Federal Appellate Court Holds Trial Court Was Wrong to Deny Relief to Beneficiary in MetLife Life Insurance Claim

Background

Mr. Thayne Watson’s, was covered under his employer’s life insurance plan with Metropolitan Life Insurance Company (“MetLife”) until it ended in November 2016. However, he had the option to convert the group policy to an individual policy. Interested in doing so, he emailed his employer asking about the next steps.

The employer, EMC Corp., replied that he would be receiving a bill from a third-party administrator that he would have to pay if he wanted to convert the policy and maintain coverage.

Mr. Watson paid all the bills for the policy until his death in September 2017.

The Life Insurance Claim and Trial Court’s Ruling

Mr. Watson’s wife, and beneficiary, filed a claim for the life insurance benefits with MetLife. However, MetLife denied the claim on the basis that Mr. Watson never converted his life insurance from a group to an individual policy or paid premiums, so his coverage ended when his employment ended.

Because of that denial, Ms. Watson then filed a lawsuit against the employer for breach of fiduciary duty, alleging the information provided to her husband was misleading and caused him to believe he still had life insurance coverage.

The trial court denied any relief to Ms. Watson, without deciding if EMC breached its fiduciary duty, because it found that the relief she sought was not appropriate under the circumstances.

The Appellate Court Disagreed with the Trial Court

Ms. Watson appealed to the Tenth Circuit Court of Appeals. On appeal, the court disagreed and reversed.

Specifically, the appellate court held that the trial court’s analysis was focused on her ability to recover benefits under the plan versus recovery for equitable relief. It is an important distinction as each required application of a different part of the ERISA statute and different analysis.

Although not referenced, the Tenth Circuit emphasized the distinction that was also discussed in detail by the Eleventh Circuit Court of Appeals in Gimeno v. NCHMD, Inc., 38 F.4th 910 (11th Cir. 2022),  a case our law firm litigated and won at the Eleventh Circuit Court of Appeals.

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