United States District Court, E.D. Kentucky, Central Division, Lexington
MEMORANDUM OPINION AND ORDER
JOSEPH M. HOOD, District Judge.
Plaintiff Barbara Jean Burgher seeks review of the denial of death benefits under a group life insurance policy. Burgher and Defendants Verizon South, Inc. and Verizon Communications Inc. have filed motions for judgment. [D.E. 18, 24]. This matter being full briefed,  and the Court being otherwise sufficiently advised, this matter is ripe for review.
I. Procedural History
James R. Burgher was enrolled in benefits through his employment with General Telephone and Electric ("GTE"), which is now owned by Defendant Verizon Communications Inc. On February 7, 1994, James Burgher was sent a letter indicating that his life insurance coverage had stopped due to non-payment of premium. [D.E. 14-1 at 6]. James Burgher died on August 31, 1999. On September 2, 1999, a letter from the GTE Benefits Center was sent to Kelli Stone, James Burgher's daughter, indicating that, due to her father's death, Stone should call the GTE Benefits Center for further information. [D.E. 14-1 at 7-8]. On September 14, 1999, Kirke Van Orsdel sent a letter to William M. Burgher, James Burgher's son, indicating that a claim under the Group Universal Life plan could not be filed because James Burgher's life insurance coverage had lapsed. [D.E. 14-1 at 9]. Later, on March 13, 2000, the GTE Benefits Center sent another letter to Kelli Stone informing her that GTE had been unable to close out the unpaid life insurance claim for James Burgher. [D.E. 14-1 at 10]. A similar letter was sent on August 22, 2000. [D.E. 14-1 at 11].
James Burgher's application for Group Life Insurance named Plaintiff Barbara J. Burgher as the first beneficiary. [D.E. 14-1 at 4]. Kelli Stone filed an affidavit swearing that she was contacted by the GTE Benefits Center and informed that Plaintiff Barbara J. Burgher was entitled to insurance proceeds. [D.E. 18-1 at 1]. Kelli Stone further swore that she could not contact Plaintiff about the benefits until 2013. [D.E. 18-1 at 1]. Similarly, Plaintiff swore in an affidavit that she was contacted by Kelli Stone regarding life insurance benefits in 2013. [D.E. 18-2 at 1]. Plaintiff stated that she contacted Verizon and was told Verizon would attempt to recover documents regarding the claim. [D.E. 18-2 at 1]. However, Verizon was unable to recover any documents and Plaintiff filed suit. [D.E. 18-2 at 1].
Plaintiff filed her complaint in Fayette Circuit Court on December 12, 2013, alleging breach of contract by Defendants Verizon South, Inc., Verizon Communications Inc., and Marsh & McClennan Agency LLC. [D.E. 1-1 at 4-6]. The complaint alleged that Plaintiff was the beneficiary of a life insurance policy related to her late ex-husband, provided by her ex-husband's employer, GTE, now owned by Defendant Verizon Communications. On January 9, 2014, Defendants removed the action to this Court on the basis of federal question jurisdiction. Defendants allege that the life insurance policy is an employee welfare benefit plan covered by the Employee Retirement Income Security Act of 1974 ("ERISA"), and, therefore, Plaintiff's state law claim is preempted by federal law. Defendant Marsh & McClennan Agency LLC filed a Motion to Dismiss, [D.E. 19], alleging that Plaintiff had failed to plead the existence of a contract with Defendant Marsh & McClennan. On July 7, 2014, after Plaintiff failed to file a response, the Court granted Defendant's motion. [D.E. 23]. Plaintiff and Defendants have now filed motions for judgment.
II. Standard of Review
This action is governed by ERISA's civil enforcement system, 29 U.S.C. § 1132(a)(1)(B). "A de novo standard of review applies to decisions by plan administrators unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Hunter v. Caliber Sys., Inc., 220 F.3d 702, 710-11 (6th Cir. 2000) (citations omitted) (internal quotation marks omitted). "[W]here [a] plan clearly confers discretion upon the administrator to determine eligibility or construe the plan's provisions, the determination is reviewed under the arbitrary and capricious' standard." Id. at 711 (citing Wells v. U.S. Steel & Carnegie Pension Fund, Inc., 950 F.2d 1244, 1248 (6th Cir. 1991)). Where a plan gives discretion to an administrator operating under a conflict of interest, that conflict is weighed as a factor in deciding whether the administrator's decision was arbitrary and capricious. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111 (2008). A conflict of interest exists where a plan administrator "both evaluates claims for benefits and pays benefits claims." Id. at 112.
"[T]he arbitrary and capricious standard is the least demanding form of judicial review of administrative action." Williams v. Int'l Paper Co., 227 F.3d 706, 712 (6th Cir. 2000) (citations omitted). The Court "must decide whether the plan administrator's decision was rational in light of the plan's provisions.'" Id. (quoting Daniel v. Eaton Corp., 839 F.2d 263, 267 (6th Cir. 1988)). "[W]hen it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious.'" Id. (quoting Davis v. Ky. Fin. Cos. Ret. Plan, 887 F.2d 689, 693 (6th Cir. 1989)). In reviewing the administrator's decision, the Court may only consider evidence available to the plan administrator at the time the final decision was made. Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir. 1997) (quoting Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 381 (6th Cir. 1996)). With these principles in mind, the Court will review Plaintiff's arguments.
Defendants removed this action on the basis of federal question jurisdiction, arguing that Plaintiff's claim is preempted by ERISA. At no time has Plaintiff argued that her claim is not preempted by ERISA. Furthermore, the Court agrees that Plaintiff's claim is governed by ERISA.
"ERISA preempts state law and state law claims that relate to' any employee benefit plan as that term is defined therein.... The phrase relate to' is given broad meaning such that a state law cause of action is preempted if it has connection with or reference to that plan.'" Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272, 1275 (6th Cir. 1991). ERISA applies to all "employee benefit plan[s]" that meet certain requirements. 29 U.S.C. § 1003(a). An "employee welfare benefit plan" is
any plan, fund, or program which has heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, ... benefits in the event of... death....
29 U.S.C. § 1002(1). Thus, the life insurance policy at issue is an employee welfare benefit plan covered by ERISA, and Plaintiff's ...