Lopez submitted a claim for life insurance benefits to Reliance Standard arising out of the death of Ricardo Galarza. At the time of his death, Galarza was insured under a group life insurance policy issued by Reliance Standard to his employer, RSI Home Products, to fund benefits under an employee welfare benefit plan.
Reliance Standard denied Lopez’s claim because of discrepancies in the name, age, and marital status of Galarza and the person identified on the death certificate submitted by Lopez.
The denial letter, dated April 30, 2013, informed Lopez that she could request a review of the claim determination within 60 days. The letter further informed Lopez that “failure to request a review within the 60 days ... may constitute a failure to exhaust the administrative remedies available under [ERISA] and may affect your ability to bring a civil action under [ERISA].”
Lopez did not seek a review of the claim determination within 60 days of receiving the letter. In August 2014, Reliance Standard received a letter from counsel for Lopez requesting a review. Reliance Standard declined to consider that letter and notified Lopez and her attorney that its denial of coverage had become final.
Lopez filed a breach of contract claim in state court, and Reliance Standard removed the case to federal court. Reliance Standard then moved for judgment on the pleadings, arguing that the complaint should be dismissed because Lopez had failed to exhaust administrative remedies available to her under the plan and ERISA. The court converted the motion to one for summary judgment and granted the motion.
The court first determined that Lopez’s breach of contract claim was preempted by section 502(a) of ERISA, 29 U.S.C. § 1132(a), such that it had jurisdiction over the claim. Next, the court held that Lopez’s claim was barred by her failure to exhaust administrative remedies: “While ERISA does not contain an explicit exhaustion provision, an ERISA welfare benefit plan participant must, nevertheless, both pursue and exhaust plan remedies before gaining access to the federal courts,” the court said. Accordingly, summary judgment was granted for Reliance Standard.
Click here to view the full November 2016 Edition of the ERISA and Life Insurance News.