United States District Court, S.D. Texas, Houston Division
MEMORANDUM OPINION AND ORDER
H. MILLER SENIOR UNITED STATE DISTRICT JUDGE.
before the court is a motion to dismiss plaintiffs Beverly
Price and Dale Price's amended complaint against
defendant Northgate Benefits and Insurance, LLC
(“Northgate”). Dkt. 17. Having considered the
motion, response, reply, and applicable law, the court is of
the opinion that the motion should be GRANTED.
case relates to the alleged wrongful denial of life insurance
benefits under a plan governed by the Employee Retirement
Income Security Act (“ERISA”). The
plaintiffs' decedent, Lonnie Price Jr.
(“Decedent”), worked as an IT professional for
ARES Corporation (“ARES”).Dkt. 1 ¶ 11.
While employed, Decedent participated in the ARES Holding
Corporation Benefits Plan (the “Plan”).
Id. ¶ 12. The Plan is a group employee benefits
plan which offered group life insurance as well as other
insurance coverage to participating ARES Holding Corporation
(“AHC”) employees under Life Insurance Company of
North America (“LINA”) Group Policy FLX-964559
(the “Policy”). Id. ¶ 6, 13, 17.
The Decedent participated in the Plan while employed by ARES.
Id. The Policy identifies defendant AHC as the Plan
Sponsor and Plan Administrator. Dkt. 17, Ex. 1 at 22. AHC
appointed defendant LINA, the Plan's underwriter, as the
named fiduciary and claims administrator of the Policy.
Id. at 23. The Policy provided the Decedent with a
life insurance benefit of $135, 000 and $200, 000 in
supplemental coverage. Dkt. 1 ¶ 17. Beverly Price and
Dale Price, Decedent's wife and son respectively, were
named as Decedent's beneficiaries under the Plan and
Policy issued by LINA. Id. ¶ 19. In addition,
ARES maintained an administrative services agreement (the
“Agreement”) with Northgate to act as a
third-party administrator of the Plan. Id. ¶
16; Dkt. 17, Ex. 2. The Agreement required that Northgate use
its “best efforts and professional judgment” in
carrying out the services agreed upon. Id. at 4. The
Agreement also maintained that “[ARES] remains the Plan
Administrator and named fiduciary for purposes of the
Plan” and retained “full authority and control
over the management” of the Plan. Id. at 5, 8.
February 2016, Decedent was diagnosed with terminal cancer.
Dkt. 1 ¶ 21. Decedent, however, continued working for
ARES on a part-time basis with varied hours until his death
in September 2017. Id. During this period, Decedent
took ARES-approved intermittent Family Medical Leave Act
leave, and ARES continued to deduct group life insurance
premiums from Decedent's pay and provide them to LINA on
his behalf. Id.
2016, Decedent was informed that he had less than one year to
live, and he subsequently filed a claim for the maximum
allowable terminal illness benefit of $67, 500 under the
Policy. Id. ¶ 22. As a prerequisite for this
benefit, Decedent informed AHC, Northgate, LINA, and the Plan
of his terminal condition. Id. ¶ 23. In
accordance with the terms of the Policy, LINA deposited the
requested terminal illness benefit into a CignaAssurance
account maintained by LINA for use by the Decedent.
Id. ¶ 24. Following Decedent's death, LINA
transferred the remaining balance of the CignaAssurance
account to plaintiff Beverly Price. Id.
August 2016, a Northgate representative emailed two LINA
representatives concerning the appropriate steps for the
Decedent to convert or port his remaining life insurance
coverage to an individual policy or otherwise maintain
Decedent's life insurance coverage. Id. ¶
27. A LINA representative responded to Northgate, claiming,
“Since [Decedent] is out on disability and was 60 when
the claim started (from what I can tell), the life insurance
coverage can stay in effect for up to 12 months as long as
premiums are paid. . . . Normally once the employment
terminates, the employee should be offered conversion.”
Id. ¶ 28. Following this exchange, no
representatives of Northgate or AHC followed-up with LINA nor
did any representatives of LINA follow-up with Northgate or
AHC. Id. ¶ 30.
Decedent's death in September 2017, the Prices filed
timely claims for Decedent's remaining life insurance
proceeds. Id. ¶ 31. However, neither the
Decedent nor the plaintiffs converted or attempted to covert
Decedent's group life insurance coverage before filing
their claims. Dkt. 17 at 6. As part of the Prices'
application, both AHC and Northgate submitted claim forms to
LINA representing that the they were entitled to
Decedent's remaining life insurance proceeds under the
Plan and Policy and Decedent's coverage was in effect
through the date of his death. Dkt. 1 ¶¶ 32-33.
denied the plaintiffs' claim for life insurance benefits
and further denied the plaintiffs' administrative appeal
seeking review of LINA's denial of their claim.
Id. ¶ 34. LINA determined that Decedent had
lost his eligible class status by working less than thirty
hours per week and should have converted his group life
insurance coverage but failed to do so within twelve months
of losing coverage. Id.
plaintiffs filed the instant lawsuit in October 2018. Dkt. 1.
Following the dismissal of improperly named defendants ARES
and ARES Corporation Benefits Plan, the plaintiffs amended
their complaint to include AHC and the Plan. Dkt. 26. The
Prices allege that AHC, Northgate, LINA, and the Plan:
failed to sufficiently, accurately, comprehensively, clearly
or reasonably apprise Decedent or Plaintiffs of their rights
and obligations under the Plan and the [LINA] Policies with
regard to circumstances which may result in disqualification,
ineligibility or denial or loss of life insurance benefits
from the Plan or The LINA Policies as LINA claims to be the
case in its denial letters, nor available steps, and how and
when they should take those steps to maintain those benefits,
including conversion, and in fact misled them regarding the
Dkt. 1 ¶¶ 45-47. The Prices further allege that
“[AHC] and/or LINA and/or Northgate” took part in
preparing a Summary Plan Description (“SPD”)
which failed to adequately inform the Decedent or the Prices
of their rights and obligations to maintain eligibility under
the Plan and Policy. Id. ¶¶ 43-44.
Prices claim entitlement to life insurance policy proceeds
under the terms and provisions of both the Plan and Policy
pursuant to § 502(a)(1)(B) of ERISA (29 U.S.C. §
1132(a)(1)(B)), alleging that they satisfy all qualifications
for benefits. Dkt. 1 ¶ 51. The Prices alternatively
assert a claim for breach of fiduciary duty against AHC,
Northgate, LINA, and the Plan, and they claim entitlement to
equitable relief under § 502(a)(3) of ERISA (29 U.S.C.
§ 1132(a)(3)). Id. ¶¶ 52-54, 58. The
Prices further allege that both LINA and the Plan have been
unjustly enriched by the retention of premiums and life
insurance benefits allegedly owed to the plaintiffs.
Id. ¶ 62. The Prices seek disgorgement of any
profits AHC, Northgate, LINA, and the Plan realized by the
retention of benefits allegedly owed to the them and also
seek an equitable surcharge. Id. at 13-14.
filed the instant motion to dismiss the plaintiffs'
§ 502(a)(3) claim against Northgate pursuant to Federal
Rule of Civil Procedure 12(b)(6). Dkt. 17. Northgate argues
that the Prices' § 502(a)(3) claim is precluded by
the plaintiffs' § 502(a)(1)(B) claim against LINA
and the Plan for recovery of benefits or, alternatively, that
the plaintiffs have not alleged sufficient facts showing