Summary
holding that state law claims for negligence in failing to enroll Plaintiff in benefits plan was in essence a claim for benefits and was thus preempted by ERISA
Summary of this case from Estate of Jennings v. Delta Air Lines, Inc.Opinion
Civil No. 99-720 (JBS).
January 3, 2002
Joseph T. Threston, III, Esquire, Zabel Associates, Burlington County Office, Riverton, New Jersey, Attorney for Plaintiff
Lawrence T. Neher, Esquire, Berkowitz, Lichtstein, Kuritsky, Giasullo Gross, LLC, West Orange, New Jersey, Attorney for Defendant.
SUPPLEMENTAL OPINION
This Court's Opinion and Order of September 29, 2000, granted the Motion of Defendant, Chase Manhattan Mortgage Corp., for Summary Judgment dismissing Plaintiff's claim for additional Basic Life Insurance benefits, and it denied Summary Judgment upon Plaintiff's claim for Group Universal Life ("GUL") insurance benefits. As to the GUL benefits claim, the Court found there were genuine issues of material fact: (1) whether Defendant was negligent in failing to supply Plaintiff's decedent with the necessary forms for GUL enrollment (the GUL Enrollment Form and its specialized instructions), and (2) whether Plaintiff's decedent had a reasonable belief that he had properly enrolled in the GUL Insurance Plan by completing the "Chase Choice" form and furnishing it to his payroll office. (See Opinion of 9/29/00 at 3-17). Accordingly, this claim must be tried.
This Supplemental Opinion addresses the issue of whether this claim will be tried to a jury or to the Court. Defendant takes the position that this claim, although sounding in common law negligence, is preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"), and thus must be tried non-jury. Plaintiff opposes, asserting that this is a pendent state law claim as to which Plaintiff's demand for a jury trial is not preempted by ERISA. The text of ERISA preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title." 29 U.S.C. § 1144(a).
The Supreme Court has given the preemption clause an expansive meaning. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987). The phrase "relate to" has been given the broadest common sense meaning, such that a state law "relates to" a benefit plan if it has a connection with or reference to such a plan.Shiffler v. Equitable Life Assur. Soc. of U.S., 838 F.2d 78, 81 (3d Cir. 1988) (citing Pilot Life, 481 U.S. at 47); Shaw v. Delta Airlines, Inc., 463 U.S. 85, 96-100 (1983). Indeed, a state law cause of action is preempted by ERISA where "if there were no plan there would have been no cause of action." 1975 Salaried Retirement Plan for Eligible Employees of Crucible, Inc. v. Nobers, 968 F.2d 401, 407 (3d Cir. 1992) (citingIngersoll-Rand Co. v. McClendon, 498 U.S. 133, 139 (1990)),cert. denied, 506 U.S. 1086 (1993). State law causes of action, such as negligent failure to pay plan benefits, are expressly preempted. Pilot Life, supra, 481 U.S. at 48; Pane v. RCA Corp., 868 F.2d 631, 635 (3d Cir. 1989); Shiffler, supra, 838 F.2d at 81.
The life insurance proceeds sought by Plaintiff are those payable pursuant to the Defendant's employee benefit plan. There is no claim for relief other than an award of plan benefits. There was no independent contract or promise to pay such benefits aside from the plan. Essentially, Plaintiff alleges that Defendant was negligent in the administration of its employee benefit plan of failing to furnish its new employee with the documentation and instructions necessary to enroll for the GUL benefit. In terms of ERISA, the GUL benefits Plaintiff seeks to recover were offered as part of a "plan" which provides "for its participants or their beneficiaries through the purchase of insurance . . . in the event of sickness, accidental disability, death. . . ." 29 U.S.C. § 1003(a). This action to recover plan benefits falls within the description of an ERISA claim "to recover benefits due him under the terms of the plan, to enforce his rights under the terms of the plan or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B).
A plaintiff seeking to recover benefits payable under an ERISA plan is not entitled to trial by jury. In re U.S. Healthcare, Inc., 193 F.3d 151, 160 (3d Cir. 1999); Pane v. RCA Corp., 868 F.2d 631, 636 (3d Cir. 1989). Actions seeking to recover plan benefits are not triable before a jury whether relief is sought against the employer or the plan's insurance carrier. Zinman v. Prudential Ins. Co. of America, 909 F. Supp. 279, 281, 282 (E.D. Pa. 1995).
Third Circuit case law has also recognized that ERISA will preempt claims pertaining to negligence in the administration of a plan, while not preempting claims for negligence in the provision of services, such that a quality/quantity distinction may determine whether a state law claim is preempted. For example, in Lazorko v. Pennsylvania Hosp., 237 F.3d 242, 249-50, (3d Cir. 2000), cert. denied, 121 S. Ct. 2552 (2001), the claim that financial disincentives imposed by a plan's HMO discouraged medical providers from hospitalizing a mentally ill beneficiary who later committed suicide was held to be a quality of care claim (and thus not completely preempted under ERISA § 502(a)). Likewise, a plan HMO's alleged negligence in supervising and arranging for medical treatment were held to implicate quality of treatment and thus not preempted. In re U.S. Healthcare, 193 F.3d at 162-65. Claims attacking the quality of benefits are thus not preempted, while those attacking whether benefits are owed at all under an ERISA-regulated plan are completely preempted. Dukes v. U.S. Healthcare, Inc., 57 F.3d 350, 356-57 (3d Cir.), cert. denied, 516 U.S. 1009 (1995).
On the other hand, allegations of negligent conduct in the administration of the benefit plan, such as delay in approving benefits, are preempted because they are administrative.Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 274-75 (3d Cir. 2001). Similarly in the present case, the alleged negligence of the employer was with respect to the administrative function of enrolling employees rather than negligence in the quality of the benefits conferred.
This case, then, seeks payment of the GUL insurance death benefit offered to Plaintiff's decedent under the Defendant's employee benefit plan. The remedy sought is payment of the death benefit. Plaintiff's characterization of the death benefit as "damages" arising from Defendant's "negligence" does not convert this action to a tort action at law, since it is a "civil action . . . brought . . . by a . . . beneficiary . . . to recover benefits due to him under the terms of his plan . . ." within 29 U.S.C. § 1132(a)(1)(B), supra, and such a claim for benefits is equitable in nature. Cox v. Keystone Carbon Co., 894 F.2d 647, 649 (3d Cir), cert. denied, 498 U.S. 811 (1990). Thus, the Third Circuit in Cox held that a claim seeking benefits under the plan following an allegedly wrongful discharge was equitable in nature, and that it must therefore be tried non-jury. Id.
Finally, the sole authority cited by Plaintiff for the proposition that she is entitled to a jury trial upon this claim, namely, Padilla De Higginbotham v. Worth Publishers, Inc., 820 F. Supp. 48 (D.P.R. 1993), is contrary to the well-established law of the Third Circuit, including In re U.S. Healthcare, Cox and Pane, supra.
In conclusion, the Court holds that Plaintiff's claim that Defendant was negligent in failing to inform and enroll Plaintiff's decedent in the employee benefit plan for GUL insurance, causing Plaintiff to suffer loss of insurance benefits under the plan, is a claim for damages arising at state law preempted by ERISA in 29 U.S.C. § 1144(a), and is triable only as a claim for the equitable relief of an award of plan benefits under 29 U.S.C. § 1132(a)(1)(B), and is thus not subject to trial by jury.
Defendant's Motion to strike Plaintiff's jury demand will be granted, and the case will proceed to a non-jury trial.
The accompanying Order will be entered.
ORDER
THIS MATTER having come before the Court upon the application of Defendant for clarification of the Court's Opinion and Order of September 29, 2000; and
The Court having considered the submissions of counsel and having determined that the Plaintiff's jury demand should be stricken for reasons explained in the Supplemental Opinion of today's date;
IT IS this 3th day of January, 2002, hereby
ORDERED that Plaintiff's demand for trial by jury upon the remaining claim shall be, and it hereby is, STRICKEN and the case shall proceed to a non-jury trial.