Akers v. Minn. Life Ins. Co.

• Decision Date: 04 August 2014
• Docket Number: Civil Action No. 2:12–cv–0667.
• Citation: 35 F.Supp.3d 772
• Court: U.S. District Court — Southern District of West Virginia
• Parties: Judy AKERS, individually, and as Administrator of the Estate of Walter Akers, deceased, Plaintiffs, v. MINNESOTA LIFE INSURANCE CO. and Alpha Natural Resources, LLC, Defendants.

35 F.Supp.3d 772

Judy AKERS, individually, and as Administrator of the Estate of Walter Akers, deceased, Plaintiffs
v.
MINNESOTA LIFE INSURANCE CO. and Alpha Natural Resources, LLC, Defendants.

Civil Action No. 2:12–cv–0667.

United States District Court, S.D. West Virginia.

Signed Aug. 4, 2014.

35 F.Supp.3d 775

Brett Justice Preston, C. Benjamin Salango, Dan R. Snuffer, Jr., Preston & Salango, Charleston, WV, Rhonda Jennings Blackburn, Office of Gary C. Johnson, Pikeville, KY, for Plaintiffs.

E. Ford Stephens, Christian & Barton, Richmond, VA, Edward P. Tiffey, Tiffey Law Practice, Arie M. Spitz, Mychal Sommer Schulz, Dinsmore & Shohl, Charleston, WV, for Defendants.

MEMORANDUM OPINION AND ORDER

JOHN T. COPENHAVER, JR., District Judge.

Pending are a motion to enforce settlement, filed by defendant Minnesota Life Insurance Company (“Minnesota Life”) on May 5, 2014, and a motion to enforce settlement or in the alternative to determine no meeting of the minds existed by plaintiff Akers, filed on May 13, 2014. An evidentiary hearing of the motions was held on July 1, 2014. Findings of fact and conclusions of law are set forth below.

35 F.Supp.3d 776

I. Background

This action was timely removed to this court on March 8, 2012, after it was filed in the Circuit Court of Mingo County, West Virginia, on February 1, 2012. Walter Akers, now deceased, worked for defendant Alpha Natural Resources, LLC (“Alpha”) before his death on January 25, 2011 at the age of 63. He died after being hospitalized almost continuously following an accident at home that occurred in late May of 2010.

At issue in this case is whether Judy Akers (“Akers” or “Ms. Akers”), Walter's wife, is entitled to collect certain insurance benefits outlined in Alpha's Welfare Benefit Plan (the “Plan” or the “Alpha Plan”). The Plan offered both Life and Accidental Death & Dismemberment (“AD & D”) insurance. Mr. Akers was enrolled in both basic (that is, employer-paid) and supplemental (employee-paid) forms of life insurance, and he was also enrolled for Basic AD & D insurance. These insurance coverages under the Plan were issued in Group Policy 18710–T (the “Policy”) by Minnesota Life for Alpha as the Plan Sponsor. According to Akers, she was and is entitled to collect $274,000 for each of these coverages as a result of her husband's death, but this has not been paid to her by Minnesota Life.

The dispute arises because Mr. Akers died after the Policy terminated on December 31, 2010. Alpha chose to cancel the Minnesota Life Policy and go with a different insurance carrier. However, the Minnesota Life Policy contains a conversion privilege:

[I]f the group policy terminates or is amended so as to terminate the insurance, an owner under this policy may convert the insurance under the group policy to an individual policy of life insurance with [Minnesota Life] subject to the following:

(1) The owner's written application to convert to an individual policy and the first premium for the individual policy must be received in our home office within 31 days of the date the insurance terminates under the group policy.

(2) The owner may convert all or a part of the group insurance in effect on the date that his or her coverage is terminated to an individual life insurance policy offered by us, except a policy of term insurance....

(3) If the insured should die within 31 days of the date that insurance terminated under the group policy, the full amount of insurance that could have been converted under this policy will be paid.

In the case of the termination of the group policy, [Minnesota Life] may require that an insured under a certificate be so insured for at least five years prior to the termination date in order to qualify for the above conversion privilege.

Stip. Concerning Documents that Make Up the Alpha Plan, Ex. 3, at ALPHA 192 [hereinafter “Policy”]. In addition, the Summary Plan Description (“SPD”) for the Alpha Plan contains conversion provisions that differ in some respects from the language in the Policy. See Stip. Concerning Documents that Make Up the Alpha Plan, Ex. 2, at ALPHA 35 [hereinafter “SPD”]. Mr. Akers was not employed by Alpha for five years prior to his death, but did die within 31 days of the cancellation of the policy.¹ Ms. Akers and Alpha assert

35 F.Supp.3d 777

that Ms. Akers was entitled to collect the benefits under the conversion privilege.

Before the suit began, by letter dated August 10, 2011, Alpha agreed to pay Ms. Akers $548,000 for the Basic Life insurance benefit and the Basic AD & D benefit. Evidentiary Hearing, Pl. Ex. A. Alpha did so “upon condition that it shall have the right to recover all sums paid to you [ (Akers) ] from the insurance carrier [ (Minnesota Life) ] under the Plan.” Id. Their agreement also noted that

The Plan Sponsor [ (Alpha) ] is pursuing payment of these benefits from the group insurance carrier under the Plan.

...

If the Plan Sponsor is successful in our efforts to obtain payment of the benefits from the group insurance carrier, you [ (Akers) ] agree to reimburse the Plan Sponsor or if payment is issued by the carrier directly to you, you agree not to cash or deposit any such check into your account and to sign over or otherwise immediately transfer the payment to Alpha.

Id.

Akers' original complaint in state court only named Minnesota Life as a defendant. Akers amended the complaint in this court to name Alpha as a defendant as well, seeking the Supplemental Life benefits from it. Alpha has filed a crossclaim against Minnesota Life to recover the $548,000 it paid Akers.

Akers has amended her complaint a total of three times. The first three complaints, that is, the original complaint, and the first and second amended complaints, alleged that Akers sought recovery from Minnesota Life for failure to pay according to the Supplemental Life coverage only. See Not. Rem. Ex. A ¶ 31, First Amended Compl. ¶ 37, Second Amended Compl. ¶ 38.² In the Third Amended Complaint, which was entered on April 16, 2013, Akers acknowledged payment from Alpha for the Basic Life and AD & D coverages, as she did in prior complaints:

[T]he Decedent Plaintiff's employer, Defendant Alpha Natural Resources, paid to the Plaintiff benefits equal to five hundred forty-eight thousand dollars ($548,000.00) equal to the value of the Basic Life Coverage and AD & D Coverage in exchange for an assignment of Plaintiff's rights against Defendant Minnesota Life Insurance Company regarding those policies. However, to date, neither Defendant Alpha Natural Resources nor Defendant Minnesota Life Insurance Company have paid to Plaintiff benefits under the Employee Paid Basic Life [ (Supplemental Life) ] coverage.

Third Am. Compl. ¶ 32. Akers also asserted that



due to Defendant Minnesota Life Insurance Company's unwarranted refusal to pay policy benefits to the Plaintiff as set forth herein, Plaintiff has suffered damages in an amount equal to the Basic Life Coverage, AD & D Coverage and Employee Paid Basic Life [ (that is, the Supplemental Life) ] coverage which is believed to be eight hundred and twenty two dollars [sic] ($822,000). As stated above, Plaintiff has assigned her rights to proceeds from the Sponsor Paid Basic Life and Sponsor Paid Accidental Death & Dismemberment to Defendant Alpha Natural Resources Services [sic].

35 F.Supp.3d 778

Third Amended Complaint, ¶ 38.³ In the motion seeking leave to file a Third Amended Complaint, Akers indicated that she “is moving to amend her Complaint to also add in causes of action for the Basic Life Coverage and AD & D Coverage under the Plan.” Mot. Leave to File Third Am. Compl., ¶ 12. The Third Amended Complaint brings various state law claims against both defendants—that is, Alpha and Minnesota Life—in connection with their alleged failure to pay benefits, and also alleges a breach of fiduciary duties by both defendants under the Employee Retirement Income Security Act (“ERISA”) 29 U.S.C. §§ 1001 –1461.

Pursuant to a bifurcation order, each of the parties moved for summary judgment on the question of coverage alone, with other claims held in abeyance. On March 31, 2014, the court entered a memorandum opinion and order on those motions, finding that Minnesota Life abused its discretion under ERISA in its denial of Ms. Akers' claims for benefits.

In that order, the court directed the parties to file a status report with the court. The status report, filed April 25, 2014, indicated that

Plaintiff Judy Akers and Defendant Minnesota Life Insurance Company (“Minnesota Life”) entered into a confidential settlement on April 11, 2014. The settlement will soon be consummated, and, accordingly, an appropriate Partial Dismissal Order will be tendered for entry. The Partial Dismissal

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