Kersh v. UnitedHealthcare Ins. Co.

• Decision Date: 23 May 2013
• Docket Number: Cv. No. SA:13–CV–00052–DAE.
• Citation: 946 F.Supp.2d 621
• Parties: Debra Lynn KERSH, Individually and on Behalf of the Estate of James R. Kersh, Plaintiff, v. UNITEDHEALTHCARE INSURANCE COMPANY, a Connecticut corporation; Paychex, Inc., a Delaware Corporation; and Dennis Walker, an individual, Defendants.
• Court: U.S. District Court — Western District of Texas

946 F.Supp.2d 621

Debra Lynn KERSH, Individually and on Behalf of the Estate of James R. Kersh, Plaintiff,
v.
UNITEDHEALTHCARE INSURANCE COMPANY, a Connecticut corporation; Paychex, Inc., a Delaware Corporation; and Dennis Walker, an individual, Defendants.

Cv. No. SA:13–CV–00052–DAE.

United States District Court,
W.D. Texas,
San Antonio Division.

May 23, 2013.

[946 F.Supp.2d 624]

Lon D. Packard, Packard, Packard & Johnson, PC, Los Altos, CA, Michael J. Packard, The Packard Law Firm, San Antonio, TX, for Plaintiff.

Lisa Michaux Magids, Michael C. Klein, Sedgwick LLP, Austin, TX, for Defendants.

ORDER: (1) GRANTING IN PART AND DENYING IN PART DEFENDANT PAYCHEX'S MOTION TO DISMISS; (2) DENYING DEFENDANT PAYCHEX'S MOTION TO STRIKE JURY TRIAL DEMAND
DAVID ALAN EZRA, Senior District Judge.

On May 3, 2013, the Court heard oral argument on the Motion to Dismiss filed by Defendant Paychex, Inc., and joined by Defendants UnitedHealthcare Insurance Company and Dennis Walker (collectively, “Defendants”). (Doc. # 5.) Lawrence Smith, Esq., Michael Diksa, Esq., and Michael Klein, Esq., appeared on behalf of Defendants. Lon Packard, Esq., and Michael Packard, Esq., appeared on behalf of Plaintiff Debra Lynn Kersh. Also before the Court is Defendant Paychex's Motion to Strike Jury Trial Demand. (Doc. # 6.) After considering the memoranda in support

[946 F.Supp.2d 625]

of and in opposition to the Motions, and in light of the parties' arguments at the hearing, the Court, for the reasons that follow, GRANTS IN PART AND DENIES IN PART Paychex's Motion to Dismiss (doc. # 5) and DENIES Paychex's Motion to Strike Jury Trial Demand (doc. # 6).

BACKGROUND

Plaintiff Debbie Kersh (“Plaintiff”) is the widow of Randy Kersh (“Mr. Kersh”). Mr. Kersh received a formal employment proposal from Salto Systems, Inc. (“Salto”) on July 6, 2011. (Compl. ¶ 14; id. Ex. A.) The proposal outlined the job duties and compensation package, which included a fringe benefits plan, stating: “Life Insurance is optional. Not covered by Salto.” ( Id.) Mr. Kersh accepted the offer and began working for Salto on July 18, 2011. (Compl. ¶ 15.) On the same day, Mr. Kersh began working with Linda Leimbach (“Leimbach”), Salto's Director of Human Resources, on various health benefits issues. ( Id. ¶ 16.)

Defendant Paychex, Inc. (“Paychex”) is a payroll and human resources company that manages Salto's employee benefits, and it is also a broker for Defendant UnitedHealthcare (“UHC”). Defendant Dennis Walker (“Walker”) was Salto's contact person at Paychex, and he answered Mr. Kersh's questions about benefits as they were relayed to him through Leimbach. ( Id. ¶ 16; id. Ex. C.)

After Mr. Kersh's questions about health benefits were resolved, he began inquiring about purchasing life insurance through Paychex. ( Id. ¶ 18.) By email dated July 26, 2011, sent to Walker and Nicole Baldo (another Paychex employee), Leimbach asked if life or disability coverage was available for Salto employees. ( Id. ¶ 18; id. Ex. C.) On July 27, 2011, Walker responded to Leimbach that Salto did not offer disability benefits. ( Id. Ex. C.) By email dated August 1, 2011, Leimbach requested “information on life insurance cost.” ( Id.) In his email response dated August 2, 2011, at 11:29 a.m., Walker wrote that the life insurance premium was $4.95 and that “[n]ew members should fax their enrollment forms to (585) 249–4029. Those go directly to our enrollment team here at Paychex.” (Id.) Leimbach responded at 12:50 p.m., asking, “[I]s that $4.95 per thousand coverage, or how does that work?” ( Id.) Walker responded, “That is monthly.” ( Id.) Minutes later, Leimbach wrote Walker again, saying, “Sorry, Dennis, I am missing something here—monthly for how much coverage?” ( Id.) Walker responded at 2:08 p.m., attaching a copy of the Salto Plan renewal, which stated the terms of the life insurance policy Salto offered through UHC. ( Id.) His email said: “On page 9 of the attached 5/1 renewal you can see that your group offers $15,000 in total benefit. The cost per month comes out to $4.95 because you multiply the sum of 0.04 and 0.29 (0.33) times 15 to get the premium.” ( Id. (emphasis added).)

Plaintiff states that “all” of the August 2 emails, which she attaches to the Complaint, were forwarded to Mr. Kersh. (Compl. ¶ 19; doc. # 20 (“Resp.”) ¶ 6.) At 3:18 p.m., Leimbach wrote an email to Mr. Kersh that said:

Hi Randy,

The life insurance offered by Salto via Paychex costs $4.95 per month for $15,000 payout, [sic] if you are interested let me know.

The completed health insurance enrollment should be faxed to (585) 249–4029.

Let me know if you need anything else.

Linda

(Compl. Ex. C.)

A few days after this exchange, on August 8, 2011, Leimbach emailed Walker

[946 F.Supp.2d 626]

once more, saying: “Hi Dennis, appreciate you sending this over, I will review sometime this week or next. Is there a special form for signing up for the life insurance, and to confirm, is it $4.95 per $15K per pay period? Thanks!” ( Id.) Later that day, Walker responded, “The $4.95 premium is per month.” ( Id.) Plaintiff alleges that she and Mr. Kersh, to whom Leimbach forwarded this email, understood Walker to be clarifying that the premium was, indeed, $4.95 per $15,000 in coverage, but that it was to be paid per month rather than per pay period. (Compl. ¶ 20; Resp. ¶ 6.) A few minutes later, Leimbach asked Walker to email her his number so that she could call him. (Compl. Ex. C.)

Believing that they could purchase life insurance in $15,000 increments at a rate of $4.95 per $15,000 in coverage, Plaintiff and Mr. Kersh calculated by hand that they could obtain $750,000 in coverage for $247.50 per month. ( See Compl. Ex. C.)

On August 18, 2011, Plaintiff and Mr. Kersh jointly completed an Employee Enrollment Form (“EE Form”), “which was on UHC letterhead.” (Compl. ¶ 21; id. Ex. B.) Plaintiff and Mr. Kersh signed the EE Form and dated it July 18, 2011. ¹ (Compl. Ex. B.) Section C, entitled “Product Selection,” contained the following directions:

Please check the box for each coverage you or your dependents are enrolling in. If your employer offers a choice of plans, indicate which plan you are selecting. Indicate the dollar amount selected for the Life and Accidental Death & Dismemberment (AD & D), Supplemental Life, Short–Term Disability (STD), and Long–Term Disability (LTD) Plans. Benefit offerings are dependent upon employer selection.
( Id. (emphases added).) Plaintiff and Mr. Kersh “checked the box indicating that they wanted Basic Life Insurance and hand-wrote $750,000 in the line where they were to indicate the dollar amount.” (Compl. ¶ 21.) Mr. Kersh also placed question marks in the blocks for supplemental life insurance, short-term disability, and long-term disability insurance, and he sent a note asking for quotes on those offerings. (Compl. Ex.B.) Apparently by accident, Mr. Kersh did not list his wife's social security number where the form requested that information. ( See id.) Plaintiffs faxed this form to Paychex on August 18, 2011, at 12:35 p.m. ( Id.)

On 10:21 a.m. on August 22, 2011, Walker emailed Leimbach to say that “James [Mr. Kersh] is all set, just need that social to get his spouse enrolled.” (Compl. Ex. C.) At 10:43 a.m., Leimbach forwarded Walker's email to Mr. Kersh, instructing him to “please forward [his] wife's social to Dennis [Walker] at [his] earliest convenience[.]” ( Id.) At some point that same day, Mr. Kersh passed away. (Compl. ¶ 22.)

Mr. Kersh was on a direct-deposit system with Salto and received one payment—on August 1, 2011, in the amount of $3.72—before he passed away. (Compl. ¶ 22.) After Mr. Kersh's death, Plaintiff received three additional paystub-type direct-deposit documents, all of which indicated that deductions had been made for Mr. Kersh's benefit package. ( Id. Ex. E.) However, the abbreviations on the paystubs make it difficult to discern precisely what the deductions were for.²

[946 F.Supp.2d 627]

On November 21, 2011, Plaintiff submitted a request for benefits to UHC requesting payment of the $750,000 in insurance proceeds. ( Id. ¶ 23; Compl. Ex. F.) The Claimant's Statement portion of the claim form included a block for the Group Policy Number; Plaintiff wrote “0724824.” (Compl. Ex. F.) Section 2 of the form, entitled “Employer's Statement,” includes a section titled “Authorized Official Must Sign Below.” ( Id.) However, the lines for the name, address, telephone number, and signature of the employer were left blank. ( Id.)

By letter dated January 24, 2012 (“Claim Decision Letter”), UHC approved benefits under Group Life Insurance Policy No. 0724824 for $15,014.00, stating that that amount “represent[ed] the proceeds payable to [Plaintiff] under the policy.” (Compl. ¶ 23; id. Ex. G.) The Claim Decision Letter also addressed Plaintiff's claim for $750,000, stating:

Included with the initial claim submission was a letter dated November 21, 2011, signed by you, requesting an additional benefit for supplemental life in the amount of $750,000.00. Please note that Salto Systems does not have any supplemental life with UnitedHealthcare Insurance Company that would provide for that additional benefit referenced in your letter.

(Compl. Ex. G.) The letter informed Plaintiff that if she disagreed with the insurer's decision and wished to “appeal it, under the Employee Retirement Income Security Act of 1974 (ERISA), [she was] entitled to a full and fair review of the decision.” ( Id.) The letter also informed Plaintiff that if her “claim [was] not approved on review,” she could bring a civil action under section 502(a) of ERISA. ( Id.)

Through a letter from her counsel to UHC's Appeals Department (“Appeal Letter”), Plaintiff appealed UHC's claims decision. (Compl. ¶ 24; id. Ex. H.) The Appeal Letter referenced policy number 0724824 and listed the policyholder as Salto Systems, Inc. (Compl. Ex. H.) Plaintiff's counsel explained in the letter that Mr. Kersh “did not seek to purchase...