946 F. Supp. 2d 621
W.D. Tex.2013Background
- Kersh sues after her husband Randy’s death over life-insurance benefits and alleged misrepresentations by Paychex and UHC.
- Salto Systems offered a group life plan through UHC for $15,000, administered by Paychex with Leimbach handling benefits inquiries.
- Kersh and Debra sought $750,000 in life insurance through Paychex/UHC, believing the rate was $4.95 per $15k in coverage.
- An August 18, 2011 enrollment form showed $750,000 in life coverage; Kersh’s spouse social security number was initially omitted but later addressed.
- Randy died on August 22, 2011; UHC paid $15,014 under the Salto Plan and denied the $750,000 request; Plaintiff contends Paychex altered the enrollment form to prevent payment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| ERISA preemption of UHC-related claims | Kersh’s claim concerns a separate policy, not the Salto Plan, and may fall under ERISA safe harbor | All state claims arise from the Salto Plan and are ERISA-preempted | UHC claims are ERISA-preempted; other claims remain non-preempted |
| Negligence against Paychex/Walker not preempted | Duty to procure insurance arose independently of the ERISA plan | Claims relate to administration of the Salto Plan and are preempted | Negligence claim not preempted; viable against Paychex/Walker |
| Negligent misrepresentation against Paychex/Walker | Walker made false representations about available life insurance during enrollment | No misrepresentation pleaded; not actionable at 12(b)(6) | Not precluded; Plaintiff adequately alleged a misrepresentation, denied at dismissal stage for summary judgment to resolve credibility |
| Texas Insurance Code and DTPA claims; IIED | Claims survive against non-ERISA entities and third-party beneficiary status supports standing | ERISA preempts many claims; IIED against non-ERISA may lie | Texas Insurance Code and DTPA claims survive; IIED claim against non-ERISA Defendants survives but IIED against UHC preempted; IIED dismissed overall as to remaining ERISA entity |
Key Cases Cited
- Cefalu v. B.F. Goodrich Co., 871 F.2d 1290 (5th Cir.1989) (preemption when misalignment increases plan benefits; related to ERISA plan)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (U.S. 2004) (complete preemption framework for ERISA plans)
- Hubbard v. Blue Cross & Blue Shield Ass'n, 42 F.3d 945 (5th Cir.1995) (test for conflict preemption; ‘related to’ plan)
- Perkins v. Time Ins. Co., 898 F.2d 470 (5th Cir.1990) (preemption limits where insurer/agent not ERISA entity; non-preempted tort claims against agent)
- Anderson v. John Morrell & Co., 830 F.2d 872 (8th Cir.1987) (contract-based benefits claims preempted when seeking to modify plan)
- Transitional Hospitals Corp. v. Blue Cross, 164 F.3d 952 (5th Cir.1999) (ERISA preemption where misrepresentation not tied to plan benefits)