Opinion
Case No. 00-CV-10477 BC
October 24, 2001
This matter is before the Court on defendant's Motion for Dismissal and for Protective Order. This case arises from the employment of the plaintiff, Mark Kerr, with defendant, Lafarge Corporation, from March 19, 1987 through May 18, 1999. Over the course of his employment, Kerr suffered three major injuries. He initiated a worker's compensation action against his employer in 1998 which led to a settlement and a separation from employment due to disability. Kerr alleges that he was told he and his family would continue to be covered by Lafarge's health care plan through age 65, and relied on that representation when he separated his employment due to disability. Subsequently, he received a letter informing him that because he was no longer an employee of Lafarge, he was not eligible for coverage under the policy. Kerr sues alleging intentional misrepresentation, innocent misrepresentation, and promissory estoppel, and seeks his past-due benefits and other damages.
The Court entertained the arguments of the parties through their respective counsel in open court on October 15, 2001. At that time, this Court rendered its decision on the record in open court.
The plaintiff's state-law claims are preempted by the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The proper test for preemption in this Circuit "is not the label placed on a state law claim . . . but whether in essence such a claim is for the recovery of an ERISA plan benefit." Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272, 1276 (6th Cir. 1991). The case of Lions' Volunteer Blind Industries v. Automated Group Administrators, 195 F.3d 803 (6th Cir. 1999), is directly on point. In that case, an employer and beneficiary sued a welfare benefit plan alleging that the plan denied coverage after previously assuring the employer and beneficiary to the contrary. Id. at 805. The two plaintiffs sued, and the district court held that the plaintiffs' misrepresentation claim was not preempted by ERISA because the alleged misconduct occurred prior to the plaintiffs' participation in the plan. Id. at 806. On interlocutory review, the Sixth Circuit reversed. The crucial issue was not when the alleged misconduct occurred, but rather the ability of ERISA to provide the remedy the plaintiffs seek. Id. at 808. Citing Cromwell, the Court then examined the substance of the plaintiffs' claims, rather than their labels, and found that a court entertaining the plaintiffs' misrepresentation claim would be required to calculate the benefits due and owing to the plaintiffs. Id. at 809. As such, the plaintiff's claim was a request for benefits, it "related to" an employee welfare plan, and was therefore preempted. Id.
In this case, plaintiff claims to have protested his denial of benefits in a letter sent to defendant on February 24, 2000, and alleges that defendant, despite acknowledging the letter and stating that it would be treated as an appeal, never responded. This failure to act would be a clear violation of established federal law. See 29 C.F.R. § 2560.503-1. Furthermore, to the extent that the original denial-of-benefits letter failed to reference the specific plan provision or provisions justifying denial and failed to notify the plaintiff of his appeal rights, that too would violate federal law. Id. Either violation could justify summary reversal of the administrator's decision to deny benefits. See, e.g., Halpin v. WW Grainger, Inc., 962 F.2d 685, 697 (7th Cir. 1992). Further, the plan administrator was never presented with, nor did it consider, plaintiff's arguments relating to misrepresentation or estoppel. The plan administrator should have the first opportunity to defend the integrity of the Plan and the company by honoring agreements duly made by the defendant's authorized representatives, and justifiably relied upon by the plaintiff. Thus, this matter should be remanded to the plan administrator for further findings of fact. In its consideration of plaintiff's appeal, the administrator should provide a decision that both conforms with "federal law and addresses the plaintiff's concerns about his earlier appeal.
Accordingly, it is ORDERED that this Court's Opinion and Order dated October 23, 2001 is VACATED.
It is further ordered that defendant's Motion to Dismiss and for Protective Order [dkt #3] is GRANTED IN PART for the reasons stated here and on the record, and plaintiff's state-law claims as reflected in Counts I, II, and III of the complaint are hereby DISMISSED WITH PREJUDICE.
It is further ORDERED that defendant's motion for a protective order barring discovery is DENIED WITHOUT PREJUDICE.
It is further ORDERED that the matter is REMANDED to the Lafarge plan administrator for further consideration of plaintiff's claims for benefits.
It is further ORDERED that the Lafarge plan administrator shall consider the plaintiff's appeal, including all factual allegations relating to plaintiff's application for continued benefits, misrepresentation, and estoppel, and shall issue a decision on or before December 15, 2001.
It is further ORDERED that on or before January 4, 2002, the plaintiff shall file an amended complaint raising any appropriate claims under ERISA or federal common law. The defendant shall file an answer on or before February 4, 2002.
This Court retains jurisdiction over this case.
It is further ORDERED that a status conference is scheduled for February 15, 2002 at 2:00 P.M. to discuss further case management.