Portable Policy And ERISA

Here is another case for life insurance lawyers to read and make part of their knowledge of life insurance cases involving ERISA.  The case is from the Northern District of Texas, Dallas Division.  The case style is, Stephanie Taylor v. Metropolitan Life Insurance Company.

This ERISA life insurance case was decided on motions for summary judgment in favor of MetLife.

Stephanie is the beneficiary under a policy of life insurance insuring her husband, Jonathan.  They had a policy of Basic Employee Life Insurance for $136,000 and $271,000 of Supplemental Employee Life Insurance.

Jonathan ceased working due to a disability and as part of the employer sponsored plan he applied for the continuation of life insurance benefits while disabled and because he met the requirements for total disability, these benefits were provided at no cost to him and referred to as the Portability Policy.  Jonathan died  and Stephanie made a claim for benefits.  Stephanie was paid the two policies mentioned above but the Portability Policy was denied by the plan administrator based on MetLife’s assertion that she could not have two benefits stemming from the same insurance coverage.

In an ERISA case, the employee challenging the plan administrator’s decision has the burden of proof.

A denial of benefits challenged under Section 1132(a)(1)(B) is to be reviewed under a de novo standard though this is not well settled law in Texas.

The court follows a two-step analysis when determining whether a plan administrator abused its discretion.  First, the court determines the legally correct interpretation of the paperwork and whether the administrator’s interpretation accords with the proper legal interpretation.  If the administrator’s interpretation is sound, then there is no abuse of discretion.  Second, if the court concludes the interpretation was not correct, then the court determines if there was an abuse of discretion.

The primary issue in this case is whether the deceased had separate and distinct coverage under both Plans such that Stephanie was entitled to recover benefits on both.

The court then cited various plan sections  but rested on a section titled “Effect Of Previous Election To Port Coverage” wherein the Plan states MetLife “will not pay insurance under both this Plan and the ported policy.”  These terms are clear.  Recovery under both plans is not allowed.

The court then discussed other plan provisions supp