Opinion
Case No. CIV-05-1051-HE.
February 23, 2006
ORDER
Plaintiff is the primary beneficiary of an accidental death and dismemberment policy issued by the defendant. After her husband's death, plaintiff submitted a claim for benefits under the policy to the defendant. Defendant initially awarded benefits to plaintiff under the policy and issued her a $250,000 check on the proceeds plus a check for $4,602.38 in interest. Almost immediately thereafter, defendant notified plaintiff that her claim was denied and placed a stop payment on the interest check, which had been deposited by plaintiff into her bank account, and "voided" the proceeds check which had been sent to her husband's prior employer. After plaintiff's "extensive" appeal of the denial of benefits was denied by the defendant, plaintiff filed this suit alleging the defendant breached the insurance contract and its implied duty to act in good faith when it willfully and intentionally rejected her claim and refused to pay the proceeds due under the insurance policy. Defendant has moved for partial summary judgment on plaintiff's state law claims, alleging they are preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 to 1461. Plaintiff responds that her state law claims are not preempted because they are based not on the ERISA governed insurance policy, but rather on a separate "agreement" made when the defendant initially issued the aforementioned checks. Upon review, the court concludes defendant's motion should be granted.
In the Joint Status Report submitted by the parties, plaintiff enumerated her claims as follows: (1) bad faith; (2) negligence/intentional negligence; (3) breach of contract; and (4) fraud. Joint Status Report, p. 3.
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). When applying this standard, the court "view[s] the evidence and draw[s] all reasonable inferences therefrom in the light most favorable to the party opposing summary judgment." Martin v. Kansas, 190 F.3d 1120, 1129 (10th Cir. 1999) overruled on other grounds Bd. of Trustees of Univ. of Ala. v. Garrett, 531 U.S. 356 (2001). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Martin, 190 F.3d at 1129.
Defendant has not moved for the dismissal of plaintiff's case altogether as the parties appear to agree that, notwithstanding the disposition of plaintiff's claims under state law, any remaining claims for the recovery of benefits under the policy arise under ERISA and are cognizable in this action. See 29 U.S.C. § 1132(a)(1)(B) ("A civil action may be brought by a . . . beneficiary to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of his plan, or to clarify his rights to future benefits under the terms of the plan.").
In general, state law claims such as the ones raised by plaintiff are preempted by ERISA. See Karls v. Texaco, Inc., 139 Fed. Appx. 29, 32 (10th Cir. May 20, 2005) ("It is well-established . . . that `common law tort and breach of contract claims are preempted by ERISA if the factual basis of the cause of action involves an employee benefit plan.'") (quoting Settles v. Golden Rule Ins. Co., 927 F.2d 505, 509 (10th Cir. 1991)). See also Allison v. Unum Life Ins. Co. of Am., 381 F.3d 1015, 1025-28 (10th Cir. 2004) (preempting a bad faith claim raised under Oklahoma law because it conflicted with ERISA's remedial scheme and, in the alternative, was directly preempted); Pacificare of Okla., Inc. v. Burrage, 59 F.3d 151, 155 (10th Cir. 1995) (holding plaintiff's claim of negligent or fraudulent administration to be preempted by ERISA); Milton v. Scrivner, Inc., 53 F.3d 1118, 1121 n. 3 (10th Cir. 1995) (fraud claim preempted by ERISA). Plaintiff attempts to avoid this well-established rule by asserting that her state law claims are based on a independent "settlement agreement" made when a representative of the defendant told her over the phone that her request for benefits had been granted and when the defendant initially issued the benefit and interest checks.
Karls is an unpublished decision cited for persuasive value only under 10th Cir. R. 36.3(B).
There is nothing in the submissions of the parties sufficient to establish, or to show the existence of a factual dispute as to, the existence of such an independent agreement. Plaintiff merely made a claim for benefits and the defendant, while initially deciding to pay, eventually concluded no benefits were due under the policy. There were no promises made outside the administration of plaintiff's claim. In addition, there were no negotiations or agreements between plaintiff and the defendant regarding either party's rights under the plan or any policy terms or issues. As such, plaintiff's claims are more akin to a claim for improper processing of her request for benefits rather than some agreement independent of the policy. See, e.g., Wilcott v. Matlack, Inc., 64 F.3d 1458, 1462 (10th Cir. 1995) (noting that the "preemption analysis turns . . . on the factual basis of plaintiff's state law claims, which [are] constru[ed] with a strict focus on substance rather than form"). Accordingly, defendant's motion for partial summary judgment with respect to plaintiff's state law claims [Doc. # 18] is GRANTED.
See, e.g., Intercon Mfg., Inc. v. Centrifugal Casting Mach. Co., Inc., 875 P.2d 1149, 1152 (Okla.Ct.App. 1993) ("The four elements necessary to have a binding contract are competent parties, consent, a legal object and consideration.").
Even assuming the existence of a settlement agreement, the court would still conclude the plaintiff's state law claims are preempted because any such agreement "relates to" the ERISA governed policy at issue in this matter. 29 U.S.C. § 1144(a). See Settles, 927 F.2d at 509 (although plaintiff was not seeking benefits under an insurance policy, her claims were still preempted by ERISA because the "factual basis" for each of her claims directly related to an employee benefit plan).
IT IS SO ORDERED.