Corey Skelton v. Radisson Hotel Bloomington, et al.

Minneapolis, Minnesota employment laws represented Plaintiff, who sued Defendants on an Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. theories.



Corey Skelton was married to Beth M. Skelton ("Skelton”), a corporate group

sales manager at Davidson Hotels LLC.



Davidson operated a welfare benefits plan ("Plan”) that provided dental,

health, life and long-term disability benefits for employees. Davidson's documents

identified it as the "Plan Administrator” with general "discretionary authority to

interpret the Plan,” and determine eligibility for coverage and eligibility for claims.

Davidson entered a policy contract ("Policy”) with Reliance Standard Life

Insurance Company to provide life insurance for the Plan. Reliance "serve[d] as the

claims review fiduciary with respect to the [life] insurance policy and the Plan.” The

Policy granted it "final and binding” "discretionary authority to interpret the Plan

. . . and to determine eligibility for benefits.”



Reliance also had sole discretion to determine eligibility for supplemental life

insurance under various circumstances, including when an employee sought it more

than 31 days after starting employment. In this circumstance, the employee was

required to submit an Evidence of Insurability ("EOI”), demonstrating "proof of

good health.” Insurance would not become effective until Reliance "approve[d]

[that] required proof of good health.”



However, if an applicant for supplemental life insurance was changing

coverage amounts within 31 days of "a life event change (such as marriage, birth, or

specific changes in e mployment status),” then the applicant was not required to

submit an EOI and receive Reliance's approval.



Davidson collected premiums from employees and remitted them to Reliance

in one monthly check for all the premiums due, along with a worksheet listing only

the total number of employees insured. This is called "bulk billing.” Reliance's

system did not collect information that would allow it to assess whether Davidson

sent mistakenly billed premiums to Reliance.



When Skelton began work at Davidson in April 2013, she was automatically

enrolled in a $100,000 basic life insurance policy under the Plan, but she did not

select supplemental insurance. When Skelton's husband regained custody of his

son—her stepson—in November 2013, she asked Davidson's Human Resources

Director if changing custody of her stepson qualified as a life event that allowed her

to elect supplemental life insurance. The Director told her it did (although Reliance

now avers that it does not unless the employee adopts the child). On November 22,

2013, Skelton applied for the maximum supplemental life insurance available,

$238,000, for herself.



In response, Reliance sent Skelton a document, titled "Important Team

Member Instructions,” stating that Skelton "enrolled in coverage . . . that requires

proof of good health,” requiring Skelton "prove Evidence of Insurability.”

Instructions, DCD 168-1 at 55. The document's letterhead had both Reliance's and

Davidson's logos. It said, "The completed EOI should be returned directly to

Reliance” at its mailing address. It stated, "If there is required information missing

from the form, Reliance . . . will return it to you for completion.” The document

explained:



Until your application . . . is approved by the Medical

Underwriting Department, the amount of your . . .

Supplemental Life Insurance coverage that is subject to

evidence of insurability will not go into effect. You will

not be charged premiums for amounts subject to evidence

of insurability until the approval is granted. . . . If you have

any questions regarding the EOI form . . . please contact

Reliance['s] Customer Care Team.



Id. (emphasis added). The parties dispute whether Skelton submitted the EOI to

Reliance. But she never received any notice that the form had or had not been

received during her time at Davidson.



Instead, Skelton received a "Benefit Verification / Deduction Authorization”

document listing her as having "Supplemental Term Life” insurance under the

"Reliance Voluntary Life” option, effective January 1, 2014. "Regain[ing] custody

of dependent child” was listed as the "Reason for Completing Form.”

In February 2014, Skelton went on medical leave and began receiving

disability benefits. Davidson notified her that she was required to pay premiums to

maintain her benefits while on disability. Skelton paid premiums from February

through May 2014. In July 2014, Davidson informed Skelton she was past due on

her premiums for May 24, 2014, through July 20, 2014.



In March 2015, Reliance sent Skelton a notice that she might be eligible to

have the premiums waived based on her disability. Skelton applied for and received

a waiver of her premiums, retroactive to March 1, 2014.





On December 6, 2015, Skelton died. Her husband, Plaintiff-Appellee Corey

Skelton, contacted both Davidson and Reliance about her supplemental life

insurance. On March 28, 2016, Davidson replied that Skelton's supplemental life

insurance had been "in a pending status” ever since she applied because, "per

Reliance Standard, there are no records that the completed EOI form was ever

received.” Davidson acknowledged it sent letters "incorrectly” listing "pending

premiums” that "should not have been requested until coverage was actually

approved by Reliance Standard's Medical Underwriting Department.” Davidson

enclosed a check for $133.12, the "maximum amount” of premiums that could have

been incorrectly charged to Skelton between February and August 2014.



Corey Skelton sued Davidson, Reliance, and other parties. Count II of his

Second Amended Complaint alleged that Davidson and Reliance violated ERISA by

mishandling his wife's supplemental life insurance enrollment. Davidson settled

with him, paying $250,000, with $175,000 for the ERISA claim. He and Reliance

then filed cross-motions for summary judgment. The district court denied Reliance's

motion and granted his, finding Reliance breached its fiduciary "duty to ensure its

system of administration did not allow it to collect premiums until coverage was

actually” effective. The district court subtracted the amount Davidson paid for the

supplemental life insurance claim, and ordered Reliance to pay damages of $63,000,

plus pre- and post-judgment interest. Reliance appeals.

Affirmed