Woods, the beneficiary of her mother's life insurance policy, alleged that American United wrongfully denied her claim for a death benefit and then, after acknowledging that benefits should have been paid, misrepresented the amount of the benefit in an effort to get her to sign a release.
She filed suit, asserting state law claims for breach of contract; fraud; suppression/concealment; bad faith; deceit; and negligent screening, hiring, training, and supervision. She sought to recover compensatory and punitive damages and requested a trial by jury on her claims.
First, Woods alleged that her mother's coverage, although originally issued as part of an ERISA plan, was converted to an individual or personal plan upon her mother's retirement and that her mother's continuation policy was not subject to ERISA. The court found this argument without merit and turned to the issue of preemption.
The court held that Woods's claims for fraud, suppression/concealment, and deceit all related to the existence and amount of her mother's life insurance coverage under an ERISA plan, as did Woods's rights as a beneficiary of the plan. Her claims were based on the core allegations that American United misrepresented that no insurance benefit was payable because her mother had not continued her coverage under the group policy, concealed the existence of documents showing that her mother had increased her coverage and had continued the coverage after retirement, and misrepresented the amount of her mother's continuation coverage.
The court held that the misrepresentations and omissions alleged in the complaint related directly to the ERISA plan. Because the fraud, suppression/concealment, and deceit claims all related to the plan, and because Woods conceded that her other state law claims were preempted if ERISA applied, all of her claims were preempted and dismissed. The court allowed Woods two weeks to amend her complaint to plead claims under ERISA.
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