In Life Insurance Dispute, District Court Dismisses ERISA Claims Against Insurer and Allows Fiduciary Breach Claim Against Employer

In Butler v. Hartford Life & Accident Ins. Co., et al., No. 0:23-CV-3144 (KMM/DJF), 2025 WL 580892 (D. Minn. Feb. 21, 2025), Minnesota District Judge Katherine Menendez granted Defendant Hartford Life & Accident Insurance Company’s Motion to Dismiss, and both granted in part and denied in part Defendant employer CBIZ, Inc.’s Motion to Dismiss finding that Plaintiff had stated a breach of fiduciary duty claim against the employer pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), but all other claims against both Defendants failed.

Plaintiff Susan Butler filed the instant action seeking to recover life insurance benefits following the death of her husband, Patrick Butler. Mr. Butler, a Senior Tax Manager at CBIZ, was enrolled in two life insurance policies, offering benefits of $430,000 and $50,000, respectively. He was diagnosed with incurable colon cancer in 2019 and remained employed at CBIZ until he opted for short-term disability (STD) in February 2022, eventually transitioning to long-term disability (LTD) in August 2022. CBIZ assured Mr. Butler that he would remain enrolled in the life insurance plan if he continued paying the monthly premiums. Despite Mr. Butler fulfilling this requirement, Hartford later denied Susan Butler’s claim for the death benefits, citing that Mr. Butler’s coverage had ended when he went on disability in 2022, and he had not exercised his conversion rights to maintain coverage beyond this period.

On Defendants’ Motions to Dismiss pursuant to FRCP Rule 12(b)(6), the court first addressed whether Ms. Butler’s state law claims, including breach of contract, breach of express or implied contract, and quantum meruit, were preempted by ERISA. The court concluded that these claims were indeed preempted because they directly related to the administration of an ERISA-governed employee benefit plan. ERISA’s broad preemption clause supersedes state laws that relate to any employee benefit plan, thus dismissing the state law claims.

The court dismissed Ms. Butler’s claim for benefits under ERISA § 1132(a)(1)(B) against both defendants. The court found that CBIZ, as the employer and plan administrator, was not a proper defendant for such a claim because it did not control the plan’s administration or determine eligibility for benefits. Hartford, as the claims fiduciary, had the discretion to determine eligibility, and the court found that Mr. Butler’s coverage had indeed terminated before his death due to his failure to exercise conversion rights.

Ms. Butler also alleged breaches of fiduciary duty against CBIZ and Hartford under ERISA § 1132(a)(3). She claimed that the defendants misrepresented Mr. Butler’s coverage status, continued accepting premium payments after coverage had allegedly terminated, and failed to notify Mr. Butler of his coverage status and conversion rights. The court found that CBIZ, due to its involvement in providing misleading information and handling premium payments, could be considered as having acted in a fiduciary capacity, thus allowing the fiduciary duty claim against it to proceed. However, the court dismissed the fiduciary duty claim against Hartford, noting that Hartford was not required by ERISA or the plan documents to provide notice of conversion rights or coverage termination. Additionally, Hartford did not make the alleged misrepresentations, as these were attributed to CBIZ, and merely accepting premiums did not constitute a breach of fiduciary duty.

The court granted Hartford’s motion to dismiss, effectively dismissing all claims against it, while partially granting CBIZ’s motion, leading to the dismissal of state law claims and the ERISA benefits claim against CBIZ. However, the court allowed the breach of fiduciary duty claim against CBIZ to proceed, recognizing that CBIZ’s actions in providing misleading information and failing to maintain an adequate administrative system could potentially constitute a breach of its fiduciary duties under ERISA.

If Hartford or your insurer has denied or otherwise limited your life or disability insurance claim, contact us for assistance.