Former Employee Not Covered Despite Premiums Paid

October 28, 2005 ( - The US District Court for the District of Massachusetts has ruled that an employee who died five days after she terminated her employment was not covered under an insurance plan even though the full plan premium was deducted from her check.

Chief Judge William Young determined that CapGemini US LLC did not act arbitrarily and capriciously when it denied Edward Heller’s claim for his wife’s benefits, BNA reports.   Young determined that the plan was unambiguous when it stated that coverage under the plan ends when an employee terminated employment.

Heller’s argument was that the plan administrator waived its right to enforce the provision that coverage would end when employment ended since the full month’s premium for the accidental death and dismemberment benefit plan was taken from his wife’s final paycheck.   Heller’s wife died in an accident five days after terminating her employment with CapGemini on January 24, 2003, BNA reports.   On January 31, 2003, the company issued her final paycheck from which the premium for the plan had been deducted.

American International Life Assurance Co. of New York denied Heller’s claim for benefits saying the plan required his wife to be a full-time employee at the time of her death to be eligible.   After several rounds of administrative appeals, Heller filed a lawsuit against the plan, American, and CapGemini, alleging they acted arbitrarily and capriciously in violation of the ERISA by denying his claim for benefits.  

In his opinion, Young said, “While Heller may have a valid claim for the return of the premium, he cannot use that overcharge as a means of bringing his wife’s untimely and tragic death within the ambit of the Plan.”

The case is Heller v. CapGemini Ernst & Young Welfare Plan, D. Mass., No. 04-11875-WGY, 10/24/05.