Lugo v. AIG Life Ins. Co.

• Citation: 852 F. Supp. 187
• Decision Date: 02 May 1994
• Docket Number: No. 90 Civ. 6462,90 Civ. 7752 (MJL).,90 Civ. 6462
• Parties: Farecilpa LUGO, Plaintiff, v. AIG LIFE INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

852 F. Supp. 187

Farecilpa LUGO, Plaintiff, v. AIG LIFE INSURANCE COMPANY, et al., Defendants.

Nos. 90 Civ. 6462, 90 Civ. 7752 (MJL).

United States District Court, S.D. New York.

May 2, 1994.

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Wolodymyr M. Starosolsky, P.C. by Wolodymyr M. Starosolsky, New York City, for plaintiff.

McCormick Dunne & Foley by Patrick F. Foley, New York City, for defendant.

Lester Schwab Katz & Dwyer by Saul Goldstein, New York City, for third party defendant.

OPINION AND ORDER

LOWE, District Judge.

Before this court is an action brought by Farecilpa Lugo ("Plaintiff"), as the named beneficiary under two separate accidental death benefit plans (the "Plans"), pursuant to § 502(a)(1)(B) of the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C.A. § 1132(a)(1)(B) to recover benefits under the Plans. For the reasons set forth below, Plaintiff's action is dismissed.

BACKGROUND

Plaintiff's husband ("Insured") died on October 8, 1984 after losing control of a van. The death certificate listed that he died of natural causes. Plaintiff completed and submitted claim forms to Hobart Corporation, the Insured's employer ("PMI" or "Third Party Defendant"). Plaintiff did not submit claims to defendant, AIG Life Insurance Company ("AIG" or "Defendant") until late 1987. Defendant denied Plaintiff's claims stating that Plaintiff was not entitled to collect under the Plans because the Insured's death did not occur within the terms of the policy.¹ Following a determination by the Worker's Compensation Board, stating that the Insured had died in the course of his employment as a result of injuries sustained in the October 8, 1984 accident, Plaintiff resubmitted her claim to AIG. AIG advised Plaintiff that the company would maintain its original position of denial.

In October 1990, Plaintiff commenced an action against AIG. Defendant contends that, as a matter of law, Plaintiff is not entitled to collect under the Plans because Plaintiff failed to give timely notice of the claim to Defendant. Plaintiff claims to have given notice of claim to PMI and argues that PMI is the agent of AIG for the purpose of filing claims. AIG maintains that PMI is not its agent and any notice given to PMI cannot be deemed to be notice to AIG.

In addition, Plaintiff argues that, even if PMI is not deemed to be AIG's agent, AIG, by not claiming a defense of late notice in its letters denying benefits, waived, or is estopped from asserting such a defense. AIG contends that the defense of late notice was preserved by the reservation of rights language in both denial of benefits letters.

Defendant also contends that Plaintiff's action is time-barred because the Plans provide that all actions must be commenced within three years after the time written proof of loss is required to be furnished. Plaintiff claims that she is not barred from commencing this action because the limitations period under ERISA governs and her claim was brought within the limitation period provided by ERISA.

Finally, Plaintiff requests that she be given a jury trial. AIG contends that there is no right to a jury trial for equitable actions and since ERISA is governed by the law of trusts, Plaintiff is not entitled to a jury trial.

On May 10, 1993, this court issued a Rule 16 Order specifying four issues for the parties to address: (1) does the rejection of a claim with reservation of all rights keep alive claims of rejection not specifically stated; (2) are there any facts, admissible in evidence, to support the claim that the Defendant authorized PMI as Defendant's agent; (3) does the Plaintiff have a right to a jury trial in an ERISA case; and (4) what factors extend the limitation to commence suit period as stated in the Plans and are such factors present. The Court ruled that Plaintiff had offered no evidence that PMI was the agent of AIG such that notice of accidental death to PMI constituted either a notice of claim or proof of loss to AIG. The ruling was held in abeyance pending submission by the parties of evidence that PMI acted as AIG's agent for receipt of notice of claim or proof of loss.

DISCUSSION

ERISA was enacted because Congress intended employee benefit plans to be an exclusively federal concern. Thus, the goal of ERISA is "to provide uniform, national regulation of benefit plans." Aetna Life Ins. Co. v. Borges, 869 F.2d 142, 147 (2d Cir.), cert. denied, 493 U.S. 811, 110 S.Ct. 57, 107 L.Ed.2d 25 (1989). ERISA contains a broad preemption provision, which provides that the provisions of the statute "shall supersede any and all State laws insofar as they may now or hereafter relate to any covered employee benefit plan." 29 U.S.C. § 1144(a). ERISA defines an employee welfare benefit plan as "any plan ... established or maintained by an employer ... for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance ..., ... benefits in the event of ... death." 29 U.S.C. § 1002(1)(A). State law is defined to include "all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." 29 U.S.C. § 1144(c)(1).

ERISA's broad preemption provision, however, contains an exception: any state law which "regulates insurance" is exempt and "saved" from the preemption provision. 29 U.S.C. § 1144(b)(2)(A). But the scope of this "savings" clause is limited by the "deemer" clause, under which "an employee benefit plan ... shall not be deemed to be an insurance company or other insurer ... or to be engaged in the business of insurance ... for purposes of any State purporting to regulate insurance companies or insurance contracts." 29 U.S.C. § 1144(b)(2)(B).

AIG's Defense of Late Notice

Plaintiff argues that because AIG failed to comply with New York Insurance Law § 3221(a)(6), which requires insurers to deliver to insured copies of "a certificate setting forth in summary form a statement of the essential features of the insurance coverage," AIG "has effectively waived and/or is estopped from asserting any rights (that plaintiff failed to comply with any policy provisions or limitations, etc.) related to the statute." (Pl.'s Br. at 4 (July 20, 1993)). In reply, AIG submits that Plaintiff admitted at deposition to having copies of the Plans in her possession at the time of Insured's death, (Def.'s Reply Br. at 4-5 (July 28, 1993)), and thus Plaintiff has failed to show that AIG did not comply with § 3221(a)(6).

This Court does not agree with Plaintiff's argument that AIG has waived or is estopped from asserting its rights because AIG violated § 3221(a)(6) of New York Insurance Law. Section 3221(a)(6) of the Insurance Law of the State of New York states:

"That the insurer shall issue either to the employer or person in whose name such policy is issued, for delivery to each member of the insured group, a certificate setting forth in summary form a statement of the essential features of the insurance coverage and in substance the following provisions of this subsection."

While Plaintiff contends that AIG has failed to comply with the provisions of this section, Plaintiff does not state how AIG failed to comply. Plaintiff makes no allegations that AIG did not issue to the employer (Hobart) or to the Insured, a certificate setting forth a statement of the essential features of the insurance coverage. Plaintiff states no facts which show that AIG failed to comply. Indeed, Plaintiff, at deposition, admitted to being in possession of the copies of the Plans at the time of the Insured's death. In addition, Plaintiff states no case law to support her argument that, a party will be deemed to have waived or is estopped from asserting its rights because of a failure to comply with a section of the New York Insurance Law.

While the parties do not argue that ERISA applies, this Court notes that ERISA also contains provisions requiring furnishing of plan description and summary plan description to participants and beneficiaries. 29 U.S.C. §§ 1022, 1024(b). Thus, it can be argued that New York Insurance Law is preempted by the ERISA provision. However, even if ERISA were to apply, Plaintiff still does not state any allegations which would suggest that AIG failed to comply with ERISA's requirements. Additionally, this Court is unaware of, and Plaintiff fails to cite to, any law which states that failure to comply with 29 U.S.C. §§ 1022 and 1024(b) would constitute waiver or estoppel of defendant's rights.

Plaintiff contends that should this Court find that AIG complied with § 3221, AIG, nevertheless, is estopped from asserting its defense of late notice because it failed to state such a defense in its rejection of claim letters. AIG argues that it neither waived, nor is estopped from asserting, late notice because AIG's letters denying benefits contained language reserving all its rights. AIG's denial letters reserve its rights and defenses without mentioning late notice.

Once again Plaintiff does not cite to any cases which support her contentions. AIG, in support of its argument relies on the decision in Guberman v. William Penn, 146 A.D.2d 8, 538 N.Y.S.2d 571 (2d Dep't 1989). Guberman held that unless the claimant could demonstrate that she suffered prejudice, the insurer would not be barred from relying on a defense which it failed to assert in a disclaimer letter. According to the Guberman court, estoppel or waiver will arise only if (1) the insurer knew of the different grounds for disclaiming liability and yet omitted any reference to them in its original notice of disclaimer and (2) the insured was prejudiced by such omission.

This Court, however, can not follow Guberman, as the Second Circuit Court of Appeals has criticized Guberman and has refused to follow the decision. In New York v. Amro Realty Corp., 936 F.2d 1420 (2d Cir.1991), the court of appeals stated that Guberman's reliance on out-of-state cases, which imposed the prejudice requirement where waiver is...