Stets v. Securian Life Ins. Co.

Background

Milica J. Stets sued Securian Life Insurance Company, Bloomberg L.P., John Stets, and Mary-Anne Stets. She alleged that she was entitled to benefits under her late husband Daniel J. Stets’s Bloomberg life-insurance plan and that Bloomberg failed to provide requested plan information.

The amended complaint asserted six causes of action: recovery of benefits under the Employee Retirement Income Security Act (ERISA); failure to provide requested information under ERISA; two claims seeking declarations that the beneficiary changes were invalid; unjust enrichment; and attorney’s fees and costs.

Daniel’s plan provided $200,000 in basic life-insurance benefits and $245,000 in supplemental benefits. Before October 31, 2016, Milica was designated to receive 75 percent and John 25 percent. Daniel had appointed his sister, Mary-Anne, as his attorney-in-fact. After Daniel suffered a stroke, Mary-Anne’s attorney told Bloomberg that she wanted the beneficiary designation changed to give 100 percent to John. Bloomberg made that change, and after Daniel died on November 7, 2016, Securian paid the benefits to John.

Milica and Daniel were also involved in a divorce proceeding. Automatic orders in that proceeding barred either party from changing beneficiaries of existing life-insurance policies. No final judgment had been entered in the divorce action when Daniel died.

Beneficiary Designation

The court reviewed the benefits claim under the arbitrary-and-capricious standard because the plan gave Bloomberg discretionary authority to administer and interpret the plan. Under that standard, the court could overturn Bloomberg’s decision only if it lacked a reasonable basis, substantial supporting evidence, or proper consideration of relevant factors.

The court first held that ERISA preempted state-law rules concerning the designation of beneficiaries under the plan. It then ruled that Bloomberg reasonably accepted Mary-Anne’s authority. The plan did not prohibit an agent from acting for a participant, did not require a statutory gifts rider, and did not specifically address whether an agent could change beneficiary designations. The power of attorney, Mary-Anne’s communications with Bloomberg, Daniel’s health, and Daniel’s reliance on Mary-Anne to act for him provided substantial evidence supporting Bloomberg’s decision.

The court also found the plan documents ambiguous about how a beneficiary change had to be made. One document allowed online changes, while another required a written request and stated that a change would take effect on the date it was signed. Because the documents could reasonably be read either to require an electronic signature or to permit an online change without one, the court deferred to Bloomberg’s interpretation that a signature was not required.

Although the change was not made through Bloomberg’s benefits website, the court found substantial compliance with the plan. Substantial compliance is a rule that may give effect to a beneficiary change when the participant’s intent is shown and the participant took a practical step similar to the plan’s required procedure. The court found that the communications by Mary-Anne’s attorney showed the intent to make the change and that the written email confirmation substantially satisfied the plan’s requirements.

Finally, the court ruled that Bloomberg was not arbitrary and capricious in allowing the change despite the divorce proceeding’s automatic orders. Relying on the cited New York appellate decision involving a death before a final divorce judgment, the court held that Daniel’s death caused the divorce proceeding to end for purposes of enforcing the automatic orders. The court therefore dismissed the benefits claim and the declaratory-relief claim based on Mary-Anne’s alleged lack of authority, as well as the declaratory-relief claim based on the automatic orders.

Request for Information

ERISA permits a participant or beneficiary to seek relief when a plan administrator fails to provide information that the law requires it to provide after a specific request. The court denied this claim as to Securian because Securian was not the plan administrator.

The court also dismissed the claim against Bloomberg. Milica’s email asked for help with “benefits and some basic information” and for the name of a contact person, but it did not identify the benefits or documents she sought. The court held that this was not a sufficiently specific request to support a statutory penalty or other relief.

Other Claims and Disposition

Because the court dismissed the benefits claim, it also dismissed the unjust-enrichment claim. Because both of Milica’s ERISA claims were dismissed and she therefore could not show the required success on the merits, the court dismissed her claim for attorney’s fees and costs.

The court granted the Entity Defendants’ motion for summary judgment, granted the Individual Defendants’ motion for partial summary judgment, and denied Milica’s motion for partial summary judgment. Judge Andrew L. Carter, Jr. entered the order on March 25, 2020.