Case Name: Sherry Evans-Carmichael v. Liberty Mutual Group Inc.
Court: US District Court for the District of New Mexico
Date of Decision: April 4, 2017
Type of Claim: Short-Term Disability and Supplemental Disability Benefits
Insurance Company: Liberty Mutual Group Inc.
Claimant’s Employer: Los Alamos National Laboratory (“LANL”).
Procedural History: Plaintiff Sherry Evans-Carmichael (“Plaintiff”) initially filed her Complaint for Breach of Contract, Breach of Duty of Good Faith and Fair Dealing, Bad Faith, and Violation of the New Mexico Insurance Code (“Complaint”) in the First Judicial District Court of the State of New Mexico. In her Complaint, Plaintiff sought to recover damages for Defendant Liberty Mutual Group, Inc.’s (“Defendant’s”) alleged breach of a disability benefits plan. The Plaintiff participated by virtue of her employment at LANL.
On April 8, 2016, the Defendant removed the case to the Federal District Court, according to 28 USC § 1331. As the basis for removal, Defendant asserted that Plaintiff’s claims relate to the laws of the United States, specifically, the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 USC §§ 1001, et seq. Defendant then moved to dismiss Plaintiff’s claims on the ground that the disability benefits plan at issue (“Policy”) is an “employee benefit plan” governed by ERISA, which preempts the state law causes of action. Accordingly, Defendant argued that the allegations pled in the Complaint are insufficient to state a claim under ERISA.
In response, Plaintiff argued that the disability benefits plan at issue is a “governmental plan,” which is exempted from ERISA according to 29 USC § 1003(b)(1).1
Other Important Factors: LANS assumed direct management of LANL on June 1, 2006. (Doc. 22-2). LANS is a private limited liability company formed by the UC, Bechtel, BWXT Government Group, Inc., and URS. Id. Before June 1, 2006, LANL was managed by the UC. In February 2006, Plaintiff filed a claim for Short Term Disability and Supplemental Disability benefits, which was denied on April 14, 2006, under the UC Policy. The Plaintiff continued to work for LANL from June 1, 2006, to sometime in August 2006. The record reflects that, after June 1, 2006, Plaintiff continued to correspond with Defendant regarding her claim, persisting with her claim and providing additional relevant information. Eventually, after several years, Plaintiff’s claim was approved, and she began receiving benefits after October 2013. However, at some point, Defendant created an additional, new claim on Plaintiff’s behalf, assigning a new claim number and a disability date of August 11, 2006, which was after LANS assumed management of LANL. As a result, Defendant granted and calculated Plaintiff’s disability benefits under the LANS Policy. The parties dispute whether, based on these facts, the UC Policy or the LANS Policy applies to Plaintiff’s disability claim.
Defendant argues that because Plaintiff was an employee of LANL from June 1, 2006, through her last day of work in August 2006, her claim for recovery of disability benefits is under the LANS Policy. Defendant further argues that the LANS Policy is an ERISA welfare plan and is not a “governmental plan,” thereby establishing this Court’s jurisdiction. Plaintiff argues that Plaintiff’s claim should be considered under the UC Policy, which is a “government plan” and therefore not subject to ERISA. The Plaintiff further argues that, even if the LANS Policy is the governing policy for her disability claim, it is nevertheless a “governmental plan” and, therefore, is excluded from ERISA. Thus, Plaintiff maintains that the Court does not have jurisdiction over the case and should remand this matter to state court.
Issue: The parties’ supplemental briefing clarifies that, as an initial matter, they dispute the applicable policy to Plaintiff’s disability claim. Defendant argues that the Los Alamos National Security, LLC (“LANS”) Group Disability Income Policy (“LANS Policy”) applies to Plaintiff’s disability claim. Plaintiff disagrees and maintains that a University of California (“UC”) Supplemental Disability Policy (“UC Policy”) applies. The parties dispute whether the LANS policy is a “governmental plan” under ERISA. However, Defendant does not dispute, and the record reflects, that the UC Policy is a “governmental plan” over which the Federal Court does not have jurisdiction. Thus, the question of which policy applies to the Plaintiff’s disability claim becomes a dispositive factual issue establishing subject matter jurisdiction.
Holding: “Based on the factual contentions summarized above, as supported by the evidence provided by the parties and the argument of counsel, the Court construes Plaintiff’s disability “claims” as one claim, which was originally filed in February 2006, and denied under the UC Policy in April 2006. Defendant maintains that it created the new claim based on Plaintiff’s representation that she had stopped working at LANL in August 2006. However, while the record reflects that Defendant did create a new, separate disability claim on Plaintiff’s behalf, there is no evidence of Plaintiff filing a disability claim after June 1, 2006. The Court is left with no satisfactory explanation for the creation of this new claim other than that Defendant applied a new date of disability based on Plaintiff’s last day of employment, which was after LANS took over management control of LANL. Further, the parties agree that the nature and object of Plaintiff’s current disability claim are identical to the claim filed in February 2006. Indeed, the only circumstance that appears to have changed after the denial of her claim in April 2006 is that the management of LANL changed from UC to LANS. While Plaintiff continued to correspond with Defendant regarding her disability benefits claim after it was denied, she never filed or intended to file, an additional claim. Rather, Plaintiff challenged the denial of disability benefits in April 2006 under the UC Policy. In fact, Defendant itself refers to this correspondence as a “third appeal request.”
As a result, it appears to the Court that the UC Policy applies to Plaintiff’s disability claim. The Defendant does not dispute that the UC Policy is a “governmental plan” and, therefore, is exempt from ERISA. Thus, the Court does not have jurisdiction over this matter and remands it to the New Mexico state district court for further proceedings.”
Summary: “For the foregoing reasons, this Court finds that it does not have subject matter jurisdiction over this matter. Because Defendant originally removed the case from state court, IT IS THEREFORE ORDERED that this case be REMANDED to First Judicial District Court for the State of New Mexico for further proceedings.”
Disclaimer: This case was not handled by disability attorney Nick Ortiz. The court case is summarized here to give readers a better understanding of how Federal Courts decide long-term disability ERISA claims.
Here is a copy of the decision in PDF: Evans-Carmichael v. Liberty
