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Life Insurance And ERISA

As any ERISA attorney can tell you, the rules surrounding ERISA are tough.  This is illustrated in a Fifth Circuit opinion styled, Kimberly D. Hendrix v. Prudential Insurance Company of America, et al.

Hendrix appeals the summary judgment granted against her on her ERISA claims arising out of a life insurance policy issued to her husband Randy, by Prudential and the dismissal of her claims against her former employer, Wal-Mart.

Randy was employed by Wal-Mart until July 11, 2012.  Prudential presented evidence that it sent a letter on July 23, 2012 , notifying Randy of his right to convert his Wal-Mart policy to an individual life insurance policy.  Randy had until August 11, 2012, thirty-one days after he ceased to be insured under the Wal-Mart plan, to indicate whether he would convert to an individual policy.  Randy passed on August 27, 2012.  On September 4, 2012, because Prudential received no response to the notice of conversion and because Randy passed outside the thirty-one day conversion period, the claim for life insurance benefits was denied and Kimberly was so notified.

On December 2, 2013, Kimberly sent a letter to Prudential requesting copies of any and all information pertaining to Randy’s policies.  Prudential sent a letter in response, saying the investigation was complete.  Kimberly sent to more requests for reconsideration of the claim, but Prudential upheld its decision on both occasions and this lawsuit resulted.

Under 29 U.S.C. Section 1132(c)(1), qualifying individuals may collect penalties if any administrator fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish.  Kimberly contends that Prudential failed to furnish the requisite documents despite her requests.  However, Kimberly did not sue the administrator and accordingly, the district court correctly determined Kimberly failed to state a claim for penalties.

With respect to Prudential, to the extent Kimberly attempts to state a claim that Prudential violated 29 C.F.R. Section 2560.503-1(h)(2)(iii), she does not plead that Prudential failed to provide her copies of the administrative record from which Prudential based its decision to deny benefits.  Prudential is under no duty to provide the records of employment she seeks.

Kimberly’s claim that she is entitled to equitable relief under 29 U.S.C. Section 1132(a)(3) for failure to produce documents also fails.  Here, Congress provided a statutory framework for the production of documents that includes a provision for penalties if the administrator fails to comply under 29 U.S.C. Section 1132(c)(1).  Kimberly thus is not entitled to equitable relief on her failure to produce documents claim.

Kimberly also asserted that Prudential abused its discretion.  Here, Prudential was granted total authority to determine the payout of life insurance benefits.  Randy passed away outside of the thirty-one days after his last day of work, and he did not convert the policy in the time allowed.  Therefore, Prudential’s determination was neither arbitrary or capricious.

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