United States District Court, D. Minnesota
REPORT AND RECOMMENDATION
BRISBOIS, U.S. MAGISTRATE JUDGE
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].
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
BACKGROUND AND RELEVANT FACTS
is the widow of the deceased, Trevor Howe. (Compl., [Docket
No. 1], at ¶ 1). Mr. Howe began working for Defendant
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.
Plan consists of the Barr Engineering Company's General
Welfare Wrap Plan, as well as, the attachments thereto,
including the Plan Booklet. The Plan Booklet consists of the
documents attached to the Barr Engineering Company's
General Welfare Wrap Plan.
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
- 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
- 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
- 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).
the Conversion Privilege, the Plan provides the following:
WHAT INSURANCE IS AVAILABLE WHEN COVERAGE ENDS?
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
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
(Id. at Exhibit A at 56).
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.).
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 ¶
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
(Exhibit G, [Docket No. 8], at 1). 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
I want to keep the following:
Barr Engineering Base Life 1x Salary 9/12/2014 3/11/2016 1
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
(Id. at 2).
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).
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.).
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.).
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
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 ...