Your ERISA Watch – District Court Rules State Law Claims Concerning Payment of Life Insurance Benefits Not Preempted by ERISA
Good morning, ERISA Watchers! It was another slow week for ERISA decisions. Today’s notable decision is a district court decision in the matter of Flinn v. Minnesota Life Insurance Company , No. CV 18-10868-WGY, 2018 WL 5982021 (D. Mass. Nov. 14, 2018), a case involving the delivery of life insurance benefits to the wrong party.
Plaintiff Flinn alleged that his deceased wife’s sister, an attorney, forged a power of attorney on this behalf to get Minnesota Life to send payment of life insurance benefits to her rather than to him. The insurance company issued the check payable to him but sent it to the sister’s address. By the time he discovered it, she had already diverted the funds from the estate for her use.
Flinn sued Minnesota Life and Securian Financial Group (the parent company) and alleged that they violated Massachusetts law by mishandling the ministerial task of transferring to him the funds to which he was undisputedly due under the terms of the life insurance policy. He alleged that they were liable for negligence; constructive trust/breach of fiduciary duty; and violating Massachusetts General Laws chapter 106, section 4-401, chapter 176D, and chapter 93A.
The Insurers removed the matter to federal court and Flinn sought a remand. The Insurers also moved to dismiss based on ERISA preemption. The Insurers contended that ERISA completely preempts Flinn’s causes of action. The court disagreed. It explained that the gravamen of Flinn’s complaint is that the Insurer’s violated their state law obligation to ensure that he, or his true legal representative, received his benefit check. The court determined that his claims do not depend on the terms of the life insurance plan or benefits law generally but on state laws and federal statutes (other than ERISA). As such, they are not completely preempted by ERISA. However, the court denied Plaintiff’s motion to remand because it has diversity jurisdiction over the causes of action.
On the issue of express ERISA preemption, the Court also determined that the causes of action do not relate to or have an impermissible connection to an ERISA plan. Flinn’s relationship with the Insurers is not based directly on the ERISA plan, but rather the process to which they failed to adhere in ensuring he received the benefit payment. Because there is no express preemption, the court denied the Insurer’s motion to dismiss.
It probably goes without saying that Mr. Flinn will not be spending Thanksgiving with his sister-in-law. Hope you all have a wonderful Thanksgiving Day celebration. Stay tuned for more ERISA decision recaps next week. To read about the rest of this week's cases, visit our blog online at https://www.lifeanddisabilitylaw.com/your-erisa-watch-district-court-rules-state-law-claims-concerning-payment-of-life-insurance-benefits-not-preempted-by-erisa/