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Interpleader Action- 6th Cir.

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  • Interpleader Action- 6th Cir.

    In a case out of the 6th Circuit, the court takes up several issues that the Defendant-Appellant challenges on appeal: (1) Humana should not have been allowed to bring an interpleader action; (2) Humana failed to exhaust administrative remedies before bringing the interpleader action; (3) the district court should not have allowed any discovery; (4) the district court erred in granting Humana’s motion to dismiss the counterclaim; (5) the district court erred in granting Perkins’ motion for summary judgment and awarding the life insurance benefit to the decedent’s estate; and (6) the district court erred in denying O’Neal’s motion for judgment on the pleadings and motion for judgment on the record.

    The court first addresses O'Neal's (the Defendant-Appellant) procedural challenges, finding:

    We can quickly dispose of O’Neal’s procedural challenges. We have repeatedl authorized use of the interpleader process where there are competing claims to an ERISA
    benefit. See, e.g., Marsh, 119 F.3d at 418. Humana was not required to investigate the competing claims and make a determination regarding the proper recipient of the death benefit. This was not a case where Humana had the discretion to determine how to distribute the life insurance proceeds. Humana is required to award the benefit to the designated beneficiary according to the decedent’s designation under the Plan. Given the protracted dispute between O’Neal and Perkins in the year after Hamilton’s death, Humana faced a real risk of litigation and possible double liability had it made a benefits decision, and the filing of an interpleader action was appropriate. Because Humana properly instituted an interpleader action below, it was not required to exhaust administrative remedies. When a plan participant challenges a benefits decision, he is generally required to exhaust administrative remedies before coming to federal court to allow “plan fiduciaries to efficiently manage their funds; correct their errors; interpret plan provisions; and assemble a factual record which will assist a court in reviewing the fiduciaries’ actions.” Ravencraft v. UNUM Life Ins. Co. of Am., 212 F.3d 341, 343 (6th Cir. 2000) (internal quotation marks and emphasis omitted). That is not the situation here. There was no benefits decision by Humana to review.
    As this case involves two competing claims for the applicable benefits, the court next addresses O'Neal's allegation that Humana breached its fiduciary duty finding:

    Despite O’Neal’s confusing position, we can unequivocally say that Humana did not breach any fiduciary duties. Humana received two competing claims for a benefit. It explained the competing claims in a letter sent to O’Neal on December 15, 2015. Humana did its best to answer all of O’Neal’s questions. As O’Neal’s own exhibits to her counterclaim and motions demonstrate, Humana provided documents, engaged in correspondence and phone calls with the two claimants or their lawyers, provided a designated point person to handle questions, responded to discovery requests, and deposited the benefit at issue in the court registry. It remained firmly neutral in the dispute between O’Neal and Perkins. The district court properly dismissed O’Neal’s counterclaim against Humana.
    Finally, the court reasons through the insureds decision to leave the beneficiary designation blank in the most current records, and what affect that has on O'Neal's position:

    While we cannot say with 100% certainty that Hamilton intended to leave the beneficiary designation blank during open enrollment in 2015, the evidence both within Humana’s own
    records and outside of that record indicate that Hamilton did not intend to designate O’Neal as his beneficiary. The circumstances of his relationship with O’Neal at the time of the 2015 reenrollment period further corroborates that Hamilton likely intended to remove O’Neal as his beneficiary. In the year following his designation of O’Neal, the two had terminated their relationship, O’Neal had made Hamilton leave their shared home, and she had obtained a restraining order against him. When Hamilton made his benefits choices in the spring of 2015, he was provided with a prompt via the drop-down menu that O’Neal was a previously designated beneficiary. He did not choose to name her again. He did everything he could do to change his designation in 2015 to reflect that he no longer wished O’Neal to continue as his beneficiary.
    The court ultimately affirmed the district court's judgement, and the opinion is attached.
    Attached Files