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Swenson v. Lincoln National Life Insurance Co.

United States District Court, W.D. Louisiana, Shreveport Division

June 18, 2018

KATHERYN SWENSON
v.
LINCOLN NATIONAL LIFE INSURANCE COMPANY, ET AL.

          HORNSBY JUDGE

          MEMORANDUM RULING

          ELIZABETH ERNY FOOTE MAGISTRATE JUDGE

         Plaintiff claims she is entitled to life insurance benefits under policies purchased by her late husband's employer. Before the Court are motions to dismiss filed by Defendants Lincoln National Life Insurance Company ("Lincoln") [Record Document 13] and United of Omaha Life Insurance Company ("United") [Record Document 34] and a motion for partial summary judgment filed by Plaintiff [Record Document 38]. Because Plaintiff is not entitled to benefits under the terms of either insurance policy, Lincoln's motion [Record Document 13] and United's motion [Record Document 34] are GRANTED, and the motion for partial summary judgment [Record Document 38] is DENIED AS MOOT.

         I. Background

         A. Background Prior to Litigation

         Plaintiff is the widow of Donald Swenson ("Swenson"), a former employee of Eldorado Casino Resort Shreveport ("Eldorado"). [Record Document 11 at 1-2]. Swenson took medical leave on January 1, 2013. [Id. at 3]. Some time later, Eldorado's disability insurance carrier denied his application for disability benefits, finding that his cancer was a pre-existing condition. [Id. at 4]. As his health improved, he attempted to return to work, but Eldorado did not assign him to any shifts before his death on April 18, 2014. [Id. at 3, 34].

         In 2013, Eldorado maintained a group life insurance policy through Lincoln (the "Lincoln Plan"), which provided employees with basic personal life insurance and optional supplemental coverage. [Record Document 1-6 at 8, 12]. Eldorado was the plan administrator, while Lincoln was the claims administrator with the "sole discretionary authority to determine eligibility and to administer claims in accord with its interpretation of policy provisions." [Record Document 17-1 at 5]. Plaintiff alleges that Swenson's coverage included $36, 000 in group life insurance benefits and $100, 000 in voluntary supplemental benefits and that she and Swenson paid all required premiums. [Record Document 11 at 5].

         Although the Lincoln Plan specifies a number of events that result in termination of coverage, two are relevant here: the termination of the Lincoln Plan itself and an employee's cessation of active work, which the Lincoln Plan defines as working at least thirty-five hours per week. [Record Document 1-6 at 8, 12, 20, 23]. The Lincoln Plan terminated on December 31, 2013, when Eldorado switched insurance carriers to United. [Record Documents 1-2 at 1, 5 and 1-6 at 23]. To mitigate the effects of a sudden loss of insurance, the Lincoln Plan provides several mechanisms allowing insureds to remain covered after events that would otherwise terminate coverage. First, by paying premiums as they become due, an employee who ceases active work due to disability may continue coverage for up to twelve months. [Record Document 1-6 at 23]. Second, if certain conditions are met, an employee under sixty who becomes totally disabled can continue life insurance coverage without paying premiums; the policy documents refer to this as the "Extension of Death Benefit" [Id. at 30]. Third, the Lincoln Plan provides an employee a right to convert a terminating group policy to an individual policy if coverage terminates for a reason other than the termination of plan itself (the "Conversion Privilege"). [Id. at 34]. If coverage terminates because the Lincoln Plan does, an employee with five years of continuous coverage under the plan may also exercise the Conversion Privilege. [Id.]. In either situation, the time period in which to apply for and purchase a conversion policy is thirty-one days from the termination of coverage. [Id.]. However, if the employee is not given notice of the right to convert, the period extends sixty additional days. [id.].

         On January 1, 2014, Eldorado began offering life insurance through United (the "United Plan") under two separate, but nearly identical policies, one for a basic plan, [Record Document 1-2 at 39-76], and one for supplemental coverage, [id. at 77-120]. Eldorado convened meetings for interested employees to enroll in the new coverage. Swenson v. Hldorado Casino Shreveport Joint Venture (Swenson I), No. 15-CV-2042, 2016 WL1084279, at *1 (W.D. La. Jan. 6, 2016), report and recommendation adopted, No. 15-CV-2042, 2016 WL 1109097 (W.D. La. Mar. 18, 2016). Like the Lincoln Plan, the United Plan identifies Eldorado as the plan administrator and grants United discretion to administer claims. [Record Document 1-2 at 65, 72, 110, 117]. Plaintiff alleges that Swenson applied for $122, 000 in basic and supplemental life insurance coverage. [Record Document 11 at 31].

         Under the United Plan, an employee becomes eligible for insurance upon completion of a sixty-day eligibility waiting period, which may be satisfied by sixty days of employment prior to the plan's effective date. [Record Document 1-2 at 47, 87-88]. Coverage begins once an eligible employee actively works, which the plan defines as working thirty-five hours per week, or once an employee submits a written enrollment request and commences active work. [Id. at 47-48, 87, 89]. The United Plan also provides that an employee who was insured under a prior employer-sponsored plan on the day before the effective date of the United Plan may continue coverage if the employee is eligible but not actively working due to sickness or injury, is not eligible for a continuation of insurance under the prior plan, is not retired, is not totally disabled, and is approved by United's home office (the "Continuity Provision"). [Id. at 47-48, 88].

         After Swenson's death, Plaintiff submitted claims to both insurers. [Record Document 1-2 at 1-6]. Lincoln denied her claim because Swenson was too old to qualify for an Extension of Death Benefit and because the Lincoln Plan terminated prior to his death ("Lincoln's Benefits Denial Letter"). [Id. at 4-6]. United denied benefits because Swenson had not actively worked for Eldorado during the policy period and because United had received no premiums for Swenson ("United's Benefits Denial Letter").[1] [Id. at 1]. Following these denials, Eldorado issued a check to Plaintiff "containing the life insurance premiums paid in the amount of $330.30." [Record Documents 11 at 2 and 1-2 at 7].[2]

         B. Swenson I

         Plaintiff initially sued Lincoln, United, and Eldorado in state court, alleging violations of Louisiana insurance law. Swenson I, 2016 WL 1084279, at *2. Following removal, the Court granted Plaintiff an opportunity to amend her complaint after finding that the Employee Retirement Income Security Act ("ERISA") preempted her claims. See Id. at *5; Swenson I, No. 15-CV-2042, 2016 WL 6106483, at *2 (W.D.La. Oct. 19, 2016). Plaintiffs amendment re-urged her state law claims and added fourteen claims designated as federal causes of action. See Swenson I, 2016 WL 6106483, at *2. Upon renewed motions to dismiss, the Court dismissed with prejudice all state-law claims, a federal claim for declaratory judgment, and federal claims sounding in equity: detrimental reliance, promissory or equitable estoppel, reformation, unjust enrichment, and breach of fiduciary duty. Swenson I, No. 15-CV-2042, 2017 WL 1334307, at *3-7 (W.D. La. Apr. 7, 2017), aff' sub nom. Swenson v. United of Omaha Ufe Ins. Co., 876 F.3d 809 (5th Or. 2017); Swenson I, 2016 WL 6106483, at *2-3, *5-6. The Court rejected Plaintiffs argument that administrative appeals would be futile and dismissed her ERISA claims without prejudice for failure to exhaust. Swenson 1, 2017 WL 1334307, at *5; Swenson 1, 2016 WL 6106483, at *4.[3] Plaintiff appealed, and the Fifth Circuit affirmed the dismissal of her state-law and equitable claims. Swenson I, 876 F.3d at 812. While her appeal was pending, Plaintiff settled with Eldorado. [Record Document 23-1 at 9].

         C. Plaintiffs Administrative Appeals

         Following the Court's dismissal of her claims for benefits, Plaintiff appealed to both insurers. [Record Documents 1-4 and 11-2].[4] Lincoln denied her appeal as untimely because the Lincoln Plan requires that any appeals be brought within sixty days of the initial denial ("Lincoln's Appeal Denial Letter"). [Record Document 1-5 at 2]. United also denied her appeal, asserting that Plaintiff was ineligible for benefits because Swenson had not actively worked before his death and because the Continuity Provision did not apply ("United's Appeal Denial Letter"). [Record Document 11-14 at 3-4]. United also noted that Plaintiffs appeal was untimely, as the United Plan requires beneficiaries to appeal within sixty days of denial. [Id. at 4]. In response to these denials, Plaintiff filed the instant suit.

         D. Claims in the Current Suit

         ERISA is an "enormously complex and detailed" statute addressing the management of employer-provided health, life, and retirement benefits. Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993). Pertinent to the instant suit, ERISA authorizes a beneficiary to bring a civil action to "recover benefits due to him under the terms of his plan." 29 U.S.C. § 1132(a)(1)(B). In addition, ERISA allows a beneficiary to "obtain other appropriate equitable relief... to redress [ERISA] violations or... to enforce any provisions of this subchapter or the terms of the plan." Id. § 1132(a)(3). Finally, the statute requires that plan administrators make available various documents related to an employee's coverage. Id. § 1132(c)(1). Plaintiff brings claims under each of these provisions.

         1. Claims Against Lincoln

         Plaintiff seeks $136, 000 in life insurance benefits because Lincoln "accept[ed] premiums from [P]laintiff and Mr. Swenson and . . . fail[ed] to notify [P]laintiff and Mr. Swenson that [Lincoln] did not consider Mr. Swenson as a covered employee." [Record Document 11 at 21]. This process allegedly resulted either in a continuation of life insurance coverage or in the conversion of Swenson's group policy to an individual one. [Id. at 22-23]. Plaintiff also disputes Lincoln's stated reasons for denying coverage. [Id. at 23-25]. Additionally, she alleges that Lincoln failed to provide notice that Swenson's coverage had terminated and notice of the Conversion Privilege. [Id. at 21-22]. According to Plaintiff, these alleged failures and inaccuracies entitle her to benefits. Finally, she asserts a claim for statutory penalties for Lincoln's failure to provide her with a complete record during her administrative appeal, a set of equitable claims (breach of fiduciary duty, equitable estoppel, detrimental reliance, and unjust enrichment), and a request for "Declaratory Judgment Relief." [Id. at 26-28, 36-42, 46].

         2. Claims Against United

         Plaintiff seeks $122, 000 in benefits to which she is allegedly entided under the United Plan. [Id. at 31]. In response to United's assertion that benefits are not due because Swenson was not actively working, Plaintiff alleges that Eldorado considered Plaintiff to be actively employed. [Record Documents 1-2 at 1 and 11 at 3]. She contends that under the United Plan coverage can begin by written application without the necessity of active work and thus that Swenson was insured because he had completed an application form during the open enrollment period. [Record Document 11 at 30-31]. She also asserts coverage based on United's acceptance of premiums from Eldorado on Swenson's behalf and the fact that Swenson died after the conclusion of the plan's sixty-day eligibility waiting period. [Id. at 31-32], Finally, she alleges that Swenson was covered under the Continuity Provision. [Id. at 32-36]. As she does against Lincoln, Plaintiff also seeks equitable remedies and statutory penalties. [Id. at 36-40, 42-46].

          3. Pending Motions

         Both Lincoln and United have filed motions to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, asserting that the terms of the Lincoln Plan and the United Plan (collectively, the "Plans") bar Plaintiff from receiving benefits. [Record Documents 13 and 34]. The parties have filed oppositions and replies, which have been considered by the undersigned. [Record Documents 16, 17, 36, and 37]. Plaintiff has also filed a motion for summary judgment against Lincoln seeking penalties for Lincoln's refusal to produce documents relevant to Swenson's coverage. [Record Document 38]. Lincoln has filed an opposition to which Plaintiff has replied. [Record Documents 40 and 42].

         II. Law and Analysis

         A. Standard of Review

          In order to survive a motion to dismiss under Rule 12(b)(6), a plaintiffs complaint must "state a claim to relief that is plausible on its face." Bell Atl Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). In determining whether the plaintiff has stated a plausible claim, the court must construe the complaint in the light most favorable to her, see In re Great Lakes Dredge &Dock Co. J J , C, 624 F.3d 201, 210 (5 th Cir. 2010), and accept as true all well-pleaded factual allegations, see Twombly, 550 U.S. at 555; In re Katrina Canal Breaches Siting, 495 F.3d 191, 205 (5th Cir. 2009). However, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). Thus, the Court does not have to accept as true "conclusory allegations, unwarranted factual inferences, or legal conclusions." Plotkin v. IP AxessInc, 407 F.3d 690, 696 (5th Cir. 2005) (citing Southland Sec. Corp. v. IN Spire Ins. Sols, Inc., 365 F.3d 353, 361 (5th Cir. 2004)).

         B. State-Law Claims

         Lincoln and United move to dismiss what they characterize as Plaintiffs state-law claims on grounds of res judicata and preemption. [Record Documents 13-1 at 9-16 and 34-1 at 4]. Plaintiffs claims for detrimental reliance, unjust enrichment, and equitable estoppel are raised under ...


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