United States District Court, E.D. Kentucky, Northern Division
MEMORANDUM OPINION AND ORDER
L. Bunning United States District Judge
an interpleader action by Humana to determine the beneficiary
entitled to life insurance proceeds. This Court has
jurisdiction over this action pursuant to 29 U.S.C. §
1132(e)(1) and 28 U.S.C. § 1331, because it arises under
the Employee Retirement Income Security Act of 1974, 29
U.S.C. § 1001 (“ERISA”).
Factual and Procedural Background
Ted Hamilton (“Decedent”) was a participant in
the Humana Basic Life Insurance Plan (“the
Plan”), an ERISA-regulated employee welfare benefit
plan. (Doc. # 1 at ¶ 8). Interpleader Plaintiff Humana
Insurance Company of Kentucky (“Humana”)
administers the Plan. Id. At his time of death,
Decedent was enrolled for basic life insurance coverage under
the Plan. Id. at ¶ 9. The Plan provides that
participants may name a beneficiary, and that if a
beneficiary is not named, Humana can pay the Plan Benefits at
its option to the plan participant's surviving spouse or
estate. Id. at ¶¶ 12, 13; (Doc. # 28-1 at
16, 2014, Decedent enrolled in the Plan through Humana's
on-line platform, and named Whitney O'Neal as the primary
beneficiary of the Plan Benefits. Id. at ¶ 15.
On May 14, 2015, Decedent re-enrolled in the Plan through
Humana's on-line platform. Id. at ¶ 14.
Decedent did not select a beneficiary for the Plan Benefits
during this re-enrollment process. Id. at ¶ 16.
died on August 5, 2015. Id. at ¶ 18. Before
Humana paid the Plan benefits, it received a letter from
Tessa Perkins, dated August 28, 2015, asking that all
proceeds be forwarded to Decedent's estate. Id.
at ¶ 19. Subsequently, Humana received a letter from
O'Neal dated December 9, 2015, indicating that she
intended to “pursue the life insurance policy” of
Decedent. Id. at ¶ 20. O'Neal had completed
and signed the Beneficiary Statement on or about November 6,
2015. Id. at ¶ 21.
on the facts before it, Humana could not determine whether a
court would find that Decedent's July 16, 2014
beneficiary designation naming O'Neal as primary
beneficiary remained valid, or whether Decedent's failure
to name a beneficiary during his May 14, 2015 re-enrollment
voided the designation to O'Neal. Consequently, believing
that it faced exposure to multiple liability, Humana filed
this interpleader action pursuant to Federal Rule of Civil
Procedure 22, naming O'Neal and Perkins as defendants.
Id. at ¶¶ 22-27. O'Neal filed a
cross-claim against Perkins and a counterclaim against
Humana. (Doc. # 6). O'Neal later voluntarily dismissed
her cross-claim against Perkins. (Doc. # 17). On December 20,
2016, the Court conducted a status conference with the
parties, and ordered discovery. (Doc. # 18). The matter has
now culminated in a Motion for Judgment on the Record by
O'Neal (Doc. # 24),  Humana's Motion to Dismiss
O'Neal's Counterclaim (Doc. # 25), Humana's
Motion for Attorney Fees (Doc. # 27), a Motion for Summary
Judgment by Perkins (Doc. # 28), and a Motion for Judgment on
the Pleadings by O'Neal (Doc. # 33). The various motions
have been fully briefed and are now ripe for the Court's
Standard of Review
parties have brought a variety of motions, with each
requiring a different standard of review. First, the Court
will consider Humana's Motion to Dismiss O'Neal's
Counterclaim. To survive a Rule 12(b)(6) motion to dismiss,
“a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). The plausibility standard is met when
the facts in the complaint allow “the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. The complaint need
not contain “detailed factual allegations, ” but
must contain more than mere “labels and
conclusions” or “a formulaic recitation of the
elements of a cause of action.” Id. Put
another way, the “[f]actual allegations must be enough
to raise a right to relief above the speculative
level.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007).
the Court will consider Perkins's Motion for Summary
Judgment in conjunction with O'Neal's Motion for
Judgment on the Pleadings. Summary judgment is appropriate when
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). If there is a dispute over facts that
might affect the outcome of the case under governing law,
then entry of summary judgment is precluded. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The
moving party has the ultimate burden of persuading the court
that there are no disputed material facts and that he is
entitled to judgment as a matter of law. Id. Once a
party files a properly supported motion for summary judgment
by either affirmatively negating an essential element of the
non-moving party's claim or establishing an affirmative
defense, “the adverse party must set forth specific
facts showing that there is a genuine issue for trial.”
Id. at 250. “The mere existence of a scintilla
of evidence in support of the [non-moving party's]
position will be insufficient; there must be evidence on
which the jury could reasonably find for the [non-moving
party].” Id. at 252.
a party may move for judgment on the pleadings “[a]fter
the pleadings are closed-but early enough not to delay
trial.” Fed.R.Civ.P. 12(c). “For purposes of a
motion for judgment on the pleadings, all well-pleaded
material allegations of the pleadings of the opposing party
must be taken as true, and the motion may be granted only if
the moving party is nevertheless clearly entitled to
judgment.” Tucker v. Middleburg-Legacy Place,
539 F.3d 545, 549 (6th Cir. 2008) (internal quotation marks
omitted). “A motion brought pursuant to Rule 12(c) is
appropriately granted when no material issue of fact exists
and the party making the motion is entitled to judgment as a
matter of law.” Id.
Humana was not required to exhaust administrative
O'Neal contends that Humana failed to exhaust its
administrative remedies as required under ERISA. (Doc. # 6 at
¶ 7; Doc. # 35 at 4-5). “Although ERISA is silent
as to whether exhaustion of administrative remedies is a
prerequisite to bringing a civil action, [the Sixth Circuit
has] held that ‘the administrative scheme of ERISA
requires a participant to exhaust his or her administrative
remedies prior to commencing suit in federal
court.'” Coomer v. Bethesda Hosp., Inc.,
370 F.3d 499, 504 (6th Cir. 2003) (quoting Miller v.
Metro. Life Ins. Co., 925 F.2d 979, 986 (6th Cir.
1991)). “The exhaustion requirement ‘enables plan
fiduciaries to efficiently manage their funds; correct their
errors; interpret plan provisions; and assemble a factual
record which will assist a court in reviewing the
fiduciaries' actions.'” Id. (quoting
Ravencraft v. UNUM Life Ins. Co. of Am., 212 F.3d
341, 343 (6th Cir. 2000)).
Sixth Circuit has not addressed whether the exhaustion
requirement also applies to plan administrators. To the
contrary, within the Sixth Circuit, it is not uncommon for
plan administrators to bring interpleader actions when faced
with exposure to multiple liability, as Humana did here.
See, e.g., Metro. Life Ins. Co. v. Marsh,
119 F.3d 415 (6th Cir. 1997). A few courts, however, have
suggested that plan administrators should be required to
exhaust administrative remedies before bringing an
interpleader action in federal court. See McLaren Inv.
& Retirement Comm. v. Whitehead, No. 1:08-CV-1178,
2009 WL 2777233 (W.D. Mich. Aug. 28, 2009). O'Neal
implores this Court to do the same.
McLaren, as in this case, the Court was asked to
determine “which of two claimants [was] entitled to
benefits that [were] indisputably owing under an ERISA
plan.” Id. at *2. There, the court endorsed
the theory of “reverse exhaustion, ” and found
that where the case required the interpretation of the Plan,
and the Plan vested the administrator with discretion to
interpret the Plan documents or determine eligibility for
benefits, exhaustion should be required. Id. at
*2-4. This Court need not decide whether to endorse
“reverse exhaustion, ” because even if that
theory were recognized, it would not apply in this case.
McLaren Court primarily based its decision on a case
from the First Circuit. See Id. (citing Forcier
v. Metro. Life Ins. Co., 469 F.3d 178 (1st Cir. 2006)).
In Forcier, the decedent had never designated a
beneficiary. Forcier, 469 F.3d at 181. The policy
provision at issue read as follows:
If there is no Beneficiary at your death for any amount of
benefits payable because of your death, that amount will be
paid to one or more of the following persons who are related
to you and who survive you:
1. spouse; 2. child; 3. parent; 4. brother and sister.
However, we may instead pay all or part of that amount to