Metro. Life Ins. Co. v. Beard
| Decision Date | 07 February 2019 |
| Docket Number | Civil Action No. 16-11782-PBS |
| Parties | Metropolitan Life Insurance Company, Plaintiff, v. Eric A. Beard, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER
Plaintiff Metropolitan Life Insurance Company ("MetLife") brings this action against pro se Defendant Eric A. Beard ("Eric Beard")1 to recover benefits mistakenly paid to him as the son and sole beneficiary of decedent Paul K. Beard, who maintained life insurance under the Federal Employees' Group Life Insurance Act ("FEGLIA"), 5 U.S.C. §§ 8716, during his employment with the United States Postal Service ("USPS"). After a bench trial, the Court finds that Eric Beard was unjustly enriched.2 Judgment shall enter for MetLife.
The United States Office of Personnel Management ("OPM"), which has the authority to administer and regulate the benefits under FEGLIA, purchases master policies from private life insurance companies such as MetLife. Pursuant to 5 U.S.C. § 8709, MetLife issued Group Policy No. 17000-G, known as the Federal Employees' Group Life Insurance Policy (the "FEGLI Policy") to OPM. The Office of Federal Employees' Group Life Insurance ("OFEGLI") is the administrative unit of MetLife charged with administering claims for FEGLI benefits.
There are two types of life insurance under the FEGLI program: Basic and Optional. For most federal employees, their Basic insurance amount is their annual rate of basic pay, rounded to the next higher thousand, plus $2,000. The cost of Basic insurance is shared between the insured individual and the employer/government.
There are three types of Optional insurance under the FEGLI program. Option A is standard optional insurance of $10,000. Option B is additional optional insurance and comes in 1, 2, 3, 4 or 5 multiples of an employee's annual pay (after the pay hasbeen rounded to the next higher thousand, if not already an even thousand). Option C is family optional insurance. The federal employee pays the full cost of any and all Optional insurance selected.
Most federal employees are automatically enrolled in Basic insurance; Optional insurance must be specifically elected. Generally, both Basic and Optional insurance end on the date the employee separates from service, subject to a 31-day extension of coverage. Under certain circumstances, an employee may choose to retain his Basic and Optional insurance into retirement.
Prior to retirement, a federal employee with insurance coverage under FEGLI may choose to fill out a "Continuation of Life Insurance Coverage" form (SF 2818). The form provides for an employee to choose whether to continue Basic life insurance, and Options A, B, and/or C if the employee already has such coverage, into retirement. The form also provides for the employee to choose to continue coverage but at various reduced levels. For example, an eligible employee with Option B or C coverage may choose to discontinue coverage for retirement, retain and pay for full coverage, or choose to have the Optional insurance with "Full Reduction." "Full Reduction" means that the employee starts with the full value of his coverage, but the value reduces by two percent per month for 50 months beginning in the second month of retirement. There is a 31 day conversionperiod starting from the day the employee retires. During this conversion period, the employee maintains the insurance he had immediately prior to retirement, before the new selections from the SF 2818 go into effect.
If an employee fails to fill out an SF 2818 prior to retirement, then there are default provisions. OPM instructs that for Option B, the default is Full Reduction for all multiples you are eligible to have in retirement. Again, "Full Reduction" does not mean the elimination of the benefit. Rather, it means that the retiring employee starts with the full value of his coverage, but the value reduces by two percent per month for 50 months beginning in the second month of retirement.
MetLife does not maintain or have access to a federal employee's paperwork until the employee, or former employee, deceases. At that point someone from the employee's family usually contacts OPM to report the death and OPM begins the death claim process. As part of that process, OPM sends MetLife a certification indicating what level of coverage the federal employee had at his time of death (Form RI 76-9), his designation of beneficiary, and a claim form usually completed by the person who reported the death (Form FE-6). It is standard practice for MetLife to receive a death certificate from OPM before a claim can be processed.
Pursuant to the FEGLI Standard Contract, MetLife is required to use "reasonable diligence to ensure that the certification was properly completed," and to "pay Benefits in accordance with the information on that certification." In doing so, MetLife must "rely on all certifications by OPM and other Government Agencies issued to verify an Insured Person's eligibility, Insurance in Force, and Annual Rate of Basic Pay." MetLife must also attempt to collect any erroneous payments made under the contract.
Paul K. Beard ("Paul Beard") was an employee of the USPS for 45 years. Paul Beard had life insurance coverage under the FEGLI program through his employment with the USPS. Immediately prior to his retirement on October 1, 2015, Paul Beard's life insurance coverage included $62,000 in Basic insurance (i.e., his $59,294 salary rounded to the next higher thousand and adding $2,000), Option A insurance in the standard amount of $10,000, and Option B insurance in the amount of $300,000 (i.e., five multiples of his salary rounded to the next higher thousand).
On August 20, 2015, Paul Beard submitted an "Application for Immediate Retirement" with the date of retirement listed as October 1, 2015. In preparation for retirement, on August 28, 2015 he filled out a "Continuation of Life Insurance Coverage"form ("August SF 2818"). The form indicated that upon retirement, Paul Beard had elected to continue Basic life insurance at a 75% reduction and to continue Option A insurance. It also indicated that Paul Beard did not want to continue Option B or C into retirement, but stated that he wished to have both at Full Reduction. This form was stamped as received by human resources on September 1, 2015. After it was received, someone wrote on the form, "If you are not keeping B or C then just [check] no." The August SF 2818 was not part of the claim file provided to MetLife.3
Paul Beard filled out, signed, and submitted a second SF 2818 on September 10, 2015 ("September SF 2818"). The September SF 2818 indicated that, upon retirement, Paul Beard intended to continue his Basic insurance and his Option A insurance, but not his Option B or C insurance.4
On October 29, 2015, after retiring from the USPS, Paul Beard signed a "Designation of Beneficiary" form (SF 2823) designating his son, Eric Beard, his sole beneficiary to the FEGLI benefits. Eric's wife Samantha Beard, and Samantha'ssister, Sarah Mauro, witnessed the designation. He was competent and not intoxicated at the time he signed this form.
Paul Beard passed away from natural causes on November 12, 2015. He died more than 31 days after his retirement from the USPS on October 1, 2015. Thus, at his time of death he was insured for Basic life insurance of $62,000 and Option A life insurance of $10,000.
On November 23, 2015, Eric Beard, as Paul Beard's sole beneficiary, filed a claim for FEGLI benefits with MetLife. Eric Beard properly reported the date of death on that form (Form FE-6) as November 12, 2015. Shortly thereafter, on November 25, OPM Legal Administrative Specialist Katherine McCune provided MetLife with a Certification of Insurance Status form (Form RI 76-9) (the "November Certification"). In the November Certification, OPM incorrectly stated that Paul Beard's date of death was November 1, 2015, instead of November 12, 2015. The form mistakenly certified that Paul Beard had "died within 31 days of retirement" and thus had Basic life insurance at 75% reduction, Option A, and Option B coverage. OPM did not attach Paul Beard's death certificate to the November Certification.
Based on the November Certification, MetLife paid Eric Beard $362,123.99 on December 7, 2015. The payment consisted of $62,000 in Basic life insurance and $300,000 in Option Binsurance, plus a small amount of interest. MetLife overpaid Beard $300,000 in Option B coverage based on the inaccurate certification from OPM, and mistakenly failed to pay him an additional $10,000 he was entitled to in Option A coverage - accordingly, Beard was overpaid by $290,000. Beard had no knowledge at that time that he was overpaid.
On February 24, 2016, upon receipt of Paul Beard's death certificate, McCune at OPM emailed MetLife about the Paul Beard claim. The email stated, in part:
[O]n the original paper cert [sic] for Paul K Beard . . . it was noted that the death was within 31 days of retirement, however, now with the receipt of the death certificate the date of death was reported incorrectly his date of death was 11/12/15 and not 11/01/2015 so this would change the amount of coverage he had at death. He would only have Basic at 75% and Option A.
On February 29, 2016, OPM issued a new Certification of Insurance Status (the "February Certification"), this time attaching Paul Beard's death certificate. The form certified that at his time of death, Paul Beard had Basic life insurance at 75% reduction and Option A insurance, but not Option B coverage. McCune also wrote on the February Certification, "[d]eath cert shows date of death 11/12/15 therefore death was not within 31 days of [his] retirement."
MetLife began attempting to recover the overpayment. On March 4, 2016, MetLife left a voicemail message on Eric Beard'scell phone regarding the...
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