Kmatz v. Metro Life Ins Co

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 07a0310n.06
Filed: May 7, 2007
No. 06-3826
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
JOSEPH E. KMATZ, individually and as )
Executor of the Estate of JOSEPH M. )
KMATZ, )
)
Plaintiffs-Appellants, )
)
v. ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR THE
METROPOLITAN LIFE INSURANCE ) SOUTHERN DISTRICT OF OHIO
COMPANY, ABX AIR INC., AIRBORNE )
FREIGHT CORP. and JENNIFER GAINES, )
)
Defendants-Appellees. )
Before: SUHRHEINRICH, CLAY and SUTTON, Circuit Judges.
SUTTON, Circuit Judge. On behalf of himself and his son’s estate, Joseph E. Kmatz urges
us to hold that he, not Jennifer Gaines (the one-time wife of his son), is the beneficiary of his son’s
life-insurance policy. Faced with cross motions for summary judgment and faced with a beneficiary
designation form that the decedent did not change after the dissolution of his marriage, the district
court determined that Metropolitan Life Insurance Company (MetLife) properly paid the decedent’s
life insurance benefits to Jennifer Gaines. We affirm.
No. 06-3826
Kmatz v. Metro. Life Ins. Co.
I.
Joseph M. Kmatz, the decedent, worked as an aircraft mechanic for ABX Air in Wilmington,
Ohio. He enrolled in the company’s employee-benefit program, which included life-insurance and
accidental-death-insurance policies issued by MetLife.
The plan administrator is Airborne Freight Corporation, which (along with the plan’s claims
administrator, the insurance companies “and other Plan fiduciaries”) possesses “full and absolute
discretionary authority to administer and interpret the terms of the Plan and to determine eligibility
for and entitlement to Plan benefits. Benefits under [the] Plan [are] paid only if the Plan
Administrator, or its delegate, decides in its discretion that the applicant is entitled to them.” JA 144.
“In the event of [a participant’s] death,” the summary plan description explains that the
participant’s “beneficiary will be paid [the participant’s] Life Insurance benefit.” JA 128. The plan
description defines a “beneficiary” as “the person or persons you name to receive your Life Insurance
benefit in the event of your death,” and instructs plan participants to “complete the beneficiary
section of your Group Insurance Enrollment form and return it to the Benefits section of Human
Resources to assure that Life Insurance benefits are paid in accordance with your wishes.” JA 129.
The plan description also informs participants that they may change their “beneficiary designation
at any time.” Id. If a participant fails to name a beneficiary in the first instance or if the named
beneficiary predeceases the participant, MetLife will pay the benefits “in the following order of
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priority: 1. Your spouse; 2. Your child(ren) equally; 3. Your parent(s) equally; 4. Your brother(s)
and sister(s) equally; 5. Your estate.” Id.
On November 13, 1999, Kmatz married defendant Jennifer Gaines. Soon after the wedding,
he executed a two-page “Group Insurance Enrollment/Change Form” designating Gaines as the
beneficiary of his life-insurance and accidental-death-insurance policies. He also enrolled Gaines
as a dependent in his health-insurance plan. After six months of marriage, the couple separated.
Kmatz and Gaines executed a separation and property agreement that purported to be the “full and
complete settlement of all spousal support and property rights between the parties.” JA 26. The
agreement did not mention life-insurance benefits. A Clinton County (Ohio) magistrate granted the
couple’s petition for a dissolution of their marriage shortly thereafter.
On August 25, 2000, Kmatz executed a new “Group Insurance Enrollment/Change Form,”
this time canceling his ex-wife’s health coverage under the company’s health insurance plan. JA
331. He did not, however, name a new life-insurance or accidental-death-insurance beneficiary; he
left that portion of the form blank.
Kmatz died intestate on August 24, 2003. After his death, MetLife owed $64,000 in group
life insurance benefits and $64,000 in accidental death benefits to his beneficiary. On August 30,
Gaines filled out a “Beneficiary’s Life Insurance Claim Statement,” seeking her ex-husband’s
benefits under the plan. JA 164. In a cover letter dated October 27 and accompanied by Gaines’
claim documents, ABX Air benefits coordinator Julie Ake notified MetLife that it had received
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Gaines’ claim and that “[t]he latest beneficiary listed [on Kmatz’s group enrollment form] was his
ex-wife, Jennifer Kmatz (Gaines) [who] was listed as the beneficiary on 12/01/99.” JA 163. Ake
noted that “Kmatz dropped his ex-wife from his insurance[;] however he did not change his
beneficiary.” Id. MetLife approved the claim on November 7, paying $128,394.52.
On December 3, an attorney representing Kmatz’s parents sent a letter to MetLife stating that,
under Ohio law, any designation of an ex-spouse as a life-insurance beneficiary is revoked if the
couple has divorced or obtained a dissolution. The living spouse, the letter explained, is treated as
having predeceased the insured spouse. See Ohio Rev. Code § 5815.33. Relying on this law, the
attorney maintained that Kmatz’s parents—not his ex-wife—had “the sole right to receive payments
as the beneficiaries” of Kmatz’s insurance policy. JA 151; see also JA 129 (plan description
indicates that parents become beneficiaries if the insured has neither a spouse nor children).
In a letter dated December 11, MetLife responded to Kmatz’s parents, informing them that
ERISA, not state law, governed the insurance plan and that MetLife “must administer claims in
accordance with the documents and instruments governing the plan.” JA 148. “The Plan provides
that benefits are payable to the beneficiary named by the participant on a proper form,” the letter
continued, and “[t]he latest designation of beneficiary contained in Joseph Kmatz’s records . . .
names Jennifer Kmatz as the sole beneficiary of the benefits.” Id.
On June 29, 2004, Kmatz’s father filed this lawsuit in federal district court on behalf of
himself and his son’s estate. As pertinent here, the amended complaint stated claims for (1) breach
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of contract against MetLife and (2) breach of fiduciary duty against ABX, Airborne and MetLife, see
29 U.S.C. §§ 1104, 1105. Faced with cross motions for summary judgment on these two claims, the
court granted both Gaines’ and the companies’ motions and denied the estate’s motion.
II.
When a plan empowers administrators with “a clear grant of discretion to determine benefits
or interpret the plan,” Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th Cir. 1994), judicial
review of the exercise of that discretion is limited—limited to deciding whether the administrator’s
decision was arbitrary and capricious, Perez v. Aetna Life Ins. Co., 150 F.3d 550, 555 (6th Cir.
1998). Because this plan says that the administrators possess “full and absolute discretionary
authority to administer and interpret the terms of the Plan and to determine eligibility for and
entitlement to Plan benefits,” JA 144, we must apply this “highly deferential standard of review”
here, Shelby Co. Health Care Corp. v. So. Council of Indus. Workers Health & Welfare Trust Fund,
203 F.3d 926, 933 (6th Cir. 2000). A plan administrator’s “decision is not arbitrary and capricious
if it is based on a reasonable interpretation of the plan.” Id.; see also Davis v. Ky. Fin. Cos. Ret.
Plan, 887 F.2d 689, 693–94 (6th Cir. 1989).
ERISA expressly instructs a plan administrator to “discharge his duties with respect to a
plan”—which includes identifying the correct beneficiary of a life-insurance policy—“in accordance
with the documents and instruments governing [that] plan.” 29 U.S.C. § 1104(a)(1)(D). The parties
do not dispute that Kmatz removed Gaines as a beneficiary of his health insurance plan after the
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Kmatz v. Metro. Life Ins. Co.
dissolution of their marriage, and they do not dispute that he left blank the portion of that same form
that would have permitted him to change the life-insurance beneficiary designation from his former
wife to his father. Doubtless, there is plenty of room to speculate about what Kmatz might have
wished to do with this beneficiary designation had he expressly reconsidered it after his marriage
dissolved. But, under a straight reading of the contract, it is hardly the case that the plan
administrator acted arbitrarily and capriciously when it respected the still-extant terms—here the
beneficiary designation—of the life-insurance policy. See id. § 1104(a)(1)(D).
Nor is this the first time our court has heeded an administrator’s decision in this kind of
situation rather than our own intuition of what the decedent may well have wanted to do. See, e.g.,
Metro. Life Ins. Co. v. Pressley, 82 F.3d 126, 130 (6th Cir. 1996) (holding that plan documents
listing an ex-wife as beneficiary controlled rather than a divorce decree containing a “broad waiver
of rights”); McMillan v. Parrott, 913 F.2d 310, 311–12 (6th Cir. 1990) (holding that plan documents
listing ex-wife as beneficiary controlled despite divorce settlement indicating ex-wife had waived
right to benefits); see also Unicare Life & Health Ins. Co. v. Craig, 157 F. App’x 787, 792 (6th Cir.
Sept. 22, 2005) (holding that husband was proper beneficiary because he was still listed on plan
documents, even though there was “little doubt” that decedent intended to change her beneficiary
from her second husband to her daughters); Hendon v. E.I. DuPont De Nemours & Co., No. 96-6233,
1998 WL 199824, at *4, *6 (6th Cir. Apr. 13, 1998) (holding that ex-husband was proper beneficiary
despite a dissolution agreement containing “a fairly explicit waiver of the plan benefits” and stating
that “we have interpreted [§ 1104(a)(1)(D)] as establishing a clear mandate that plan administrators
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follow plan documents in determining the designated beneficiary”); Czarski v. Bonk, No. 96-1444,
1997 WL 535773, at *3 (6th Cir. Aug. 28, 1997) (“This circuit has clearly and repeatedly held that
29 U.S.C. § 1104(a)(1)(D) . . . together with plan provisions that allow (or require) a plan participant
to change the designated beneficiary of the plan, require the administrator to give benefits to the
beneficiary named in the plan documents.”).
In addition to contending that it should have received the life-insurance benefits, the estate
complains that Airborne and MetLife failed to satisfy ERISA’s notice provision because the plan
administrators did not notify Kmatz’s father before paying Kmatz’s benefits to Gaines. See 29
U.S.C. § 1133. ERISA, however, demands no such notification in this instance. Section 1133
requires benefit plans to “provide adequate notice . . . to any participant or beneficiary whose claim
for benefits under the plan has been denied” and to “afford a reasonable opportunity to any
participant whose claim for benefits has been denied for a full and fair review.” (emphasis added);
see McCartha v. Nat’l City Corp., 419 F.3d 437, 444 (6th Cir. 2005). The estate is neither a plan
participant nor a beneficiary whose claim for benefits has been denied; the estate, indeed, never
submitted a claim under the plan.
The estate persists that Kmatz’s father, not his ex-wife, should receive the plan proceeds
because Kmatz “substantially complied” with the plan’s instructions for changing his beneficiary
designation. Br. at 18. As an initial matter, Kmatz relies heavily on evidence outside the
administrative record in making this claim—evidence that the district court properly declined to
consider. Wilkins v. Baptist Healthcare Sys. Inc., 150 F.3d 609, 619 (6th Cir. 1998) (“The district
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court may consider evidence outside of the administrative record only if that evidence is offered in
support of a procedural challenge to the administrator’s decision.”). Because the estate attempts to
use this extra-record evidence to obtain the benefits themselves, see 29 U.S.C. § 1132(a)(1)(B), not
to show that the procedure used by the administrator was flawed, it may not rely on this evidence.
Moreover, while other circuits have embraced the substantial-compliance doctrine, in some
instances as a matter of state law and in some instances as a matter of federal common law, see, e.g.,
BankAmerica Pension Plan v. McMath, 206 F.3d 821, 827 (9th Cir. 2000); Aetna Life Ins. Co. v.
Wise, 184 F.3d 660, 663 (7th Cir. 1999); Phoenix Mut. Life Ins. Co. v. Adams, 30 F.3d 554, 565 (4th
Cir. 1994), our take on the doctrine is less clear. See, e.g., Pressley, 82 F.3d at 130 n.2 (concluding
that plan documents controlled and therefore declining to determine whether decedent sought
“substantially to redesignate [his] beneficiary”); Life Ins. Co. of N. Amer. v. Leeson, 81 F. App’x
521, 523–24 (6th Cir. Nov. 6, 2003) (engaging in substantial compliance discussion but noting that
there was not substantial compliance when the decedent filled out change-of-beneficiary form but
forgot to send it in); Aetna Life Ins. Co. v. Weatherford, No. 90-5585, 1991 WL 11611, at *1, *6 (6th
Cir. Feb. 5, 1991) (undertaking substantial compliance analysis but noting that there was no
substantial compliance when the decedent “partially completed” a change-in-beneficiary form by
checking a box labeled “Change in Beneficiary Designation,” but did not designate a beneficiary,
obtain a witness’s signature or mail in the form). But see Tinsley v. Gen. Motors Corp., 227 F.3d
700, 704 n.1 (6th Cir. 2000) (rejecting 29 U.S.C. § 1104(a)(1)(D) analysis in favor of federal
common law analysis because “the validity of a plan document itself [was] in question”). We need
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not determine whether the doctrine has force in this circuit because, even if we engaged in a
substantial-compliance analysis, Kmatz’s actions fall well short of satisfying it.
The estate’s claim does not satisfy even the most far-reaching characterizations of the
doctrine. To comply in substance with plan procedures, an insured must “do all that he reasonably
could do to meet the conditions of the policy.” Leeson, 81 F. App’x at 524 (internal quotation marks
omitted); see also, e.g., Wise, 184 F.3d at 663 (“For a change of beneficiary to be effective, the party
asserting that a change has occurred must establish: (1) the certainty of the insured’s intent to change
his beneficiary and (2) that the insured did everything he could have reasonably done under the
circumstances to carry out his intention to change the beneficiary.”) (internal citation omitted).
This, however, is not a case where the decedent failed to include a middle initial or placed
the right information on the wrong line of a form. The change-of-beneficiary form contains
nothing—no initials, no words, no letters, anywhere. On this record, Kmatz thus did not do
everything he reasonably could have here—first and foremost because he did not complete the only
document that could effect the change in beneficiary. The summary plan description expressly
instructs participants to “complete the beneficiary section of your Group Insurance Enrollment form
and return it to the Benefits section of Human Resources to assure that Life Insurance benefits are
paid in accordance with your wishes.” JA 129. No matter how much evidence the estate can
produce to show what Kmatz intended to do, one glaring fact remains: He did not do it, leaving the
administrator with a clearly written designation in favor of Jennifer Gaines.
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Also unavailing is the estate’s claim that the plan administrators breached their fiduciary
duties. See 29 U.S.C. § 1104. First, the factual bases offered in support of these claims do not pass
muster. We have already rejected one of them—that the defendants violated the plan’s notice
requirements. The other one turns on the allegation that the ABX benefits coordinator “undertook
an affirmative duty to assist . . . Kmatz in changing his life insurance beneficiary—going so far as
to actually fill the form out for” him. Br. at 31. The administrative record does not support this
claim, and the extra-record materials offered by the estate do not support it either.
Second, the estate leaves us guessing as to which subsection of 29 U.S.C. § 1132 it relies on
in bringing these claims—§§ 1132(a)(2) or (a)(3). (The estate has already raised—and lost—a
denial-of-benefits claim under § 1132(a)(1)). Under either subsection, the estate loses. Neither
§ 1132(a)(2) nor § (a)(3) supplies the sort of remedy that the estate seeks—money damages. Any
recovery obtained under § 1132(a)(2), moreover, “inures to the benefit of the plan as a whole,” not
to an individual plan beneficiary. Mass. Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 140 (1985).
And § 1132(a)(3) allows only for equitable relief. Helfrich v. PNC Bank, Ky., Inc., 267 F.3d 477,
481 (6th Cir. 2001). As the estate lacks a factual and legal basis for its breach-of-fiduciary-duty
claims, the district court properly rejected them as a matter of law.
III.
As for the estate’s state-law claims, it offers no substantive arguments on appeal except to
say that, if we “reverse[ ] the decision of the trial court on Plaintiffs’ claims against MetLife or ABX
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. . . the basis for [the district court’s] decision in granting summary judgment to Gaines would be
lacking, and should also be reversed and remanded.” Br. at 32–33. Because the district court
properly granted the other defendants’ motion for judgment on the administrative record, we
necessarily reject the estate’s challenge to the resolution of these claims as well.
IV.
For these reasons, we affirm.
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