Judge: Death Benefits Regulated by ERISA

October 22, 2002 (PLANSPONSOR.com) - The estate of a man covered by an employer accidental death plan can't sue the plan's administrator under an Illinois law for delaying plan payments because such a claim is barred by ERISA, a federal judge ruled.

US District Judge Wayne Andersen of the Northern District of Illinois dismissed a lawsuit from the estate of Casey O’Neil after ruling that the Illinois law “relates to” an ERISA regulated plan so the federal law takes precedence.   The Illinois allows a judge to award damages and attorney fees if an insurer unreasonably delays paying an insurance claim.

O’Neil was covered under his employer’s group life and accidental death and dismemberment plan when he died in September 1999.

The plan’s administrator, UNUM Life Insurance Co. of America, denied O’Neil’s estate’s claim for accidental death benefits. UNUM claimed O’Neil’s death was not covered by the plan because his death was caused by the use of morphine and alcohol.

O’Neil’s estate sued UNUM in an Illinois state court, arguing that UNUM violated Illinois insurance law by refusing to pay the estate benefits.

Anderson also ruled that the Illinois law did not fall under an ERISA section with exempts certain state insurance statutes from federal preemption.

The case is Estate of O’Neil v. UNUM Life Insurance Co. of America, N.D. Ill., No. 01 C 5419, 10/16/02.

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