Wife Loses Life Insurance Claim Due to Husband’s Missed Conversion Deadline

Anthony Hayes lost his employer-provided life insurance when his employment ended, and failed to convert it to an individual policy within the given timeframe. When Hayes passed away, his surviving spouse filed a claim under the Employee Retirement Income Security Act (ERISA) seeking benefits under the plan’s provisions.

However, Prudential Insurance Company denied the claim, stating that Hayes’ coverage had terminated and there was no conversion policy on file. The claim administrator held that applying equitable tolling to extend the deadline for conversion would effectively rewrite the terms of the plan, which is not allowed.

Despite the beneficiary’s argument that Hayes was incapacitated during the conversion period, the district court ruled in favor of Prudential, upholding the denial of the claim. This case highlights the importance of timely conversion of life insurance policies and the limitations of equitable tolling in such situations.

Analysis

The plaintiff filed a claim under 29 U.S.C. § 1132(a)(1)(B) of the Employee Retirement Income Security Act (ERISA) seeking relief for her late husband’s missed conversion deadline for life insurance coverage. However, the plaintiff’s claim was denied as awarding benefits would require modifying the plan’s terms, which is not permitted under § (a)(1)(B).

Although the plaintiff argued that the court should apply the doctrine of equitable tolling to allow for an exception to the deadline because her husband was incapacitated during the conversion period, the plan administrator did not abuse its discretion in deciding that “the terms of the plan” do not provide for equitable tolling.

The court held that § (a)(1)(B) does not address the availability of equitable tolling and does not purport to alter the terms of any ERISA plan. In contrast, the court suggested that equitable tolling may be available for deadlines in ERISA plans involving the time to file a lawsuit or appeal the denial of benefits. However, no cause of action for benefits accrues when a participant misses a conversion deadline.

The plaintiff cited various nonbinding decisions for the view that equitable tolling is consistent with the purpose and intent of ERISA. However, the court held that a court’s determination that certain relief is consistent with the purpose of a statute does not mean the court can necessarily provide it. The district court concluded that the plaintiff’s claim under § (a)(1)(B) fails as a matter of law.