United States District Court, D. Colorado
BROOKE JACKSON UNITED STATES DISTRICT JUDGE
Pentland was an employee at Schlumberger and insured under a
group life insurance plan administered by defendant
Metropolitan Life Insurance Company (“MetLife”).
Complaint, ECF No. 1 at ¶¶7-8. On March 30, 2017,
Schlumberger terminated Mr. Pentland. Id. at
¶8. On April 11, 2017, MetLife sent a letter to Mr.
Pentland informing him that he was eligible to convert $207,
000 in basic life coverage and $525, 000 in optional life
coverage to an individual life insurance policy. Id.
at ¶9. They gave him a conversion application to
complete and suggested he contact a financial professional
with Massachusetts Mutual Life Insurance Company to assist
him with converting this coverage. Id. at
¶¶9-10. Mr. Pentland and his spouse received
assistance from a financial services representative with the
company, Robert Lucke, in completing the conversion
application. Id. at ¶¶11-12. Mr. Pentland
elected to convert $207, 000 in basic life coverage and $525,
000 in optional life coverage from the Schlumberger group
plan to an individual policy. Id. at ¶12.
issued Mr. Pentland a policy with Policy Number 217012877A,
the “Individual Policy, ” with an effective date
of May 1, 2017. On June 7, 2017, the Pentlands paid
MetLife $3, 391.84 as the first premium due under the
Individual Policy. Id. at ¶15. The Pentlands
continued to make timely premium payments for the Individual
Policy through the date of Mr. Pentland's death on
November 11, 2017. Id. at ¶18.
Mr. Pentland's death, Ms. Pentland submitted a claim for
benefits under the Individual Policy. However, in a letter
dated December 12, 2017, MetLife notified Ms. Pentland that
it was rescinding the Individual Policy after a review of the
terms of the Schlumberger Group Life, Accidental Death &
Dismemberment, and Business Travel Accident Plan (the
“Group Plan”). MetLife asserted that Mr. Pentland
was still covered by the Group Plan at the time of his death,
and therefore “the conversion to the individual policy
was not necessary.” ECF No. 12, Ex. 2. MetLife refunded
Ms. Pentland $11, 945.64 for the premiums paid on the
Individual Policy. Id.; ECF No. 1 at ¶20.
MetLife also payed Ms. Pentland the amount it concluded she
was entitled to receive under the Group Plan: $326, 066.99.
However, Ms. Pentland asserts that the Individual Policy was
in effect on the date of Mr. Pentland's death, and as the
sole, primary beneficiary of the Individual Policy, she is
entitled to the value of the Individual Policy: $732, 000.
ECF No. 1 at ¶¶14, 22, 23.
February 2018, Ms. Pentland filed a complaint in this court
alleging breach of Colorado state law - specifically, breach
of contract and tortious breach of duty of good faith and
fair dealing. ECF No. 1. The basis for jurisdiction was
diversity jurisdiction under 28 U.S.C. §1332. MetLife
filed an answer, asserting that the Employee Retirement
Income Security Act of 1974 as amended, 29 U.S.C.
§§ 1001-1461 (“ERISA”), preempts Ms.
Pentland's Colorado state law claims. At the scheduling
conference held on June 11, 2018, I asked the parties to
submit briefs as to whether Ms. Pentland's state law
breach of contract and related claims arising under the
Individual Policy are preempted by ERISA. ECF No. 11. Both
parties submitted an opening brief, ECF Nos. 12, 13, and a
response brief, ECF Nos. 15, 16. The parties jointly moved
for an Order for Determination on the ERISA issue, ECF No.
17. I determine that ERISA preempts plaintiff's state law
514(a) of ERISA provides that the statute preempts all state
laws that “relate to any employee benefit plan.”
29 U.S.C. § 114(a). The Supreme Court has instructed
that in determining the reach of ERISA preemption, “the
purpose of Congress is the ultimate touchstone.”
Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 8
(1987). The purposes of ERISA are described by the Supreme
Court in Aetna Health Inc. v. Davila:
Congress enacted ERISA to protect . . . the interests of
participants in employee benefit plans and their
beneficiaries by setting out substantive regulatory
requirements for employee benefit plans. . . . The purpose of
ERISA is to provide a uniform regulatory regime over employee
benefit plans. To this end, ERISA includes expansive
pre-emption provisions, see ERISA § 514, 29 U.S.C.
§ 1144, which are intended to ensure that employee
benefit plan regulation would be exclusively a federal
542 U.S. 200, 208 (2004) (citing Alessi v.
Raybestos-Manhatten, Inc., 451 U.S. 504, 523 (1981))
(internal quotation marks omitted). In sum, the Supreme Court
has described the purpose of ERISA as twofold: the protection
of employee interests and administrative ease for employers.
See, e.g., Ingersoll-Rand Co. v. McClendon, 498 U.S.
133, 137 (1990).
determine whether ERISA preempts Ms. Pentland's state law
claims in this case there are two questions I must answer.
Because plaintiff asserts claims for benefits under the
Individual Policy, the first question is whether the
Individual Policy is subject to ERISA regulation as an ERISA
plan. See Demars v. CIGNA Corp., 173 F.3d 443, 446
(1st Cir. 1999); Waks v. Empire Blue Cross/ Blue
Shield, 262 F.3d 872, 875 (9th Cir. 2001). The Ninth
Circuit has held that “[t]he answer is straightforward.
. . . An employee benefit plan must cover at least one
employee to constitute an ERISA benefit plan.”
Waks, 262 F.3d at 875. I agree with the Ninth
Circuit on this point: because Mr. Pentland's Individual
Policy covered him as an individual and not as an employee of
Schlumberger or any other employer, this policy is not itself
an employee benefit plan under ERISA. The second question I
must answer is whether the state law claims under the
Individual Policy are so related to an employee benefit plan
that they are preempted. See Waks, 262 F.3d at 875.
cases from the Ninth Circuit are instructive on this second
question: Waks, 262 F.3d 972, and Reynolds v.
Metropolitan Life Ins., 685 Fed.Appx. 615 (9th Cir.
2017) (unpublished). In Waks, the plaintiff was
initially insured under a group plan from her spouse's
employer that was subject to ERISA regulation. When the
employer ceased operations, the plaintiff applied for
individual coverage pursuant to the conversion rights of the
group policy. The insurance company, Empire, issued her an
individual medical insurance policy. Id. at 874.
When Empire subsequently denied an insurance claim under
plaintiff's converted policy and she filed a complaint
asserting state-law claims of breach of contract, Empire
defended on the ground that claims under plaintiff's
converted policy were preempted by ERISA. The Ninth Circuit
held that “claims arising under a converted individual
policy are not ‘related to' an ERISA plan for
purposes of ERISA pre-emption.” 262 F.3d at 875
other hand in Reynolds, the Ninth Circuit found that
a dispute about an insured's converted life insurance
policy was preempted by ERISA where the insured was seeking
to file a claim both under an employee group life insurance
plan and under her converted policy. The Ninth Circuit
reasoned that the defendant insurance company necessarily had
to consider a “one payment only” provision in the
group plan covered by ERISA in deciding how to pay benefits
under either policy. Therefore, claims under the converted
policy were sufficiently related to the group plan to justify
from other circuits similarly distinguish between lawsuits
involving benefits under a converted policy and lawsuits
where a court must consider the conversion rights under an
employee benefit plan to determine the existence of benefits
under a converted policy. In general, courts have found that
state law claims in the former situation are not preempted by