McCravy Keeps Tortured Case Alive
In the fall of 2005, Mr. Moon, an employee of BWX, was provided with an employee benefit enrollment package for the following year. During the open enrollment period, he elected life insurance coverage. He then retired on December 1, 2005. On January 13, 2006, Mr. Moon received a confirmation statement of his life insurance coverage, effective January 2, 2006. The confirmation statement incorrectly noted that Mr. Moon was a non-disabled active employee.
Mr. Moon died in November of 2006. At the time of his death, his life insurance premiums were in arrears. These were quickly paid. Mr. Moon’s spouse then submitted a claim for the life insurance benefits. BWX denied her claim on the basis that Mr. Moon was no longer eligible for life insurance coverage after he ceased working.
Ms. Moon brought a lawsuit in state court, alleging state law claims, including breach of contract, negligence and estoppel. When BMX removed the case to federal court, based upon ERISA’s complete preemption, Ms. Moon moved for a remand, arguing that ERISA did not govern her case. The District Court denied remand, holding that her state law claims were completely preempted by ERISA’s civil enforcement provision, Sec. 502, and that Plaintiff’s claim was a claim for benefits under ERISA sec. 502(a)(1)(B). The District Court went on to hold that the clear terms of the plan provided that Mr. Moon was no longer eligible for life insurance coverage after he retired, and, therefore, Ms. Moon could not prevail.
Ms. Moon appealed to the Fourth Circuit, who affirmed the District Court’s denial of her remand motion. However, in the time between the District Court’s decision and the Fourth Circuit’s review, the Fourth Circuit had decidedMcCravy v. Metro. Life Ins. Co., 690 F.3d 176 (4th Cir. S.C. 2012), which allowed a participant to bring a claim under ERISA sec. 502(a)(3) for equitable relief in certain circumstances in which the participant’s claim for benefit under Sec. 502(a)(1)(B) was defeated. Based upon McCravy, the Court remanded the case back to the District Court, allowing Ms. Moon another opportunity to amend her complaint to add a possible claim for equitable relief under Sec. 502(a)(3).