In Swenson v. United of Omaha Life Insurance Company, No. 17-30374 (5th Cir. 2017), Katheryn Swenson filed suit in Louisiana state court seeking benefits from a life insurance policy after her husband passed away. The insurance company refused to pay based on its belief that Swenson’s husband was not a covered employee at the time of his death. In seeking to recover the death benefits, Swenson cited Louisiana statutes imposing certain requirements on group life policies concerning the rights of a discharged employee to convert the employer-provided policy into individual life insurance. Although Swenson alleged only state law claims, the insurer removed the matter to federal court arguing it was completely preempted by ERISA. After the case was removed, Swenson added a claim for equitable relief under ERISA.
The district court dismissed Swenson’s claims on various grounds. It held that ERISA preempted the state law claims, so it dismissed them with prejudice. Because of this finding of complete preemption, the district court construed the complaint as seeking recovery of benefits from an ERISA plan. But that claim was dismissed without prejudice for failure to exhaust administrative remedies (Swenson has since commenced the ERISA administrative process). As to the claim for equitable relief under ERISA, the court dismissed it with prejudice on the ground that equitable relief is not available when ERISA provides an adequate legal remedy, such as the provision allowing judicial review of benefit denials (29 U.S.C. § 1132(a)(1)).
On appeal, Swenson challenges only the preemption ruling and denial of her claim for equitable relief.
As to the district court’s ruling that ERISA completely preempts Swanson’s claim, the Fifth Circuit Court of Appeals (the “Court”) said that Swenson does not dispute that the life insurance policy under which she seeks to recover is an ERISA plan. For such plans, federal law provides the sole avenue for seeking to recover benefits. This congressional intent to have ERISA completely occupy the field converts Swenson’s state law claims seeking to recover policy benefits into a federal claim under section 502 of ERISA (29 U.S.C. § 1132(a)(1)(B)). The ERISA “Savings Clause”, which save certain insurance laws from preemption, does not apply here. Thus, complete preemption applies, so that the claim can validly be moved to federal court.
As to the district court’s denial of Swanson’s claim for equitable relief, the Court said that equitable relief under ERISA is normally unavailable where Congress elsewhere provided adequate relief for a beneficiary’s injury. Because ERISA’s civil enforcement provision provides a direct mechanism to address the injury for which Swenson seeks equitable relief, she cannot assert a separate ERISA claim for equitable relief.
As such, the Court affirmed the decision of the district court.