Benefits Not Owed for Employee Who Died Before Electing Coverage

February 14, 2006 ( - The US District Court for the District of Rhode Island has ruled that ExxonMobil Corp. does not owe additional life insurance benefits to the children of an employee who died before he could elect coverage under the plans.

BNA reports that the court found that two employees in ExxonMobil’s benefits office who told the children they were entitled to $2 million in life insurance benefits did not have the authority to make that decision.   In addition, the court rejected the children’s claim that the employees made a binding promise to pay them the $2 million because the letter sent to the children included a disclaimer that their entitlement to benefits was “subject to verification.”

Also rejected was the children’s contention that they were entitled to equitable relief in the form of benefits because ExxonMobil failed to provide the election forms to their father in a timely manner and, had he received the forms, he would have elected coverage.   The court determined that, had the benefits office sent the forms to their father on they day they had planned to, it would have taken eight business days for the election to be made, and that time period was not “egregiously lethargic or inefficient.”

In addition, the court said there was no evidence that the children’s father would have elected coverage since he was unmarried and the children were grown.   “Under these circumstances, no inference can be drawn that Dr. Renfro would have wanted additional coverage and the concomitant deductions from his paycheck,” the court said.

Dr. Robert Renfro was working for Mobil Corp. when it merged with Exxon.   Exxon hired Dr. Renfro and he filled out several employment-related forms on his first day of work.   Once the benefits office received the forms from Renfro, they prepared a package of employee benefit forms to mail to him.  

The package included documents for ExxonMobil’s life insurance plan.   On the day the office planned to mail the forms, it learned that Renfro had been in a car accident and was on life support.   Renfro died the next day.

Two employees of the benefits office decided to posthumously enroll Renfro in components of the life insurance plan, according to the court.   The benefits office sent to Renfro’s children a letter confirming that they were Renfro’s beneficiaries and that they would receive basic life insurance of $314,000, accidental death and dismemberment benefits of $314,00, group universal life (GUL) benefits of $785,000, and voluntary death and dismemberment (VADD) benefits of $1,256,000.   The letter also included a disclaimer that informed Renfro’s children that their entitlement to benefits was “subject to verification.”  

A month after the benefits office sent the letter to Renfro’s children, the plan’s named administrator determined that the children were ineligible for GUL and VADD benefits because Renfro had never elected such coverage. The children filed a lawsuit against ExxonMobil, contending that the denial of their claim for GUL and VADD benefits was arbitrary and capricious.

The court said the actions of the two benefits office employees was a mistake.

The case is Green v. ExxonMobil Corp., D.R.I., No. 02-534L, 2/9/06.