80 F. Supp. 3d 1244
D. Colo.2015Background
- Marilyn Shafer sued MetLife and Schlumberger Technology Corp. (STC) under ERISA challenging denial of life insurance benefits above $873,000 after exhausting administrative appeals.
- The group life plan (2012 Plan) was issued to STC by MetLife (in Texas) and STC issued a Certificate to Mr. Shafer in Colorado; the Plan contains a discretionary clause granting the Plan Administrator fiduciary discretion to interpret the plan and determine benefits.
- Plaintiff moved for partial summary judgment seeking (1) de novo judicial review and (2) a jury trial under Colo. Rev. Stat. § 10-3-1116(3), a Colorado statute providing de novo review and jury trials for denied insurance claims.
- Defendants argued the Colorado statute is preempted by ERISA and/or inapplicable because the policy was not "issued in this state."
- The Court held the Plan issuance to the participant occurred in Colorado (so the statute could apply on its face) but concluded ERISA preempts Colo. Rev. Stat. § 10-3-1116(3) in its entirety because the statute’s jury-trial provision conflicts with ERISA’s remedial scheme; therefore the Court denied plaintiff’s motion and applied the arbitrary-and-capricious standard due to the Plan’s discretionary clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 10-3-1116(3) applies ("issued in this state") | Shafer: STC issued the Certificate to Mr. Shafer in Colorado, so statute applies | Defendants: Plan was issued in Texas to STC; statute does not apply | Held: Court finds STC issued the Certificate to Mr. Shafer in Colorado, so statute could on its face apply |
| Whether § 10-3-1116(3) is saved from ERISA preemption (Savings Clause) | Shafer: § 10-3-1116(3) "regulates insurance" and thus is saved from preemption | Defendants: Statute substantially interferes with ERISA plan terms and uniform federal scheme | Held: § 10-3-1116(3) qualifies as insurance regulation but still faces conflict preemption analysis |
| Whether § 10-3-1116(3) is expressly preempted under Kentucky Ass’n test (risk-pooling) | Shafer: statute regulates insurers and affects policy terms (so saved) | Defendants: statute does not alter risk-pooling; it applies after pool formation | Held: Court finds statute is directed at insurers and substantially affects insurer–insured bargains (satisfies Kentucky Ass’n prongs) |
| Whether § 10-3-1116(3) is conflict-preempted because it supplants ERISA remedies (de novo + jury) | Shafer: de novo here is consistent; jury right is permissible under state insurance regulation | Defendants: jury right and mandatory de novo review undermine ERISA uniform remedial scheme | Held: De novo review alone does not conflict, but the statute’s mandatory jury-trial provision conflicts with ERISA’s equitable remedial structure and creates an alternative enforcement mechanism; statute is preempted in full and not severable |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (establishes that de novo review is default absent plan grant of discretion)
- Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355 (state insurance-mandated review requirements can regulate insurers but must not conflict with ERISA’s uniform remedial regime)
- Kentucky Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329 (two-part test for whether a state law "regulates insurance" under ERISA Savings Clause)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (state-law remedies that duplicate or supplement ERISA’s civil enforcement are preempted)
- Standard Ins. Co. v. Morrison, 584 F.3d 837 (law regulating policy terms qualifies as regulation of insurance)
- Am. Council of Life Insurers v. Ross, 558 F.3d 600 (state insurance rules can be preempted if they provide separate enforcement vehicles outside ERISA)
- Graham v. Hartford Life & Acc. Ins. Co., 589 F.3d 1345 (Tenth Circuit: §1132(a)(1)(B) actions are equitable in nature; jury trial not guaranteed)