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Beazley v. Metropolitan Life Insurance Co.

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

August 20, 2019

SHARON KIM BEAZLEY, ETAL.
v.
METROPOLITAN LIFE INSURANCE COMPANY AND SCHLUMBERGER TECHNOLOGY CORPORATION

          HANNA JUDGE

          MEMORANDUM RULING

          S. MAURICE HICKS, JR., CHIEF JUDGE

         The above captioned matter concerns a claim for benefits under a life insurance policy governed by the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., and is before the Court for a decision on the briefs and stipulated administrative record. For the reasons assigned herein, all claims are hereby DISMISSED WITH PREJUDICE.

         FACTUAL AND PROCEDURAL BACKGROUND

         Plaintiffs Sharon Kim Beazley ("Mrs. Beazley"), individually and on behalf of the minor child LMB, Jordon Kale Beazley, and Jake Lynfield Beazley filed the instant lawsuit against Defendants, Metropolitan Life Insurance Company ("MetLife") and Schlumberger Technology Corporation ("STC"), alleging that Defendants improperly denied a life insurance claim for benefits. See Record Document 1. Plaintiffs are the wife, sons, and granddaughter of Greg Lynfield Beazley ("Mr. Beazley") who died on June 12, 2014. See id. at ¶¶ 3-6.

         Mr. Beazley is a former employee of STC. See id. at ¶ 7. STC established the Schlumberger Group Life, Accidental Death & Dismemberment, and Business Travel Accident Plan ("the Plan"), an employee welfare plan as defined by ERISA, to provide basic and supplemental life insurance benefits to its eligible employees. See Record Document 7 at ¶ 8. MetLife issued STC a group insurance policy to fund benefits payable under the Plan. See id. MetLife also served as the claims administrator for the Plan. See id. at ¶ 9. Mr. Beazley purchased group life insurance through the Plan. See Record Document 1 at ¶¶ 8-9. Plaintiffs allege that Mr. Beazley's life was insured in excess of $1, 034, 000.00. See id. at¶8.

         Mr. Beazley's employment with STC ended on May 6, 2014 as part of a reduction in workforce. See id. at ¶ 10. Plaintiffs assert that after his separation from STC, Mr. Beazley was eligible to port or convert his existing life insurance coverage. See id. at ¶ 11. Plaintiffs allege that Mr. Beazley's application period to elect to continue his coverage was extended by 45 days because of MetLife's untimely notice of his options under the policy. See id. at ¶¶ 12-13. On June 12, 2014, Mr. Beazley died before electing to port or convert his coverage. See id. at ¶¶ 14-15. Mrs. Beazley filed a claim with MetLife, which was denied. See id. at ¶ 17. Mrs. Beazley appealed the denial of her claim, which was also denied. See id. at ¶ 18.

         Plaintiffs allege that MetLife and STC are liable for (1) failing to timely provide them with notice of their rights under Mr. Beazley's insurance policies or plans; (2) failing to pay benefits owed under the policies or plans; and (3) failing to act as a competent and prudent plan administrator. See id. at ¶¶ 19-20. Plaintiffs contend that they are entitled to all amounts due under the policy, judicial interest, attorney's fees, court costs, and any applicable penalties under ERISA, 29 U.S.C. § 1001 et seq. See id at ¶ 21.

         Defendants state that per the terms of the Plan, Mr. Beazley's coverage ended with his separation from employment with STC on May 6, 2014. See Record Document 7 at ¶¶ 7-9. Defendants claim that Mr. Beazley was provided notice of his portability and conversion rights under the plan, but he did not port or convert his coverage prior to his death on June 12, 2014. See id. at ¶¶ 12, 15, 16. Defendants maintain that per the terms of the Plan, Mr. Beazley's death prohibits the retroactive exercise of the portability and conversion privileges afforded by the Plan. See id. at ¶ 15. Defendants deny that they acted arbitrarily and capriciously in the determination of Mrs. Beazley's claim. See id at ¶ 19.

         This Court issued an ERISA Case Order setting forth briefing deadlines applicable to this matter. See Record Document 9. In response, the parties filed statements stipulating that the Plan at issue is governed by ERISA, and ERISA preempts all state law claims as they may relate to the Plan. See Record Document 10; Record Document 14. The Defendants provided a full and complete copy of the Plan and the administrative record concerning Mrs. Beazley's claim for benefits and subsequent appeal. See Record Document 12, Ex-1 Your Benefit Plan - Schlumberger Technology Corporation (herein "SPD")[1], Ex-2 Administrative Appeal Record ("AAR"). The parties stipulated that the administrative record is complete. See Record Document 14. The matter was placed before the Court for a decision on the briefs and stipulated administrative record.

         Thereafter, Defendants filed a Supplemental Answer and Cross Claim for Interpleader. See Record Document 21. As Cross-claimants in Interpleader, MetLife and STC named Jared Beazley as Defendant in Interpleader upon their belief that Jared Beazley is another biological child of Mr. Beazley who was not made a party of the original complaint. See id. at ¶ 5. Mr. Beazley designated Mrs. Beazley, Jake Beazley, Jordan Beazley, and LMB as primary beneficiaries under his basic life insurance policy. See id. at ¶¶ 8-10. However, Mr. Beazley did not name a beneficiary for his supplemental policy. See id. As such, any payment under the supplemental policy would follow the Plan's provision concerning the death of a participant without a designated beneficiary. See id. at ¶ 11. MetLife and STC contend that because the position of Plaintiffs and Jared Beazley are adverse, a ruling in favor of the Plaintiffs could potentially expose them to multiple liabilities. See id. at ¶¶ 13-14. In response, Jared Beazley asserts a claim that as a natural born son of Mr. Beazley he is also a proper beneficiary. See Record Document 24 at ¶¶ 16-17. Jared Beazley agreed to all stipulations in this case. See Record Document 27.

         All parties have submitted trial briefs in support of their respective positions based on the stipulated administrative record. See Record Document 28; Record Document 31; Record Document 34. The parties also submitted supplemental briefs at the request of the Court. See Record Document 41; Record Document 42; Record Document 45; Record Document 47; Record Document 48. Accordingly, this matter is ripe for a determination.

         LAW AND ANALYSIS

         I. Standard of Review Under ERISA

          "ERISA was enacted to promote the interests of employees and their beneficiaries in employee benefit plans and to protect contractually defined benefits." Schadler v. Anthem Life Ins. Co.. 147 F.3d 388, 393 (5th Cir. 1998) (citation omitted). ERISA authorizes a civil action by a plan participant or beneficiary "to recover benefits due to him under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). The standard of review in an ERISA case is governed by the language of the plan at issue. Generally, a denial of benefits under an ERISA plan is reviewed de novo. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956 (1989). However, courts must apply an abuse of discretion standard when "the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Id. at 115. In this case, the policy specifically and expressly conferred discretionary authority upon MetLife. See SPD 084.[2] Therefore, the abuse of discretion standard applies. Additionally, regardless of the administrator's ultimate authority to determine benefit eligibility, factual determinations made by the administrator during the course of a benefits review should be reviewed for an abuse of discretion. See Chacko v. Sabre Inc., 473 F.3d 604, 610 (5th Cir. 2006); McCall v. Burlington Northern/Santa Fe Co., 237 F.3d 506, 512 (5th Cir. 2000).

         An "administrator abuses its discretion where the decision is not based on evidence, even if disputable, that clearly supports the basis for its denial." Holland v. Int'l Paper Co. Ret. Plan, 576 F.3d 240, 246 (5th Cir. 2009). "If the plan fiduciary's decision is supported by substantial evidence and is not arbitrary or capricious, it must prevail." Schexnavder v. Hartford Life & Ace. Ins. Co.. 600 F.3d 465, 468 (5th Cir. 2010). "Substantial evidence is more than a scintilla, less than a preponderance, and is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Anderson v. Cvtec Indus., Inc., 619 F.3d 505, 512 (5th Cir. 2010). The administrator's decision is arbitrary "only if made without a rational connection between the known facts and the decision or between the found facts and the evidence." Holland, 576 F.3d at 246-247. Under the abuse of discretion standard, a court's "review of the administrator's decision need not be particularly complex or technical; it need only assure that the administrator's decision fall somewhere on a continuum of reasonableness - even if on the low end." Id., at 247 (quoting Corry v. Liberty Life Assur. Co. of Boston, 499 F.3d 389, 398 (5th Cir. 2007)).

         In cases where the insurance provider is also the claims administrator, there exists an inherent conflict of interest. See Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 114, 128 S.Ct. 2343, 2349 (2008). However, the Fifth Circuit has joined the majority of other circuits in finding that such a conflict does not change the standard of review. See Holland, 576 F.3d at 248. Rather, the conflict is "but one factor among many that a reviewing judge must take into account." ]d. (quoting Glenn, 554 U.S. at 116). A reviewing court may give more weight to such a conflict "where the circumstances surrounding the plan administrator's decision suggest procedural unreasonableness." Crowell v. CIGNA Group Ins., 410 Fed.Appx. 788, 793-94 (5th Cir. 2011) (quoting Schexnayder, 600 F.3d at 469). "Procedural unreasonableness" exists when a plan administrator employs an unreasonable method in making the benefits decision. See Davis v. Aetna Life Ins. Co.. 699 Fed.Appx. 287, 293 (5th Cir. 2017).

         II. Interpretation of the Plan

         A. Relevant facts

         The Plaintiffs contend that MetLife improperly denied Mrs. Beazley's claim for benefits. See Record Document 28. In support thereof, Plaintiffs have provided the Court with a timeline of the relevant factual events. See id. at 3. Mr. Beazley, while employed by STC, was on medical leave from September 2013 through April 2014. See id.[3] On May 6, 2014, Mr. Beazley was separated from his employment with STC due to a reduction in workforce. See id; AAR 124. Plaintiffs state that on the same date, another company hired Mr. Beazley. See Record Document 28 at 3. On May 18, 2014, while traveling on job-related business for his new employer, Mr. Beazley experienced health problems and was admitted to a hospital in Dallas, Texas. See Id. On May 30, 2014, Mr. Beazley was released from the hospital and returned home to Breaux Bridge, Louisiana. See id.[4] Mr. Beazley's health deteriorated, and Mrs. Beazley took care of him on a full time basis. See id. In the interim, on May 27, 2014, MetLife generated a letter addressed to Mr. Beazley entitled "Notice of Group Life Insurance Portability and Conversion Privileges - Schlumberger." See id.; AAR 029. The letter was postmarked May 29, 2014. See Record Document 28 at 3; AAR 101.[5] The letter contained information regarding Mr. Beazley's option to continue life insurance coverage through porting and/or converting his policy. See AAR 053-074. The letter also included the necessary application forms. See id.

         On June 12, 2014, thirteen days after his release from the hospital, and thirty-seven days after his separation from STC, Mr. Beazley died. See Record Document 28 at 3; AAR 007. The next day, Donna Latiolais ("Ms. Latiolais"), a close family friend, contacted MetLife on behalf of Mrs. Beazley. See Record Document 28 at 3; AAR 015. Ms. Latiolais advised MetLife of Mr. Beazley's death, and requested information about his benefits. See id. The administrative record reflects that Ms. Latiolais advised MetLife that Mrs. Beazley received MetLife's letter on or about June 2, 2014, but did not open the mail until June 13, 2014, the day after her husband died. See AAR 015.

         Mrs. Beazley filed a claim for benefits with the assistance of an attorney. See AAR 001-010. By letter dated June 2, 2015, MetLife denied the claim. See AAR 079-081. Therein, MetLife noted that Mr. Beazley's coverage ended on May 6, 2014, the date his employment with STC was terminated. See id. MetLife explained that per the terms of the Plan, for coverage to be in place, MetLife must have received a completed conversion application from Mr. Beazley within thirty-one days from the date his coverage ended. See id. Because Mr. Beazley died more than thirty-one days from the date his coverage was terminated, MetLife concluded that no coverage was in effect at the time of his death. See id. The Court notes that MetLife's initial denial did not address the issue of porting coverage.

         Mrs. Beazley appealed the decision with the assistance of her attorney. See AAR 107-123. By letter dated September 3, 2015, MetLife upheld its denial of Mrs. Beazley's claim. See AAR 129-132. Therein, MetLife again noted that Mr. Beazley's life insurance coverage ended with the date of his termination, May 6, 2014. See Id. MetLife stated: "[t]he extension period provided to Mr. Beazley due to the late written notice of the option to continue his life insurance did not extend the group life insurance itself; it extends the application period only." See id. MetLife concluded that because Mr. Beazley did not submit an application to port his coverage, no coverage was in effect at the time of his death. See id.

         B. Language of the Plan

          The provisions of the Plan relevant to MetLife's denial of Mrs. Beazley's claim are as follows:

ELIGIBILITY PROVISIONS: INSURANCE FOR YOU DATE YOUR INSURANCE ENDS
Your[6] insurance will end on the earliest of:
For all coverages:
1. the date the Group policy ends; or
2. the date insurance ends for Your class; or
3. the end of the period for which the last premium has been paid for You; or
4. the date Your employment ends; Your employment will end if You cease to be Actively at Work in any eligible class, except as stated in the section entitled CONTINUATION OF INSURANCE WITH PREMIUM PAYMENT;
[...]
Please refer to the section entitled LIFE INSURANCE: CONVERSION OPTIONS FOR YOU for information concerning the option to convert to an individual policy of life insurance if Your Life Insurance ends.
In certain cases insurance may be continued as stated in the section entitled CONTINUATION OF INSURANCE WITH PREMIUM PAYMENT.

See SPD041.

         The section entitled "CONTINUATION OF INSURANCE WITH PREMIUM PAYMENT" establishes the terms and conditions for porting coverage. It states in pertinent part:

CONTINUATION OF INSURANCE WITH PREMIUM PAYMENT [...]
AT YOUR OPTION: PORTABILITY

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