ERISA-Eighth Circuit Holds That The Administrator Did Not Abuse Its Discretion In Determining the Beneficiary Of The Plan’s Life Insurance Proceeds

In Hall v. Metropolitan Life Insurance Company, No. 13-1332 (8th Cir. 2014), the plaintiff, Jane Hall (“Hall”), had sued Metropolitan Life Insurance Company (“MetLife”), alleging that MetLife abused its discretion in denying her claim to receive the proceeds of her late husband’s life insurance policy under an employee benefit plan governed by ERISA. The district court granted summary judgment for MetLife, and Hall appeals.

In this case, Dennis Hall began work at Newmont USA Limited in August 1988. Through his employment at Newmont, Dennis obtained a life insurance policy issued by MetLife. In 1991, Dennis designated his son, Dennis Hall II, as the beneficiary of the life insurance policy. The designation was appropriately filed. Under the terms of the governing employee benefit plan (“the Plan”), MetLife is expressly granted “discretionary authority to interpret the terms of the Plan and to determine eligibility for and entitlement to Plan benefits in accordance with the terms of the Plan.” The Plan also informs Newmont employees how they may designate or change the beneficiary or beneficiaries of their policy.

Jane Hall married Dennis in May 2001. Around March 2010, Jane and Dennis began traveling regularly to the Mayo Clinic in Rochester, Minnesota, for medical examinations and treatment relating to Dennis’s cancer diagnosis. Dennis made a new beneficiary designation of the life insurance proceeds, naming Hall, but never filed the new designation with the Plan. Just before he died from the cancer, Dennis made a will under which all of his life insurance and other benefits will be paid to Hall. Even though Dennis Hall II was the designated beneficiary of the life insurance proceeds on file with the Plan, Hall claimed payment, based on Dennis’ will and the unfiled new beneficiary designation. MetLife decided to deny Hall’s claim, and ultimately distributed the life insurance proceeds to Dennis Hall II. This suit ensued.

In analyzing the case, the Eighth Circuit Court of Appeals (the “Court”) said that where, as here, a plan governed by ERISA gives the administrator discretionary power to interpret the terms of the plan or to make eligibility determinations, a federal court reviews the administrator’s decisions for abuse of discretion. Hall argued that MetLife abused its discretion by refusing to recognize either Dennis’s will or the new beneficiary designation. However, the Court disagreed with these arguments, stating that MetLife reasonably viewed the will as applying only to Dennis’ estate and not the Plan, and that MetLife reasonably rejected the new beneficiary designation because it was never filed with the Plan. The Court also rejected an argument by Hall that that the district court erred by refusing to apply the federal common law doctrine of substantial compliance to conclude that Dennis effected a change of beneficiary. Accordingly, the Court upheld the district court’s judgment that Dennis Hall II is the appropriate recipient of the life insurance proceeds.

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