Terry v. Northrop Grumman Health Plan
989 F. Supp. 2d 401
M.D. Penn.2013Background
- ERISA action by Terry filed Feb 10, 2012 seeking life insurance benefits, breach of fiduciary duty, penalties, and state-law benefits; Northrop Grumman Health Plan is the plan administrator/defendant.
- Plaintiff is beneficiary of husband David Terry’s coverage; he died Jan 2, 2011.
- Notice of conversion/portability rights was not provided within 31 days after coverage ended; notice provided Feb 23, 2011.
- Northrop denied benefits Feb 22, 2011; appeals upheld Sept 12, 2011.
- Plaintiff sought copies of documents and plan materials; court reviews motions to dismiss and to amend.
- The magistrate judge recommended denying Counts II and granting Count IV dismissal; motions ripe for disposition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Count II is precluded by ERISA remedies | Terry seeks equitable relief for fiduciary breach. | Count II mirrors benefits claim; §1132(a)(3) only equitable relief. | Count II may proceed (not precluded). |
| Whether Count IV is preempted by ERISA | 40 P.S. § 532.7 regulates notice of conversion, not ERISA plans. | State life-insurance claim preempted as related to plan benefits. | Count IV preempted; dismissal granted. |
| Whether leave to amend Count II should be allowed | Amendment would add equitable relief without delay or bad faith. | Amendment futile; life policy cannot vest for deceased. | Leave to amend denied as moot (and amendment proposed is questionable). |
Key Cases Cited
- Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (U.S. 2002) (equitable relief limited; no legal remedies under §1132(a)(3))
- Varity Corp. v. Howe, 516 U.S. 489 (U.S. 1996) (§1132(a)(3) as a catchall for equitable relief where no other remedy applies)
- Twombly v. Bell Atl. Corp., 550 U.S. 544 (U.S. 2007) (plaintiff must plead plausible grounds for relief; avoid mere speculation)
- Iqbal v. Ashcroft, 556 U.S. 662 (U.S. 2009) (pleading must show plausible entitlement to relief; not just legal conclusions)
- Koert v. GE Grp. Life Assur. Co., 2005 WL 1655888 (E.D. Pa. 2005) (allowing dual claims for wrongfully denied benefits and fiduciary duty)