Stephen Mazur v. UNUM Insurance Company

NOT RECOMMENDED FOR PUBLICATION
File Name: 14a0816n.06
No. 14-1369 FILED
Oct 28, 2014
UNITED STATES COURT OF APPEALS
DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
STEPHEN MAZUR, )
)
Plaintiff-Appellant, )
)
ON APPEAL FROM THE
v. )
UNITED STATES DISTRICT
)
COURT FOR THE
UNUM INSURANCE COMPANY, )
WESTERN DISTRICT OF
)
MICHIGAN
Defendant-Appellee. )
)
)
BEFORE: BATCHELDER, GILMAN, and GIBBONS, Circuit Judges
ALICE M. BATCHELDER, Circuit Judge. Appellant Stephen Mazur’s state-court
complaint alleged that UNUM Insurance Company (“UNUM”) breached its contract with Mazur
and misrepresented the nature of the benefits to which he was entitled as the beneficiary of his
ex-wife’s life insurance policy (“policy”). UNUM removed the case to federal court, claiming
that it arose under the Employee Retirement Income Security Act (“ERISA”), and the district
court dismissed the case because Mazur failed to comply with the policy’s notice provisions. We
construe Mazur’s claims as ERISA claims and AFFIRM.
I.
Before they divorced on November 2, 1998, Mazur was the beneficiary of Claudia
Hages’s $79,600 policy. The Judgment of Divorce stated that “any rights of either Party in any
policy or contract of life, endowment or annuity insurance of the other, as beneficiary are
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extinguished unless specifically preserved by this Judgment.” Hages reinstated Mazur as the
policy’s named beneficiary sometime later without telling him. Hages died on November 3,
1999.
The policy’s limitations provide:
Written notice of claim must be given to the Insurance Company within 30 days
after the date of loss on which claim is based. If that is not possible, the Insurance
Company must be notified as soon as it is reasonably possible to do so.
....
Proof of claim must be given to the Insurance Company no later than 90 days
after the date of loss. . . . If it is not possible to give proof within this time limit, it
must be given as soon as reasonably possible. But proof of claim may not be
given later than one year after the time proof is otherwise required . . . .
....
A claimant or the claimant’s authorized representative cannot start any legal
action . . . more than 3 years after the time proof of claim is required.
Mazur filed a claim on the policy on June 9, 2010, which UNUM denied as untimely. Mazur
filed a complaint against UNUM in Emmet County, Michigan Circuit Court, alleging claims for
breach of contract and misrepresentation. UNUM, citing ERISA’s remedial scheme, 29 U.S.C.
§ 1132, removed the case to the U.S. District Court for the Western District of Michigan. The
district court granted UNUM’s motion to dismiss under Federal Rule of Civil Procedure
12(b)(6), holding that “[e]ven if equitable tolling was [sic] applicable, Plaintiff failed to give
notice to Unum within the time required by the policy and offers no excuse for not doing so.”
Mazur appealed.
II.
Although the district court described this as an “ERISA case,” Mazur has not pleaded
ERISA causes of action; instead, his complaint states state-law breach-of-contract and
misrepresentation claims.1 But ERISA completely preempts all state-law claims that “relate
1
Mazur’s complaint does not state specifically whether these claims are state-law claims, but the fact that
he brought these claims in state court and failed to mention ERISA or any federal question suggests that they are.
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to”—even tangentially—an ERISA plan such as the policy here.2 See Cromwell v. Equicor-
Equitable HCA Corp., 944 F.2d 1272, 1275 (6th Cir. 1991) (“It is not the label placed on a state
law claim that determines whether it is preempted, but whether in essence such a claim is for the
recovery of an ERISA plan benefit.”); see also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52
(1987) (holding “that Congress clearly expressed an intent that the civil enforcement provisions
of ERISA § [1132](a) be the exclusive vehicle for actions by ERISA-plan participants and
beneficiaries asserting improper processing of a claim for benefits, and that varying state causes
of action for claims within the scope of § [1132](a) would pose an obstacle to the purposes and
objectives of Congress.”); Warner v. Ford Motor Co., 46 F.3d 531, 534 (6th Cir. 1995)
(“Therefore, in order to come within the exception a court must conclude that the common law
or statutory claim under state law should be characterized as a superseding ERISA action ‘to
recover benefits due to him under the terms of his plan, to enforce his rights under the terms of
the plan, or to clarify his rights to future benefits under the terms of the plan,’ as provided in
§ 1132(a)(1)(B).”).
In this case, Mazur’s two-count complaint alleges claims that “are essentially state law
claims seeking benefits under an employee benefit plan.” State Farm Mut. Auto. Ins. Co. v. Blue
Care Network of Mich., No. 04-CV-72741, 2005 WL 2123730, at *2 (E.D. Mich. Aug. 31,
2005). First, his breach-of-contract claim alleges “[t]hat the Defendant withheld the full amount
for the loss of life of Ms. Hages from Plaintiff when Plaintiff filed a valid proof of loss.” Compl.
¶ 21. Second, his misrepresentation claim alleges “[t]hat the Defendant misrepresented the terms
2
It is undisputed that Compuware Corporation provided the policy to Hages as part of her “employment
benefits,” Pl.’s Br. 3, and thus the policy is an ERISA plan. See 29 U.S.C. § 1002(1) (“The terms ‘employee welfare
benefit plan’ and ‘welfare plan’ mean any plan, fund, or program which was heretofore or is hereafter established or
maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or
program was established or is maintained for the purpose of providing for its participants or their beneficiaries,
through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the
event of sickness, accident, disability, [or] death . . . .”).
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of the contract.” Compl. ¶ 27. Both claims “relate to” an employee benefit plan governed by
ERISA, which means that “the relief provided by ERISA is the only relief available . . . .” Smith
v. Provident Bank, 170 F.3d 609, 615 (6th Cir. 1999). And we have previously held that these
claims—“negligent misrepresentation” and “breach of contract”—are “at the very heart of issues
within the scope of ERISA’s exclusive regulation,” thus warranting preemption. Cromwell,
944 F.2d at 1276; see also Smith, 170 F.3d at 615 (holding that claims such as breach of contract
and misrepresentation, when related to an employee benefit plan, are preempted).
Rather than granting Mazur leave to file an amended complaint or dismissing the
complaint without prejudice, the district court appears to have construed Mazur’s state-law
claims as properly pleaded ERISA claims under § 1132(a) and addressed the merits. Other
courts have followed this approach. See Ackerman v. Fortis Benefits Ins. Co., 254 F. Supp. 2d
792, 818 (S.D. Ohio 2003) (“[Amendment] is not an absolute requirement. Indeed, the Court has
at other times simply recognized the existence of the ERISA claim.”); see also Bartholet v.
Reishauer A.G. (Zurich), 953 F.2d 1073, 1078 (7th Cir. 1992) (“[Defendant] argued, and the
district court held, that this allegation comes within ERISA. Removal depended on a conclusion
that the complaint, as filed, arose under federal law. What would be the point of amending the
complaint to make explicit what the district judge has held is the only possible interpretation of
the document?”). And this approach is especially appropriate where, as here, amendment would
have been futile anyway because Mazur’s claims are untimely. Foman v. Davis, 371 U.S. 178,
182 (1962) (holding that leave to amend need not be freely given where the “futility of
amendment” is apparent); Smith v. Commonwealth Gen. Corp., No. 12-6284, 2014 WL 5032357,
at *5 (6th Cir. Oct. 9, 2014) (holding the same in the ERISA context). We will therefore
construe Mazur’s claims as ERISA claims and analyze them accordingly.
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ERISA’s “statutory scheme . . . is built around reliance on the face of written plan
documents.” US Airways, Inc. v. McCutchen, 133 S. Ct. 1537, 1548 (2013) (internal quotation
marks omitted); see also 29 U.S.C. § 1102(a)(1) (“Every employee benefit plan shall be
established and maintained pursuant to a written instrument.”). The Supreme Court has
“recognized the particular importance of enforcing plan terms as written in § [1132](a)(1)(B)
claims.” Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S. Ct. 604, 606–07 (2013).
Although ERISA does not provide a statute of limitations for suits, proof of loss, or notice of
claims, we enforce the parties’ contractual agreement provided “that the limitations period is
reasonable.” Med. Mut. of Ohio v. k. Amalia Enters. Inc., 548 F.3d 383, 390 (6th Cir. 2008); see
also Northlake Reg’l Med. Ctr. v. Waffle House Sys. Emp. Benefit Plan, 160 F.3d 1301, 1303
(11th Cir. 1998) (“We agree with the Seventh Circuit’s conclusion in Doe that contractual
limitations periods on ERISA actions are enforceable, regardless of state law, provided they are
reasonable.”).
The district court assumed that because “ERISA does not contain a limitations period for
claims seeking benefits” and because “state laws that regulate insurance apply, including notice-
prejudice rules,” “Michigan law applies here when analyzing the statute of limitations and notice
requirements of the contract.” But federal courts only borrow a state limitations period in the
absence of a reasonable contractually agreed upon period. In Medical Mutual, 548 F.3d at 390–
91, we cited approvingly two sister-circuit cases holding that “contractual limitations periods on
ERISA actions are enforceable, regardless of state law, provided they are reasonable.”
Northlake, 160 F.3d at 1303; see also Doe v. Blue Cross & Blue Shield United of Wis., 112 F.3d
869, 875 (7th Cir. 1997) (“We conclude that such limitations if reasonable are enforceable in
suits under ERISA, regardless of state law.”).
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Mazur argues that Michigan’s notice-prejudice requirement applies under UNUM Life
Insurance Co. of America v. Ward, 526 U.S. 358, 364 (1999), which held that California’s
notice-prejudice rule was not preempted by ERISA because it “regulate[d] insurance” under
29 U.S.C. § 1144(b)(2)(A). But Ward is inapposite because Michigan has no specific statutory
or common law rules that apply to this case. Despite Mazur’s insistence that UNUM is required
to prove that a beneficiary’s untimely claim prejudiced the plan, the case to which he cites—
Aetna Casualty & Surety Co. v. Dow Chemical Co., 10 F. Supp. 2d 800, 810 (E.D. Mich.
1998)—observes only that Michigan law requires an insurer to prove prejudice before using an
insured’s late notice to avoid indemnification. And Michigan has since abolished this notice-
prejudice requirement anyway. See DeFrain v. State Farm Mut. Auto. Ins. Co., 817 N.W.2d 504,
506 (Mich. 2012) (“We hold that an unambiguous notice-of-claim provision setting forth a
specified period within which notice must be provided is enforceable without a showing that the
failure to comply with the provision prejudiced the insurer.”). Even if Michigan law were to
govern—either directly or through the savings clause—UNUM is not required to show prejudice
prior to raising an untimely notice-of-claim defense.
III.
We apply the limitations periods specified in the policy because they apply to Mazur’s
ERISA claims, and because Mazur has not argued that these limitations are unreasonable. See
Med. Mut. of Ohio, 548 F.3d at 391 (“Because the contract language clearly states that the parties
shall have either two years or three years to bring the claim at issue and MMO did not present
arguments indicating that a limitations period of two or three years would be unreasonable, we
find no reason to believe that the contractual limitations provision here is unreasonable.”).
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The policy requires a beneficiary to provide “notice of claim . . . within 30 days after the
date of loss” or “as soon as it is reasonably possible to do so.” But Mazur filed his claim on June
9, 2010, over ten years after Hages died. A beneficiary also “cannot start any legal action . . .
more than 3 years after the time proof of claim is required.” And “proof of claim may not be
given later than one year after the time proof is otherwise required . . . .” Proof is “otherwise
required” within ninety days of the date of loss. Mazur was required to initiate this legal action
no later than February 1, 2004—or a total of four years and ninety days after Hages died. Mazur
missed this deadline by over nine years.
Mazur argues that the discovery rule equitably tolls these limitations periods until
sometime in April 2010, when he first discovered that he was the policy’s named beneficiary.
Like the district court, we “need not decide whether equitable tolling applies,” because Mazur’s
claims are untimely regardless.3 Mazur concedes that he discovered that he was the policy’s
named beneficiary sometime in April 2010. Yet he waited at least forty days—until June 9—to
file his claim, which is the only “notice” he gave UNUM. Mazur failed to comply with the
thirty-day notice provision and has not explained why it was not “reasonably possible” for him to
meet this deadline or notify UNUM before June 9. Mazur’s only excuse is that “he had no actual
or constructive knowledge of the policy filing deadlines, and, in fact, did not find out about them
until . . . July 2, 2010 . . . .” Pl.’s Br. 16. Although courts sometimes excuse delay under notice
provisions like the one here, they do so only until the beneficiary obtains knowledge of the
existence of the policy, not knowledge of every intricate policy detail. See, e.g., Hosp.
3
We note in passing that the federal common law of ERISA—not Michigan law—controls the availability
of equitable tolling here. In Medical Mutual of Ohio, 548 F.3d at 391, we held that “although the parties and the
district court assumed that Ohio law governed application of the ‘discovery rule,’ we have held that the ‘discovery
rule’ is a matter of federal common law in the context of ERISA claims under § 1132(a)(3).” See also Mich. United
Food & Commercial Workers Unions & Drug & Mercantile Emps. Joint Health & Welfare Fund v. Muir Co.,
992 F.2d 594, 598 (6th Cir. 1993) (“Although the statute of limitations may be borrowed from state law, it is federal
law that determines the date on which a statute of limitation begins to run.”).
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Underwriting Grp., Inc. v. Summit Health Ltd., 63 F.3d 486, 492 (6th Cir. 1995) (focusing on a
beneficiary’s knowledge of the existence of the insurance policy). Mazur discovered that he was
the policy’s named beneficiary on April 30 at the latest, but his first communication with UNUM
occurred when he filed his claim on June 9. Mazur’s claim is untimely because, even assuming
the limitations period is tolled until when Mazur’s complaint alleges he acquired knowledge that
he was the policy’s named beneficiary, he still failed to satisfy the notice provision in the policy.
IV.
For the foregoing reasons, we AFFIRM the judgment of the district court.
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