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Howe v. Barr Engineering Co.

United States District Court, D. Minnesota

December 6, 2017

Candice Howe, Plaintiff,
v.
Barr Engineering Co., et al, Defendant.

          REPORT AND RECOMMENDATION

          LEO I. BRISBOIS, U.S. MAGISTRATE JUDGE

         This matter comes before the undersigned United States Magistrate Judge upon Defendants' Motions to Dismiss, [Docket No. 29, 35], and upon referral from the Honorable Joan N. Ericksen. (Order of Reference [Docket No. 43]). A hearing was held on October 27, 2017, after which the motions were taken under advisement. [Docket No. 48].

         For the reasons discussed herein, it is recommended that the Defendants', Barr Engineering Co. and Barr Engineering Company General Welfare Plan, Motion to Dismiss, [Docket No. 29], as well as, Defendant, PayFlex System USA, Inc.'s, Motion to Dismiss, [Docket No. 35], be GRANTED.

         I. BACKGROUND AND RELEVANT FACTS

         Plaintiff is the widow of the deceased, Trevor Howe. (Compl., [Docket No. 1], at ¶ 1). Mr. Howe began working for Defendant Barr[1] in July 2014, in Duluth, Minnesota. (Id. at ¶ 3). During his employment with Defendant Barr, Mr. Howe applied for and received group life insurance coverage under Defendant Plan. The life insurance benefits consisted of basic benefits in the amount of $49, 000.00 and supplemental coverage in the amount of $147, 000.00, totaling $196, 000.00. (Id. at ¶ 4). Plaintiff is the sole beneficiary of the insurance benefits in the event of Mr. Howe's death under the Plan.

         The Plan consists of the Barr Engineering Company's General Welfare Wrap Plan, as well as, the attachments thereto, including the Plan Booklet.[2] The Plan Booklet consists of the documents attached to the Barr Engineering Company's General Welfare Wrap Plan.[3]

         Under the Life Insurance General Provisions heading, the Plan contains the following:

LIFE INSURANCE CONTINUATION RIGHTS

If you are an employee, you have the right to continue life insurance for yourself and your dependents if this insurance terminates because you have:

- voluntarily or involuntarily terminated employment; or - been laid off.

There is no continuation if:

- you end employment because of gross misconduct; or - the Summary of Benefits is terminated.

The Employer Must inform you of:

- your right to continue life insurance;

- the monthly premium amount you must send to your Employer;

- the manner in which payment is to be made;

- the office of the Employer payment is to be made or sent; and - the time the payments are due to your Employer.

* * *

Life insurance will stop when the first of the following occurs:

- the end of an 18 month period from the date your employment terminated or the date of your layoff.

- the date you obtained life insurance under another group policy.

- the date the Summary of Benefits terminates.

* * *

When life insurance stops on one of the dates above, the Life Conversion Privilege will apply.

(Id. at Exhibit A at 55).

         Regarding the Conversion Privilege, the Plan provides the following:

WHAT INSURANCE IS AVAILABLE WHEN COVERAGE ENDS? (CONVERSION PRIVILEGE)
When coverage ends under the plan, you and your dependents can convert your coverages to individual life polices, without evidence of insurability. The maximum amounts that you can convert are the amounts you and your dependents are insured for under the plan. You may convert a lower amount of life insurance.
You and your dependents must apply for individual life insurance under this life conversion privilege and pay the first premium within 31 days after the Dated:
- your employment terminates; or - you or your dependents no longer are eligible to participate in the coverage of the plan.

(Id. at Exhibit A at 56).

         Defendant Barr is the Plan administrator and the named fiduciary under the Plan. (Compl., [Docket No. 1], at ¶ 3; Exhibit A at 5-6). Plaintiff alleges that the Plan is “funded” by Defendant Unum. (Compl., [Docket No. 1], at ¶ 3). Plaintiff also asserts that Defendant PayFlex was an agent of Defendant Barr under the Plan at all times relevant to the present case. (Id.).

         On September 11, 2014, Mr. Howe left his employment with Defendant Barr, and he accepted a position at Independent School District 709 (the “School District”). (Id. at ¶ 5). On October 27, 2014, Mr. Howe applied for group life insurance from Madison National Life Insurance thru the School District. (Id. at ¶ 6).

         In an email dated September 25, 2014, sent to Defendant PayFlex, Mr. Howe wrote:

Hello my name is Trevor Howe my last 4 SSN's are [XXXX] my zip code is 55808. I did not want to select the family medical when I selected my benefits and so I would like to drop just the family medical effective 9/12/14. I want to keep my single medical at I believe was $500 as well as my Base Life 1x Salary, Employee Life Insurance, and Spouse Life Insurance.

(Exhibit G, [Docket No. 8], at 1).[4] In an email dated December 17, 2014, which Mr. Howe sent to Defendant PayFlex, Mr. Howe identified himself and wrote:

I would like to drop my medical plan effective Oct 1st 2014. I have been waiting on my new insurance to kick in with my new job and it has now and is effective starting October 1st 2014.
I want to keep the following:
Barr Engineering Base Life 1x Salary 9/12/2014 3/11/2016 1 Single $4.95
Barr Engineering Employee Life Insurance 9/12/2014 3/11/2016 1 Single $14.85
Barr Engineering Spouse Life Insurance 9/12/2014 3/11/2016 1 Single $3.79

(Id. at 2).

         In October 2014, Mr. Howe was diagnosed with bile duct cancer. (Compl., [Docket No. 1], at ¶ 7). On November 1, 2014, Mr. Howe took a leave of absence from his new employer, the School District, due to his declining health. (Id.). In late 2014, and early 2015, Mr. Howe underwent chemo and radiation treatment, and on April 17, 2015, he underwent a liver transplant. (Id.). Plaintiff asserts that due to his “uncertain health” it was important to Mr. Howe to maintain life insurance with Unum in addition to his group life insurance thru the School District. (Id. at ¶ 18).

         In an email dated January 7, 2015, Mr. Howe requested that he be given a refund for his “medical plan” because his new medical plan with the School District was “effective Oct 1st.” (Exhibit G, [Docket No. 8], at 3]). He explained that he only continued his medical coverage under the Plan until he got his actual insurance card under his new medical plan, and he had been informed that he would be refunded back to the new insurance's effective date. (Id.). In addition to requesting a refund, he also requested a complete history of the charges and credits applied to his account. (Id.).

         In a letter dated January 22, 2015, Defendant PayFlex notified Mr. Howe that his participation in the “COBRA Continuation Plan” was terminated on November 30, 2014, including his Barr Engineering Full Feature Medical Plan, Barr Engineering Base Life 1x Salary, Barr Engineering Employee Life, and Barr Engineering Spouse Life Insurance. (Exhibit H [Docket No. 8]). The letter stated that the coverage was being terminated as a “Final Termination Per Written Member Request” indicating that it was done at Mr. Howe's request. (Id.).

         In an email dated February 19, 2015, Mr. Howe informed Defendant PayFlex that he was still waiting on a refund for his medical coverage and that the cancellation of his Barr Engineering Base Life 1x Salary, Barr Engineering Employee Life, and Barr Engineering Spouse Life Insurance was in error. (Exhibit G, [Docket No. 8], at 4). In the email, Mr. Howe also wrote that:

Back on October 10th 2014 I called and spoke with a gal named Kelly in regards to my concerns of have dual insurance because I started a new job and I would be getting new medical insurance. My new insurance would be effective October 1st2014 however I stated that I would not be receiving my new insurance card until potentially December. I asked Kelly about this issue because I wanted to make sure that I would get my full refund for the months of October and November until I received my new insurance card and [k]new that I had effective new insurance. I was told that there would be not [sic] problem and that I would get refunded for the months I was waiting for my new insurance card back-dated to October 1st.
When I sent the email to cancel “JUST” my medical and to “KEEP” my other 3 benefits, which included Barr Engineering Base Life 1x Salary, Barr Engineering Employee Life Insurance, and Barr Engineering Spouse Life Insurance. (I have attached and forwarded this email again to you to prove that this is what I requested) Some ...

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