exhaustion of benefits case.” Id. at

1214. Meaning, that when the policy benefits (there, the $2,500 PIP limit) were fully

exhausted, there was no case or controversy because no more money under the PIP

benefit would be owed regardless of the outcome of the claim for declaratory relief.

Here, Provident is still paying monthly disability benefits under the Policy and

presumably will continue to pay these benefits until the day that Golson dies. Indeed,

unlike in A&M Gerber, the Policy contains no monetary cap (like a lifetime

maximum benefits cap) or limitation whatsoever on the amount of benefits paid,

other than Golson’s death. Thus, it cannot be said that Golson has exhausted his

benefits under the Policy, as was the case in A&M Gerber. From all that appears,

Provident will be paying disability benefits for years and years to come.

Even more fundamental, the parties have contrasting positions regarding

whether Golson has been underpaid or overpaid on the Policy. Through his expert

CPA witness, Golson says he has been underpaid by $518.73 between January 2003

to April 2019. (Doc. 36-3 at 13-15; Doc. 36-3 at 5, 9.) Provident, using various

spreadsheets and running tallies, says Golson has been overpaid by $709.53 for the

same period, (Doc. 36-4 at 4), and by $390.27 from January 2013 to November

2019.4 (Doc. 35 at 4-5, 9, 15.) Provident then goes on to argue that, regardless of

which index one uses and regardless of which expert’s data they use, all of the data

generally shows that Golson has been paid more than he was contractually entitled

to receive under the Policy.5 (Doc. 39 at 7.) Therefore, Provident argues, it does not

matter if it used the incorrect index, miscalculated the monthly COLA, or shorted

Golson a few dollars every month, because the extra day of COLA paid every

January rendered any unrelated breaches for a lesser total amount unactionable.

4 Because the lawsuit was filed on February 15, 2019 and due to the applicable six-year statute of

limitations, the operative time period for discussion is from February 2013 to the present. While

the parties recognize the pertinent time frame at issue, they nevertheless date the issue as beginning

in 2002 when Provident resumed making monthly disability payments after settlement of the

previous litigation.

5 As Provident acknowledges, its standing argument is based simply on the “amount of payment”

and not the “basis” for that payment. (Doc. 39 at 7.)

The Court finds fault with Provident’s argument for several reasons. First,

the January overpayment bears no factual connection to the underpayments made

during the remaining months of each year. In other words, Provident does not claim

that it underpaid Golson from February through December every year because it

overpaid him every January. Instead, they are completely independent. If Provident

purposefully paid lesser amounts from February to December every year to account

for the overpayment made every January, then the standing issue is much easier to

resolve and is likely one warranting dismissal of this case on standing grounds.

However, that is not the set of facts presented here.

Provident also does not allege that, had it been using the correct index and

paying higher monthly payments to Golson, it would not have paid the extra day of

COLA benefits each January. As a result, had Provident been using the 1988 index,

as Golson argues it should, then Golson would have received a higher monthly

payment in addition to the overpayment each January. This is further evidence that

the January overpayment is not connected to Provident’s use of the 1967 index.

Second, the Court also notes that Provident is not asking, nor has it ever asked,

for Golson to repay the January overpayments. (Doc. 36-3 at 25.) Provident also

does not argue that the overpayment is being asserted as a recoupment claim or offset

claim to Golson’s claims. Instead, the only import that the annual overpayment

appears to have is the convenience that it now serves in defending against an

unrelated breach under its currently asserted Article III standing argument. Lawsuit

aside, this overpayment has had no relevance in how Provident historically has

otherwise paid benefits under the Policy, and presumably, how it will pay benefits

going forward.

Third, as framed by Provident, its “no harm” argument ignores possible

defenses that Golson may have as to any assertion by Provident to the applicability

of the overpayment, such as voluntary payment, estoppel, waiver, and the like. See,

e.g., Manville v. Tennessee Valley Authority, No. 2:99-CV-2294-VEH, 2006 WL

8436900, at *10 (N.D. Ala. July 31, 2006) (explaining defenses); McCabe v.

Comm’r of Social Security, 661 F. App’x 596, 598 (11th Cir. 2016) (discussing

possible waiver of overpayment of benefits). For example, Provident argues that

every January, Provident knowingly, willfully, voluntarily, and without mistake

pays an extra day of COLA benefits. A knowing and voluntary payment may very

well be subject to legitimate legal defenses should Provident try to use that payment

to its benefit through a claim or defense of recoupment or offset. Indeed, all of these

are merits-related issues that very well could render Provident’s voluntary

overpayment irrelevant and without legal importance for purposes of Golson’s claim

that Provident has breached the Policy in other respects.

More importantly, Provident acknowledges, as does Golson, that an

underpayment each month constitutes an independent and distinct breach of the

Policy. As a distinct breach, the Court must look at each and every month

independently from each other month. That acknowledgement alone renders Golson

with standing if for no other reason that Golson can show a financial injury or harm

for each month in which the incorrect index is used.

To summarize, standing is a low threshold that requires Golson to show an

actual or prospective injury that can be fairly traced to the challenged conduct and

that can be redressed through court action. Given the allegations in the Complaint

and Golson’s contentions on summary judgment, which Provident itself has

accepted as true for the purposes of the standing issue, the Court concludes there is

sufficient harm or injury connected to the use of an incorrect index to proceed. This

is true even if this harm or injury is otherwise “outweighed by other benefits”, such

as Provident’s payment of an extra day of COLA benefits every January.

CONCLUSION

For the foregoing reasons, the Court hereby DENIES the Defendants’ motions

for summary judgment on the issue of standing. According, it is ORDERED as

follows:

1. the Motion for Summary Judgment of Defendant Provident (Doc. 34) is

DENIED;

2. the Motion for Summary Judgment of Defendant Unum Group (Doc. 47)

is DENIED;

3. the Motion to Dismiss of Defendant Unum Group (Doc. 45) is DENIED

as premature; and

4. pursuant to the Court’s Order of May 28, 2019 (Doc. 18), the parties shall

file a new Rule 26(f) report proposing a schedule for the remaining

proceedings.

DONE and ORDERED on September 28, 2020.

/s/ R. Austin Huffaker, Jr.

R. AUSTIN HUFFAKER, JR.

UNITED STATES DISTRICT JUDGE