The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge
The Court has before it cross-motions for summary judgment. The Court heard oral argument on December 20, 2010, and the took the motions under advisement. For the reasons expressed below, the Court will grant Unum's motion and deny plaintiffs' motion.
This case presents two questions related to the accidental death policy held by Scooter Nield at the time of his death. Defendant-Insurer Unum Group paid the amount owed pursuant to the policy upon receipt of the Proof of Loss, plus interest, to the plaintiff-beneficiaries. Plaintiffs contend that they are owed (1) interest for the period from the date of death through payment, rather than interest for the period from receipt of the Proof of Loss through payment, (2) at a higher interest rate. Unum responds that ERISA preempts plaintiffs' claims, and that they paid the proper rate and amount of interest.
Scooter Nield, an employee of the J.R. Simplot Company, died on September 3, 2005. Tracy Decl., Dkt. 12-4, Ex. A. Nield was a participant in Simplot's Employee Group Accidental Death and Dismemberment Policy No. GSR10455 (the "Policy"), which is governed by ERISA. Tracy Decl., Dkt. 12-4, Ex. B. Plaintiffs were the beneficiaries of the Policy, which provided for a death benefit of $170,000. Id. Plaintiffs did not become aware of the Policy until late 2006. Complaint, Dkt. 1, at ¶ XVII. Unum received Plaintiffs' Notice of Claim and Proof of Loss on December 26, 2006. Tracy Decl., Dkt. 12-4, Ex. A. After a brief investigation, Unum paid $170,000 to plaintiffs on January 29, 2007. Tracy Decl., Dkt. 12-4, Ex. D.
Plaintiffs then requested interest on the $170,000 paid on the Policy. Tracy Decl., Dkt. 12-4, Ex. E. On February 7, 2007, Unum paid plaintiffs $946.88 in interest: 34 days (December 26-January 29) at 5.35% (federal reserve rate of 3.35% 2% ) following the Idaho statute governing interest rates on life insurance policies, Idaho Code § 41-1337. Tracy Decl., Dkt. 12-4, Ex. F. On April 19, 2007, Unum denied plaintiffs' appeal of the interest paid. Tracy Decl., Dkt. 12-4, Ex. H.
Plaintiffs sued Unum in Idaho state court, asserting breach of contract and unjust enrichment, on November 19, 2009. Complaint, Dkt. 1. Unum removed the action to this Court on December 22, 2009. Notice of Removal, Dkt. 1. Both parties moved for summary judgment, seeking resolution of the interest issue.
ERISA Preemption of State Law Claims
Unum argues that since plaintiffs' sole claims (unjust enrichment and breach of contract) are premised on state law, they are preempted by ERISA and should be dismissed. Defendant's Mem., Dkt. 12-1, at 2. ERISA preempts a state law cause of action if it "relates to" an employee benefit plan. 29 U.S.C. § 1144(a); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47 (1987). "A law relates to an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan." Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138 (1990).
It is undisputed that the policy at issue here is an ERISA plan. The plaintiffs' state law claims "relate to" the ERISA plan in the normal sense of the phrase because they seek to set the rate and accrual date for the interest due on the plan's proceeds. Hence, the ...