Tenth Circuit: Hartford Fulfilled Its Obligation to Investigate the Existence of Beneficiaries in ERISA Life Insurance Dispute

In Hartford Life and Accident Insurance Company v. Jones-Atchison, et al., No. 20-6135, __F.App’x__, 2021 WL 4258761 (10th Cir. Sept. 20, 2021), Hartford Life and Accident Insurance Company brought an interpleader action to determine the proper beneficiary of basic life insurance benefits. The decedent was shot and killed by an unknown person. He was survived by his parents, his ex-wife, and his children. His ex-wife was the beneficiary of his basic life insurance policy and there was no contingent beneficiary. The decedent also had supplemental life and accidental death and dismemberment (AD&D) insurance benefits for which there was no named beneficiaries. The ex-wife and the parents submitted claims to the basic life insurance policy benefits. Because Hartford was unsure whether Oklahoma law barred it from paying the ex-wife, who was a suspect in the investigation of the decedent’s death, Hartford brought the interpleader action.

The parents also made a claim to the supplemental life and AD&D insurance benefits. The decedent’s father submitted an executed Preference Beneficiary Affidavit (PBA) stating that the decedent had no children. The PBA form explained that it was to be used when no beneficiary was named to assist Hartford in determining the proper beneficiary under the policy’s successive preference beneficiary provision. Under this provision, “benefits were to be paid to the first surviving class of the following classes of the insured’s surviving beneficiaries: (1) his widow; (2) his children; (3) his parents; (4) his siblings; and (5) his estate.” The father submitted the PBA under the penalty of perjury. Because the decedent was not married and the PBA indicated he had no children, Hartford paid the parents the supplemental and accidental death benefits. The children later made a claim for the benefits, which Hartford denied because it had already paid the benefits to the parents.

The children intervened in the interpleader action and brought counterclaims against Hartford claiming violations of both state law and ERISA. They claimed that Hartford failed to conduct a reasonable search of beneficiaries before distributing the benefits to the parents. The district court dismissed the counterclaims on the basis that ERISA preempted the state-law claims and that the children failed to state a plausible claim under ERISA. The children appealed the dismissal of their ERISA claim.

The Tenth Circuit agreed with the district court, which held that Hartford did not fail to adequately investigate whether there were other potential beneficiaries when it paid the parents the supplemental life and AD&D benefits. Hartford reasonably relied on the father’s statement in the PBA form that the decedent had no children because there was no reason to doubt the father’s sworn statement. The court rejected the children’s argument that the PBA was not a plan document, and as such, it was unreasonable for Hartford to rely on it. The district court found that the PBA was an acceptable means of investigating the existence of beneficiaries for the purpose of paying benefits. “[W]hether or not the PBA is a ‘plan document’ does not control whether Hartford could rely on it in determining the proper distribution of benefits.” The Tenth Circuit affirmed the judgment of the district court.