Life Insurance – ERISA

Here is a life insurance case that involves a plan under the Employee Retirement Income Security Act (ERISA).  It is a 2018, 5th Circuit Court of Appeals case styled, Jason Crawford v. Metropolitan Life Insurance Company.

This is a summary judgment case granted in favor of MetLife.  This Court sustained the ruling in favor of MetLife.

The deceased, Tracy Crawford, worked as a flight attendant for Southwest Airlines.  Tracy enrolled in the company offered life insurance benefit plan in 2008, and submitted a paper document naming her great-nephew as the primary beneficiary.

In 2011, Tracy married Jason.  Three years later she died.  Believing he was the beneficiary, Jason submitted a claim to MetLife.

MetLife, however, had no record of Tracy ever designating Jason as the beneficiary and denied Jason’s claim.

Jason sued under ERISA to enforce his rights under the plan pursuant to 29 U.S.C., Section 1132(a)(1)(B).  MetLife moved for summary judgment under Civil Rule 56(a).

Where a plan vests its administrator with the discretion to interpret the plan’s terms, the administrator’s decision is reviewed for an abuse of discretion.  To do this, the Courts applies a two-part test, with each part comprised of three factors:  (1) Did the plan administrator interpret the plan correctly?  (2) If not, did the plan administrator abuse his discretion by reaching the wrong result?

Answering the first question requires the Court to ask whether: (i) the administrator has given the plan a uniform construction, (ii) that interpretation is consistent with a fair reading of the plan, and (iii) differing interpretations will impose any unanticipated costs.   Answering the second requires us to consider: (i) the plan’s internal consistency under the administrator’s interpretation, (ii) any relevant administrative rules and regulations, and (iii) the facts surrounding the administrator’s denial of the claim, including any evidence of bad faith.
The Court then quoted from the plan documents.
Because Tracy’s life insurance plan gave the administrator discretion to interpret the plan, the Court applies the traditional multi-factor abuse-of-discretion test.  Under that standard, Jason cannot establish a material fact dispute because MetLife’s interpretation is not only a fair reading of the plan, but is also the only permissible one.
A single phrase in the plan document resolves this case: “will not be accepted.”  The phrase reads:
Beneficiary Designation:  Life Insurance Beneficiary Designation must be completed through the MetLife web site at www.metlife.com/mybenefits. Effective June 15, 2013, paper life insurance designation forms will not be accepted by the Health & Wellness Team except for Committed Partner designations as described immediately below.
In this appeal there was also a discussion of how the Court treated some discovery issues and is a good read for how this Court or any Federal Court would look at a discovery issue in an ERISA case.