I. ERISA LITIGATION

ERISA Pre-Empts A Breach of Contract Claim Seeking Benefits Under An Employer-Sponsored Group Life insurance Policy

In Shephard v. AETNA Life Ins. Co., 2009 WL 2448548 (E.D. Pa. August 7, 2009)(Slip opinion), plaintiffs, Tammy L. Shephard and Lorri A. Hendrikse, sought benefits under a policy issued by AETNA Life Insurance Company. Before the District Court was Defendant's Motion to Dismiss, and Plaintiffs' Motion for Leave to Amend the Complaint. The District Court of the Eastern District of Pennsylvania granted Defendant's Motion to Dismiss, and denied Plaintiffs' Motion.

Plaintiffs were the children of decedent William Hendrickse, a former employee of Monet Graphics, Inc. Monet Graphics took out a policy of group life insurance through Defendant AETNA, which policy was intended to cover all eligible employees of Monet Graphics, beginning on July 1, 2004. Mr. Hendrickse died in April 2008. Plaintiffs were the named beneficiaries of decedent under the policy. Upon decedent's death, Plaintiffs filed a claim for benefits with Defendant AETNA, which benefits were valued at approximately $9,750.00. Defendant AETNA denied the claim.

Plaintiffs filed a Complaint with the Pennsylvania Court of Common Pleas, asserting a state law claim for breach of contract. The complaint alleged that Monet Graphics paid premiums on the group policy of life insurance issued by AETNA, covering all employees, including decedent, from July 1, 2004 through to the time of decedent's death in April 2008.

Defendant removed the matter to federal Court, and filed a Motion to Dismiss the Complaint, claiming the state law claims were pre-empted by ERISA. Plaintiff then filed a Motion for Leave to Amend the Complaint, but failed to file opposition to the Motion to Dismiss.

In granting Defendant's Motion to Dismiss, the Court found that "ERISA expressly preempts any and all State laws insofar as they may . . . relate to any employee benefit plan." The District Court also noted that "[t]he U.S. Supreme Court has specifically held that breach of contract claims arising out of a failure to provide employee benefits under a group insurance policy are preempted by ERISA." With regard to Plaintiffs' Motion for Leave to Amend the Complaint, seeking to bring a cause of action under ERISA, the Court noted that ERISA requires an exhaustion of all administrative remedies before such a claim can be brought, and the failure to exhaust all such administrative remedies would constitute grounds for dismissal under Rule 12(b)(6). Accordingly, in denying Plaintiffs' Motion, the Court found allowing leave to amend would be futile, as Plaintiffs had failed to plead that all administrative remedies had been exhausted. Accordingly, Plaintiffs' Complaint was dismissed, as pre-empted by ERISA.