D.S.S. v. Prudential (No-21-5315, January 10, 2022, 6th Cir. 2022)

This case involves a disputed claim for life insurance benefits.

Jancita Malone had a life insurance benefit subject to ERISA. Initially, her two sons were the beneficiaries. For reasons that are not explained, in February 2014 she changed the beneficiary to Tiffani Graves, a relative. Malone died tragically less than two months later. Graves filed a claim several days after Malone died and Prudential paid the full amount of $147,00 to her. The first executor to Malone’s estate and guardian to her young child contacted Prudential in December 2014 regarding Malone’s life insurance benefits. Prudential responded by producing documents showing that the benefit had already been paid to Graves. Two years later another executor was appointed. He continued the effort to recover the $147,000, although he did not file suit in state court until February 2020. Prudential removed the case to federal court, successfully arguing that all state law claims were preempted by ERISA and then moved to dismiss the ERISA suit as untimely. The district court agreed with Prudential holding that the Plan’s one-year contractual statute of limitations applied and that, by application of the “clear repudiation” rule to Prudential’s December 2014 letter to Malone’s executor, the claim was time-barred.

The moral of this story is: Pursue your claim, exhaust your administrative remedies, and then go to court before the statute of limitations expires. And be sure to get a copy of the plan early in the process to determine the applicable statute of limitations. The statute of limitations in ERISA cases varies between jurisdictions. And plans can and often do contractually shorten the statute of limitations to their distinct advantage. This case also illustrates that executors are often unfamiliar with the administrative technicalities built into ERISA. Whether Malone’s children would have won if their claim had been pursued properly is not clear. What is clear, however, is that they never got their day in court because their mother’s executor failed to follow ERISA’s administrative procedures and then failed to file suit before the statute of limitations expired.