Third Circuit Affirms Dismissal of ERISA Life Insurance Claims Due to Ex-Spouse’s Ineligibility for Coverage

Staropoli v. Metropolitan Life Insurance Co; JP Morgan Chase Bank NA, et al., No. 21-2500, 2023 WL 1793884 (3d Cir. Feb. 7, 2023) involves a denied claim for life insurance benefits based on an insured’s ineligibility for coverage. Plaintiff-Appellant Susan Staropoli worked for JPMorgan Chase and enrolled in their benefits plan. JPMorgan Chase offered life insurance through a policy issued by Metropolitan Life Insurance Company and administered by JP Morgan Chase U.S. Benefits Executive (the “Benefits Executive”). Staropoli elected to take out life insurance on her then-husband, Charles Staropoli. After they divorced, Staropoli continued to re-enroll Charles for life insurance and paid the premiums for the coverage. After Charles passed away, Staropoli submitted a claim for benefits to MetLife, which MetLife denied on the basis that Charles was not her spouse and was not eligible for coverage. MetLife upheld its decision after Staropoli submitted an administrative appeal. Staropoli then filed suit against MetLife and JPMorgan, asserting a claim for benefits under ERISA Section 502(a)(1)(B) and a claim for breach of fiduciary duty under ERISA Section 502(a)(3).

The district court dismissed the complaint for the following reasons: (1) JPMorgan was not a proper defendant because the Benefits Executive, not JPMorgan, was responsible for administering the plan; (2) the unambiguous language of the plan made Charles ineligible for benefits; and (3) Staropoli failed to state a claim against MetLife for breach of fiduciary duties. Staropoli filed a second amended complaint asserting a new breach of fiduciary duty claim against the Benefits Executive. The court dismissed that claim too. Staropoli appealed.

The Third Circuit Court of Appeals upheld the dismissal of Staropoli’s claims. First, the court held that MetLife’s interpretation of the plan was reasonable as the parties agree that the plan does not permit coverage for ex-spouses. The court rejected Staropoli’s claim that MetLife’s decision ran afoul to the plain language of the incontestability clause. There is a difference between “eligibility” and “insurability.” After two years of coverage, MetLife cannot use statements which relate to insurability to deny claims. Here, MetLife relied on statements underpinning Charles’s eligibility for coverage.

Second, the court held that precedent forecloses Staropoli’s breach of fiduciary duty claim against the defendants. Staropoli argued that the Benefits Executive misled her into believing she had coverage for Charles because it withdrew premiums from her paycheck and listed Charles as a covered dependent on the company’s benefits portal. Reliance on these facts is unreasonable as a matter of law because they cannot be reconciled with the unqualified plan language. See In re Unisys Corp. Retiree Med. Ben. ERISA Litig., 58 F.3d 896, 907 (3d Cir. 1995). The court also rejected the argument that the defendants breached their fiduciary duties through their omissions, but the court found that the Benefits Executive lacked actual knowledge of Charles’s ineligibility. The court also found that Staropoli did not allege facts sufficient to establish an agency relationship between Benefits Executive and MetLife such that Benefits Executive’s supposed knowledge of Staropoli’s divorce is attributable to MetLife. Lastly, the court found that Plaintiff’s equitable estoppel claim was properly dismissed (a claim she characterized as for “surcharge” but the court noted she presented surcharge only as a possible remedy; it is not an independent claim). Without an underlying violation of ERISA or the plan, the claims for equitable relief cannot be maintained.