Tenth Circuit Finds Lawsuit Challenging Post-Retirement Life Insurance Premium Increases Preempted by ERISA

In Huff v. BP Corporation North America, Inc. et al., No. 23-5022, 2023 WL 8802698 (10th Cir. Dec. 20, 2023), the Tenth Circuit considered whether a retiree’s state law claims against his former employer, which are premised on the increase of his post-retirement monthly life insurance premiums, are preempted by ERISA. The court found that the claims are related to a company-sponsored employee benefit plan and are preempted by ERISA.

Plaintiff Huff worked for BP until he retired in 1998. He was enrolled in the BP Group Universal Life Plan, which provides group universal term life insurance benefits to current and former BP employees. Metropolitan Life Insurance Company (MetLife) serves as the Plan claims administrator. Huff elected to maintain coverage under the Plan and paid premiums directly to MetLife. Initially his premiums were about $200/month but by the time he reached the age of 78, his premiums were above $1,900/month.

Huff sued MetLife in the Northern District of Oklahoma alleging state law causes of action including breach of contract and breach of the implied duty of good faith and fair dealing. His complaint sought information from MetLife regarding the actuarial basis for the premium increases. MetLife moved to dismiss the lawsuit on the basis of ERISA preemption and the district court granted MetLife’s motion. The court permitted Huff to file an amended complaint to allege a claim under ERISA and name the correct defendant as to the Plan, but Huff did not do so. Instead, he filed a new complaint in Oklahoma state court against BP alleging similar causes of action as the ones he brought against MetLife. BP removed the case to federal court and moved to dismiss. After the court granted BP’s motion, Huff filed an amended complaint alleging ERISA claims and also seeking information about the basis for the premium increases. The amended complaint named MetLife as a defendant, but Huff did not serve MetLife with a summons. BP moved to dismiss for failure to state a claim for relief under ERISA, which the court granted. The district court denied Huff’s two motions for reconsideration and then filed an appeal.

On de novo review of the district court’s decision, the Tenth Circuit found that the district court did not err in concluding that ERISA preempted Huff’s state law claims because the factual basis for his lawsuit was a challenge to the increase in premiums under his company-furnished life insurance plans. The court rejected his argument that he had converted the life insurance policy to an individual one with MetLife when he left employment. The Plan expressly provides that an employee cannot convert to individual coverage. Further, the Plan at issue, including the group policy number, has not changed since Huff’s enrollment. The court rejected Huff’s argument that the Plan falls under ERISA’s “safe harbor exemption” because his employer made contributions to the Plan and Huff cannot sever optional coverage from the rest of the benefits received through an employer’s plan. Lastly, the court agreed that Huff did not state a claim under ERISA. The district court found Plaintiff’s complaint confusing to interpret and that it did not state a claim under ERISA. And the complaint’s statement that Huff needed an expert actuary to review certain information to determine whether the premiums were justified stops short of the line between possibility and plausibility of entitlement to relief. The court also explained that it is of no moment that ERISA provides fewer remedies than what would otherwise be available under state law.