N.Y. Life Ins. Co. of NY v. Maxwell

• Decision Date: 02 December 2022
• Docket Number: 1:21-CV-00346 (LEK/ATB)
• Parties: NEW YORK LIFE GROUP INSURANCE COMPANY OF NY, Plaintiff, v. HENDRIKA MAXWELL, et al., Defendants.
• Court: U.S. District Court — Northern District of New York

NEW YORK LIFE GROUP INSURANCE COMPANY OF NY, Plaintiff,
v.
HENDRIKA MAXWELL, et al., Defendants.

No. 1:21-CV-00346 (LEK/ATB)

United States District Court, N.D. New York

December 2, 2022

MEMORANDUM-DECISION AND ORDER

LAWRENCE E. KAHN UNITED STATES DISTRICT JUDGE

On March 25, 2021, Plaintiff New York Life Group Insurance Company of NY (“NY Life”) commenced this interpleader action pursuant to Federal Rule of Civil Procedure 22 and 29 U.S.C. § 1132, seeking discharge from all liability in connection with a life insurance plan (“Plan”) previously issued to Dreena Verhagen (“Decedent”). Dkt. No. 1 (“Complaint”). NY Life named the following Defendants as potential claimants to the Plan's proceeds (“Plan Benefits”): Hendrika Maxwell, Decedent's sister; Samantha Kantola, the Voluntary Administrator of the Estate of Randi S. Hongisto, Decedent's friend;^[1] Erin Lynch, Decedent's friend; Heidi Verhagen, Decedent's sister; Jessica Dulong, Decedent's niece; Scott Dulong, Decedent's nephew; James Verhagen, Decedent's brother; Shirley A. Davis, Decedent's sister; and Peter Verhagen, Decedent's brother.^[2] Compl. ¶¶ 2-10. Because NY Life itself “makes no

1

claim to the Plan Benefits other than payment of its reasonable attorney's fees and costs,” NY Life initiated this action so that “this Court determine to whom the Plan Benefits should be paid.” Compl. ¶ 36.

On July 9, 2021, the Court granted NY Life's Motion for Interpleader Deposit, Dkt. No. 20 (“Order-Motion for Deposit”), and on August 3, 2021, NY Life deposited the Plan Benefits amount plus applicable interest in the Court Registry Investment System, Dkt. No. 24 (“Interpleader Deposit”). On May 11, 2022, NY Life filed a Motion for Interpleader Relief to Dismiss, “request[ing] that it [and its associated entities^[3] be discharged from all liability, and that the Defendants be enjoined from raising any Claims against NY[] [Life] or these other entities regarding the [Plan] [B]enefits.” Dkt. No. 92-1 (“Motion”) at 2.^[4] For the reasons set forth below, the Court grants NY Life's request that it be discharged from the action, but the Court denies NY Life's request for injunctive relief.

2

I. BACKGROUND

A. Factual Background

The following facts are undisputed, except where otherwise noted. Decedent was a former employee of Centene and a participant in the Plan, Compl. ¶ 13, which provided for life insurance coverage in the amount of $138,000, Id. at ¶ 23. The Plan is an employee welfare benefit plan regulated by the Employee Retirement Income Security Act (“ERISA”). Id. ¶ 13. The Plan is sponsored by Centene and funded by a group life insurance policy initially issued by Cigna Life Insurance Company of New York (“CIGNA”).^[5] Id. The Plan provides, in pertinent part, that:

Change of Beneficiary

You may change your beneficiary at any time by giving us a written notice or notice by any other electronic or telephonic means authorized by us. The beneficiary's consent is not required for this or any other change which you may make unless the designation of beneficiary is irrevocable

No change in beneficiary will take effect until the request form is received by us. When the request form is received, it will take effect as of the date of the form. If you die before the request form is received, we will not be liable for any payment that was made before receipt of the request form

Dkt. No. 1-1 (“Compl. Ex. A”) at 27; Compl. ¶ 18.

The Plan also sets forth to whom benefits should be paid in the event that a covered employee dies with no designated beneficiary:

3

To Whom Payable

Death benefits for you will be paid to the beneficiary named in our records, if any, at the time of payment. If there is no named beneficiary or surviving beneficiary, or if you die while Disability Benefits are payable to you, we may, at our option, make direct payment to any of the following:

1. spouse of the Insured;

2. child or children of the Insured;

3. parents of the Insured;

4. sisters or brothers of the Insured; or

5. the estate of the Insured.

Compl. Ex. A at 27; Compl. ¶ 19.

Decedent died on March 30, 2020. Compl. ¶ 20. Following Decedent's death, Hongisto emailed a Beneficiary Designation Form (“Designation Form”) to CIGNA allegedly signed by Decedent on March 11, 2020. Id. ¶ 21; but see Dkt. Nos. 26-31 (“August 27, 2021, Answers”) ¶ 2 (James Verhagen, Davis, Heidi Verhagen, Scott Dulong, Jessica Dulong, and Maxwell “den[y] knowledge or information sufficient to form a belief as to the allegations contained in” ¶ 21 of the Complaint). According to the Designation Form, the Plan Benefits were to be distributed accordingly: Maxwell to receive a 30% share, Hongisto to receive a 30% share, Lynch to receive a 20% share, Heidi Verhagen to receive a 10% share, Jessica Dulong to receive a 5% share, and Scott Dulong to receive a 5% share. Compl. ¶ 21; but see August 27, 2021, Answers ¶ 2.

Following the submission of the Designation Form, Heidi Verhagen reached out to CIGNA and disputed the authenticity of the Designation Form. Compl. ¶ 22. By correspondence dated July 22, 2020, CIGNA advised Hongisto, Lynch, Jessica Dulong, and Scott Dulong their claims were denied based on the opinion of a handwriting expert in CIGNA's Special Investigation Unit who determined that Decedent's signature was not valid. Id. ¶¶ 24-27; see Dkt. Nos. 1-4-1-7 (“Compl. Exs. D-G”). On August 16, 2020, Hongisto appealed CIGNA's

4

denial letter directly to CIGNA, Compl. ¶ 28; see Dkt. No. 1-8 (“Compl. Ex. H”); but some Defendants deny having knowledge of, or information sufficient to form a belief about, Hongisto's appeal, see August 27, 2021, Answers ¶ 2.

After CIGNA's handwriting expert opined that Decedent's signature on the Designation Form was not valid, CIGNA, by letter dated July 22, 2020, requested that Heidi Verhagen prepare a Preference Beneficiary Affidavit (“Preference Affidavit”) in accordance with the provisions of the Plan. Compl. ¶ 29; see Dkt. No. 1-9 (“Compl. Ex. I”); but see August 27, 2021, Answers ¶ 2 (James Verhagen, Davis, Heidi Verhagen, Scott Dulong, Jessica Dulong, and Maxwell “den[y] knowledge or information sufficient to form a belief as to the allegations contained in” ¶ 29 of the Complaint). The provisions of the Plan set forth to whom benefits would be payable in the event that there were no designated beneficiaries at the time of Decedent's death. Compl. ¶ 29; see Compl. Ex. I. The Preference Affidavit submitted to CIGNA on July 29, 2020, set forth the names of the five surviving siblings of the Decedent: Heidi Verhagen; James Verhagen; Davis; Maxwell; and Peter Verhagen. Compl. ¶ 30; see Dkt. No. 110 (“Compl. Ex. J”). Each of the five surviving siblings listed on the Preference Affidavit would receive equal shares of 20%. Compl. ¶ 35.

Before CIGNA administered the Plan Benefits, NY Life acquired CIGNA on December 31, 2020, “resulting in a change to [CIGNA]'s corporate ownership.” Compl. ¶ 14; see also Mot. at 5. After NY Life reviewed the ongoing dispute, it found that it could not “determine the proper beneficiaries of the Plan Benefits at issue without risking exposure of itself, the Plan, and Centene to multiple liabilities.” Compl. ¶ 33.

5

B. Procedural History

On March 25, 2021, NY Life commenced this action by filing a Complaint in interpleader, see Compl., and sought wavier of service from all Defendants to avoid the expense of personally serving them. Dkt. No. 2 (“Summons”). All Defendants signed and returned waivers of service in a timely manner. Dkt. No. 4-12 (collectively, “Waivers of Service”). On June 25, 2021, NY Life filed a motion for interpleader deposit pursuant to Rule 67 of the Federal Rules of Civil Procedure and Local Rule 67.1 to deposit the Plan Benefits in dispute, plus any applicable interest, into the registry of the Court. Dkt. No. 19 (citing Fed.R.Civ.P. 67 and L.R. 67.1). On July 9, 2021, this Court granted the motion for interpleader deposit, see Order- Motion for Deposit, and on August 3, 2021, the funds were deposited into the registry of the Court, see Interpleader Deposit.^[6]

On August 27, 2021, James Verhagen, Heidi Verhagen, Scott Dulong, Jessica Dulong, Davis, and Maxwell filed virtually identical answers to the Complaint. See August 27, 2021, Answers. On September 13, 2021, Lynch submitted an Answer to the Complaint, in which she stated that based on messages between herself and Decedent, she is entitled to her portion of the proceeds. Dkt. No. 61 (“September 13, 2021, Answer”). Following Lynch's Answer, on September 27, 2021, Lynch submitted a Request for Subpoena for Decedent's medical records “to show diagnosis of [Decedent's] neurological disorders . . . to refute the conclusion that [Decedent's] signature was forged.” Dkt. No. 64 (“First Subpoena Request”). The Court granted this request by text order on October 8, 2021.^[7] Dkt. No. 66. On December 27, Lynch submitted a

6

second Request for Subpoena to recover Facebook messages from Decedent to Lynch to show the “authenticity of the messages.” Dkt. No. 80.^[8] The Court granted this second request by text order on January 3, 2022, “subject to the condition requested by other defendants that any documents be produced, in the first instance, to the Clerk of the Court, to then be made available to the parties.” Dkt. No. 88.

NY Life now moves to be discharged from the action through interpleader relief because it is at risk of exposure to multiple liabilities from claims to the Plan Benefits, Mot. at 2, and seeks to have Defendants “enjoined from commencing or prosecuting any action related to the Plan,” Id. at 10. On May 20, 2022, Heidi Verhagen, James Verhagen, Davis, and Maxwell (collectively, “Opposing Parties”), opposed NY Life's Motion. See Dkt. Nos. 93-96 (collectively, “Oppositions”). The Opposing Parties claim in their virtually identical Oppositions that NY Life...