Employer not liable for delay in policy conversion
In Picou v. Fedex, a federal court in Fort Worth examined an employee's efforts to convert an ERISA group policy to an individual policy. The court summarized the dispute as follows:
Welton was employed with FedEx until her resignation on December 31, 2010. Welton allegedly resigned due to the increasingly deleterious effects of breast cancer. While employed, Welton was insured under FedEx's group life-insurance policy. On January 21, 2011, Welton “requested information regarding the conversion of her policy.” Plaintiffs allege that FedEx failed to transmit this request to Lincoln until February 18. On February 24, Lincoln mailed a conversion application to Welton, requesting that the application be completed and returned by March 11. Unfortunately, by that time, Welton was too ill to complete the application or pay the required premium. She passed away on April 12, 2011. No premiums were paid to Lincoln on Welton's behalf subsequent to her resignation.
The federal court determined that ERISA preempted all negligence claims against Fedex under state law. Furthermore, the court noted that the plan documents directed employees to contact the insurance company directly for conversion paperwork.