Shafer v. Metropolitan Life Insurance Company et al

Filing 37

ORDER denying 26 Motion for Partial Summary Judgment, by Judge Raymond P. Moore on 2/19/2015.(tscha, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Raymond P. Moore
Civil Action No. 14–CV–00656–RM–KMT
MARILYN O. SHAFER,
Plaintiff,
v.
METROPOLITAN LIFE INSURANCE COMPANY, a New York Insurance Company, and
SCHLUMBERGER TECHNOLOGIES, INC., a Texas Corporation,
Defendants.
______________________________________________________________________________
ORDER
______________________________________________________________________________
This matter concerns Plaintiff Marilyn O. Shafer’s claim for life insurance benefits
allegedly due under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. § 1001 et seq.
This matter is before the Court on Plaintiff’s motion for partial summary judgment
regarding the proper standard of review under ERISA for a benefit denial claim. (ECF No. 26.)
Plaintiff contends that she is entitled to a de novo standard of review and a jury trial due to a
Colorado statute concerning the subject. Defendants Metropolitan Life Insurance Company
(“MetLife”) and Schlumberger Technology Corporation1 (“STC”) oppose Plaintiff’s motion.
(ECF No. 29.)

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Schlumberger Technology Corporation (“STC”) avers that Plaintiff erroneously identified it as “Schlumberger
Technologies, Inc.” (ECF No. 29.) Plaintiff does not contest STC’s averment.

For the reasons stated below, the Court DENIES Plaintiff’s motion regarding the proper
standard of review. The Court concludes that while the part of Colo. Rev. Stat. § 10-3-1116(3)
(2008) providing for a de novo standard of review, standing alone, would not be preempted, the
part of Colo. Rev. Stat. § 10-3-1116(3) providing for a jury trial conflicts with ERISA’s remedial
structure by altering the judiciary’s role. Thus, the Court concludes that ERISA preempts, in its
entirety, Colo. Rev. Stat. § 10-3-1116(3).
I.

BACKGROUND
Plaintiff’s deceased husband, Michael Shafer, was a participant in the Schlumberger

Group Welfare Benefits Plan (the “Plan”), effective January 1, 2012. (ECF Nos. 20-2 at 43-44,
20-17 at 1-2, 20-27 at 28-30; Shafer Rec. 0093-94, 0801-02, 1328-30.) STC is the group
policyholder of the 2012 Plan. (ECF No. 20-1 at 3; Shafer Rec. 0003.) The Plan provides that
the “Plan Administrator” and “other Plan fiduciaries” have “discretionary authority to interpret
the terms of the Plan and to determine eligibility for and entitlement to Plan benefits in
accordance with the terms of the Plan.” (ECF No. 20-2 at 36; Shafer Rec. 0086.) The Plan
Administrator and Plan Sponsor is STC. (ECF Nos. 20-2 at 32, 20-8 at 26; Shafer Rec. 0082,
0376.) The Plan Administrator and Plan Sponsor are based in Houston, Texas. (ECF Nos. 20-2
at 32, 20-8 at 26; Shafer Rec. 82, 376.)
MetLife issued the 2012 Plan to STC in Texas. (ECF Nos. 20-1 at 2-3, 20-2 at 32; Shafer
Rec. 0002-03, 0082.) STC issued the 2012 Plan to Mr. Shafer in Colorado. (ECF No. 20-1 at 23, 38; Shafer Rec. 0002-03, 0038.)
MetLife informed Plaintiff of its decision to deny benefits over the amount of
$873,000.00. (ECF No. 20-10 at 30-31; Shafer Rec. 0480-81.) On June 6, 2013, Plaintiff
appealed this denial of benefits under the 2012 Plan. (ECF No. 20-21 at 2-10; Shafer Rec. 1002-

10.) MetLife confirmed receipt of Plaintiff’s appeal letter via fax on June 12, 2013. (ECF No.
20-21 at 12-13; Shafer Rec. 1012-13.) On July 29, 2013, MetLife upheld its denial of benefits
for any amount over $873,000.00. (ECF No. 20-21 at 27-28; Shafer Rec. 1027-28.)
On March 3, 2014, Plaintiff filed this lawsuit against Defendants challenging the denial
of benefits for any amount over $873,000.00. (ECF No. 1.) By motion for partial summary
judgment (ECF No. 26), Plaintiff seeks both de novo review and trial by jury on the claim denial
under Colo. Rev. Stat. § 10-3-1116(3).
II.

LEGAL STANDARDS
Summary judgment is appropriate only if there is no genuine dispute of material fact and

the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp.
v. Catrett, 477 U.S. 317, 322 (1986); Henderson v. Inter-Chem Coal Co., Inc., 41 F.3d 567, 56970 (10th Cir. 1994). Whether there is a genuine dispute as to a material fact depends upon
whether the evidence presents a sufficient disagreement to require submission to a jury or is so
one–sided that one party must prevail as a matter of law. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 251-52 (1986); Stone v. Autoliv ASP, Inc., 210 F.3d 1132, 1136 (10th Cir. 2000). Once
the moving party meets its initial burden of demonstrating an absence of a genuine dispute of
material fact, the burden then shifts to the non-moving party to move beyond the pleadings and
to designate evidence which demonstrates the existence of a genuine dispute of material fact to
be resolved at trial. See 1-800-Contacts, Inc. v. Lens.com, Inc., 722 F.3d 1229, 1242 (10th Cir.
2013) (citation omitted). A fact is “material” if it pertains to an element of a claim or defense; a
factual dispute is “genuine” if the evidence is so contradictory that if the matter went to trial, a
reasonable jury could return a verdict for either party. Anderson, 477 U.S. at 248. In
considering whether summary judgment is appropriate, the facts must be considered in a light

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most favorable to the non-moving party. Cillo v. City of Greenwood Vill., 739 F.3d 451, 461
(10th Cir. 2013) (citations omitted).
If a movant properly supports a motion for summary judgment, the opposing party may
not rest on the allegations contained in her complaint, but must respond with specific facts
showing a genuine factual issue for trial. Fed. R. Civ. P. 56(e); Scott v. Harris, 550 U.S. 372,
380 (2007) (holding that “[t]he mere existence of some alleged factual dispute between the
parties will not defeat an otherwise properly supported motion for summary judgment; the
requirement is that there be no genuine issue of material fact”) (citation omitted).
Only admissible evidence may be considered when ruling on a motion for summary
judgment. Jaramillo v. Colo. Judicial Dep’t, 427 F.3d 1303, 1314 (10th Cir. 2005) (citation
omitted) (holding that hearsay evidence is not acceptable in opposing a summary judgment
motion); World of Sleep, Inc. v. La-Z-Boy Chair Co., 756 F.2d 1467, 1474 (10th Cir. 1985).
Affidavits must be based on personal knowledge and must set forth facts that would be
admissible evidence at trial. Murray v. City of Sapulpa, 45 F.3d 1417, 1422 (10th Cir. 1995)
(quotations and citation omitted). “Conclusory and self-serving affidavits are not sufficient.” Id.
The Court will not consider statements of fact, or rebuttals thereto, which are not material or are
not supported by competent evidence. Fed. R. Civ. P. 56(c)(1)(A), 56(e)(2), 56(e)(3). “[O]n a
motion for summary judgment, it is the responding party’s burden to ensure that the factual
dispute is portrayed with particularity, without depending on the trial court to conduct its own
search of the record.” Cross v. The Home Depot, 390 F.3d 1283, 1290 (10th Cir. 2004) (internal
quotation and citation omitted). The Court is “not obligated to comb the record in order to make
[Plaintiff’s] arguments for [her].” See Mitchell v. City of Moore, Okla., 218 F.3d 1190, 1199
(10th Cir. 2000). Further, Local Rule 7.1(e) provides that “[e]very citation in a motion, response

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or reply shall include the specific page or statutory subsection to which reference is made.” D.C.
Colo. L. Civ. R. 7.1(e).
III.

ANALYSIS
At issue in this matter is Section 10-3-1116(3) of the Colorado Revised Statutes2.

Section 10-3-1116(3) states:
An insurance policy, insurance contract, or plan that is issued in this state shall
provide that a person who claims health, life, or disability benefits, whose claim
has been denied in whole or in part, and who has exhausted his or her
administrative remedies shall be entitled to have his or her claim reviewed de
novo in any court with jurisdiction and to a trial by jury.
Colo. Rev. Stat. 10-3-1116(3) (emphasis added). Further, the Colorado General Assembly
declares that this “section is a law regulating insurance.” Colo. Rev. Stat. 10-3-1116(7).
A.

Applicability of Colorado Revised Statute § 10-3-1116(3)

Defendants contend that a predicate condition to the applicability of Section 10-31116(3) has not been met, i.e., that the 2012 Plan was not “issued in this state [of Colorado].”
(ECF No. 29 at 9-10.) MetLife issued the 2012 Plan to STC in Texas as a “group policyholder.”
(ECF Nos. 20-1 at 2-3, 20-2 at 32; Shafer Rec. 0002-03, 0082; ECF No. 29 at 9.) STC
administers the 2012 Plan in Texas. (ECF Nos. 20-2 at 32, 20-8 at 26; Shafer Rec. 0082, 0376.)
STC, however, then issued the 2012 Plan to Mr. Shafer. (ECF No. 20-1 at 2-3; Shafer Rec.
0002-03.)
Both parties agree that “issued” means one of the following: (1) the preparation and
signing of the policy; (2) the delivery and acceptance of the policy; or (3) the preparation,
execution and delivery of the policy. (ECF No. 29 at 9; ECF No. 32 at 6.) The parties disagree

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Colo. Rev. Stat. 10-3-1116(1) has been held preempted by ERISA. Timm v. Prudential Ins. Co. of Am., 259 P.3d
521, 525-27 (Colo. Ct. App. 2011).

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as to whether “plan issuance” ends at MetLife’s issuing the group policy to STC or whether it
continues to STC’s issuing the 2012 Plan to Mr. Shafer.
The principle objective of ERISA is to protect plan participants and beneficiaries. 29
U.S.C. §§ 1001(b), 1001(c), 1103(c)(1), 1104(a)(1), 1108(a)(2), 1132(a)(1)(B); Boggs v. Boggs,
520 U.S. 833, 845 (1997) (citation omitted). ERISA defines the term “participant” as “any
employee or former employee of an employer, or any member or former member of an employee
organization, who is or may become eligible to receive a benefit of any type from an employee
benefit plan which covers employees of such employer or members of such organization, or
whose beneficiaries may be eligible to receive any such benefit.” 29 U.S.C. § 1002(7). ERISA
defines the term “beneficiary” as “a person designated by participant, or by the terms of an
employee benefit plan, who is or may become entitled to a benefit thereunder.” 29 U.S.C. §
1002(8). The parties do not dispute that Mr. Shafer was a 2012 Plan participant and that Plaintiff
is a 2012 Plan beneficiary.
Because ERISA is designed to benefit plan participants or beneficiaries, it would make
little sense to limit “issue” as to only the relationship between MetLife and STC. Rather, the
Court, in furtherance of ERISA’s principle purpose, holds that STC issued the 2012 Plan to Mr.
Shafer because he, and his designated beneficiary, were the intended protected individuals. See
Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 359 (2002) (identifying that the employer
issued a “Certificate of Group Coverage” to employees who participated in the employersponsored plan).
The Court finds Defendants’ reliance upon Carberry v. Metro. Life Ins. Co., Case No. 09CV-02512-DME-BNB, 2011 WL 2887842, at *2 (D. Colo. July 19, 2011) and Krob v. Hartford
Life & Acc. Ins. Co., Case No. 10-CV-00719-RPM, slip op. (D. Colo. June 16, 2010) as

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misplaced and unconvincing. In Carberry, the court acknowledged that the plaintiff did not
pursue the argument that his employer “arguably” issued the plan at issue to him. Carberry,
2011 WL 2887842 at *2. Further, the court assumed that Carberry’s former employer did issue
the plan to him but found that it occurred in Arizona not in Colorado. Id. In contrast, in this
matter, the parties do not dispute that if any issuance occurred, then it occurred in Colorado.
And the Certificate of Insurance at issue states that it was issued to Mr. Shafer under STC’s
group policy. (ECF No. 20-1 at 2-3; Shafer Rec. 0002-03.) Krob is a decision that was issued
without any citation to the record or explanation of its underlying facts or reasoning, and for
those reasons, the Court finds it not persuasive for the proposition which Defendants assert.
B.

Whether ERISA Preempts Colorado Revised Statute § 10-3-1116(3)

Due to ERISA’s “statutory complexity,” “any court forced to enter the ERISA
preemption thicket sets out on a treacherous path.” Kidneigh v. UNUM Life Ins. Co. of Am., 345
F.3d 1182, 1184 (10th Cir. 2003) (internal quotations and citations omitted).
ERISA permits an individual who is denied benefits under an ERISA-governed plan to
challenge that denial in a federal district court. See 29 U.S.C § 1132(a)(1)(B). “ERISA does not
set out the appropriate standard of review for actions under § 1132(a)(1)(B) challenging benefit
eligibility determinations.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 (1989).
Under United States Supreme Court precedent, in the absence of a federally defined standard of
review, a district court must review a denial of plan benefits under a de novo standard of review
unless the plan provides the administrator or fiduciary discretionary authority to determine
eligibility for benefits or to construe the terms of the plan. Id. at 115. In this case, the 2012 Plan
provides the Plan Administrator and other fiduciaries with such discretionary authority. (ECF
No. 20-2 at 36; Shafer Rec. 0086.)

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The parties here, however, contracted in light of the 2008 Colorado statute which
provides a person whose insurance claim has been denied with an entitlement to de novo judicial
review of that determination and the right to a jury trial. Colo. Rev. Stat. § 10-3-1116(3). The
question then becomes whether ERISA preempts Section 10-3-1116(3). Congress left the
development ERISA law details to the courts. See Firestone Tire & Rubber, 489 U.S. at 110.
ERISA’s express preemption clause (“Preemption Clause”) broadly recites that “[e]xcept
as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III
of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate
to any employee benefit plan. . . .” 29 U.S.C. § 1144(a). Defendants argue that ERISA preempts
Section 10-3-1116(3). However, 29 U.S.C. § 1144(b)(2)(a) (the “Savings Clause”) provides that
“nothing in this subchapter shall be construed to exempt or relieve any person from any law of
any State which regulates insurance, banking, or securities.” Plaintiff contends that ERISA does
not preempt her claim because Section 10-3-1116(3) regulates insurance and, thus, is saved from
ERISA’s Preemption Clause. Finally, ERISA’s deemer clause (“Deemer Clause”) provides that
self-funded benefit plans are not to be deemed insurance companies for the purpose of any state
laws purporting to regulate such companies. See id. § 1144(b)(2)(B). Defendants do not argue
that the Deemer Clause is applicable to this matter.
Although the Tenth Circuit Court of Appeals has yet to address this particular issue, i.e.,
whether ERISA preempts Section 10-3-1116(3), Menge v. AT&T, Inc., Case No. 14-1210, 2014
WL 7172350, at *3 n.1 (10th Cir. Dec. 17, 2014), the Court holds that ERISA preempts Section
10-3-1116(3).

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1.

Express Preemption

A state statute “regulates insurance” within the meaning of the Savings Clause when it is:
(1) “specifically directed toward entities engaged in insurance”; and (2) “substantially affect[s]
the risk pooling arrangement between the insurer and the insured.” Kentucky Ass’n of Health
Plans, Inc. v. Miller, 538 U.S. 329, 341-42 (2003). For the following reasons, the Court holds
that ERISA does not expressly preempt Section 10-3-1116(3).
a.

Whether Section 10-3-1116(3) is Directed Toward Entities
Engaged in Insurance

Defendants contend that Section 10-3-1116(3) is overly broad because it would apply to
all ERISA plan documents and thus, is not specifically directed to entities engaged in insurance.
(ECF No. 29 at 11.) Although the statute itself identifies that it is a law regulating insurance,
Colo. Rev. Stat. § 10-3-1116(7), the Court finds support that Section 10-3-1116(3) is a statute
directed toward entities engaged in insurance in the Supreme Court’s holding in Rush Prudential,
536 U.S. at 385-87. In Rush Prudential, the Supreme Court held that
[w]hile the statute designed to [regulate insurance and medicine] undeniably
eliminates whatever may have remained of a plan sponsor’s option to minimize
scrutiny of benefit denials, this effect of eliminating an insurer’s autonomy to
guarantee terms congenial to its own interests is the stuff of garden variety
insurance regulation through the imposition of standard policy terms. . . . It is
therefore hard to imagine a reservation of state power to regulate insurance that
would not be meant to cover restrictions of the insurer’s advantage in this kind of
way. . . . To the extent that benefit litigation in some federal courts may have to
account for the effects of [the statute], it would be an exaggeration to hold that the
objectives of [ERISA’s Savings Clause] are undermined.
536 U.S. at 387 (internal citations omitted). Further, the Supreme Court in Rush Prudential held
[w]hatever the standards for reviewing benefit denials may be, they cannot
conflict with anything in the text of the statute, which we have read to require a
uniform judicial regime of categories of relief and standards of primary conduct,
not a uniformly lenient regime of reviewing benefit determinations.

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536 U.S. at 385 (emphasis added and citation omitted). Thus, because Section 10-3-1116(3)
requires insurance documents to provide a specific standard of review for a benefit denial and the
right to a jury trial, the Court finds that Section 10-3-1116(3) is a law directed toward entities
engaged in insurance. See Standard Ins. Co. v. Morrison, 584 F.3d 837, 842 (9th Cir. 2009)
(holding that “a law which regulates what terms insurance companies can place in their policies
regulates insurance companies”) (citations omitted); see also Am. Council of Life Insurers v.
Ross, 558 F.3d 600, 605 (6th Cir. 2009) (holding that certain rules meet the first prong of the
Kentucky Association test because those rules regulate insurers with respect to their insurance
practices).
Further, insurance regulation is not preempted merely because it conflicts with
substantive plan terms or affects third parties. Kentucky Ass’n, 538 U.S. at 337-38; Rush
Prudential, 536 U.S. at 385 n.16 (citation omitted).
b.

Whether Section 10-3-1116(3) Substantially Affects the Risk
Pooling Arrangement Between the Insurer and the Insured

Defendants’ main argument focuses on the meaning of “risk pooling” as used in the
second prong of the Kentucky Association test. (ECF No. 29 at 11-14.) The crux of Defendants’
argument is that the term “risk pooling” has a narrow meaning specific to the insurance industry,
and this is also its legal meaning as used in Kentucky Association. Defendants argue that “[r]isk
pooling is the process of assuming a group of individuals who have a broad cross section of
risks, in order to spread the risk among the individuals and predictably calculate costs and
premiums.” (ECF No. 29 at 11 (citations omitted).) The Court understands Defendants’
argument to be, that because the moment Section 10-3-1116(3) operates comes after the pool of
insureds has been established through risk classification, the statute cannot “substantially affect
the risk pooling arrangement between the insurer and the insured.” In other words, at the
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moment Section 10-3-1116(3) matters, the risk pool is already established, so the statute cannot
affect the risk pooling arrangement, and therefore, the second prong of the Kentucky Association
test cannot be satisfied.
The Supreme Court, contrary to Defendants’ argument, has held that to fall within the
scope of the Savings Clause, a state law does not have to actually spread a policy holder’s risk.
Kentucky Ass’n, 538 U.S. at 339 n.3. The Supreme Court held that “our test only requires” “that
the state law substantially affect the risk pooling arrangement between the insurer and insured. . .
.” Id. (Emphasis added.) That is, the state law at issue must “alter the scope of permissible
bargains between insurers and insureds.” Id. at 338-39. The requirement that the Court engage
in a de novo standard of review and the right to a jury trial dictates to the insurance company the
conditions under which it must pay for the risk it has assumed. In Rush Prudential, the Supreme
Court held that an independent review requirement affected the substantive terms of the
insurance policy and thus, not simply the risk insured against. Rush Prudential, 536 U.S. at 37375; see Kidneigh, 345 F.3d at 1186-87 (recognizing Rush Prudential’s holding); Am. Council of
Life Insurers, 558 F.3d at 606-07. Section 10-3-1116(3) alters the scope of permissible bargains
between insurers and insureds. Section 10-3-1116(3) requires parties to include a specific
provision in the contract related to judicial scrutiny of a claim denial. Section 10-3-1116(3)
eliminates Defendants’ option to minimize scrutiny of benefit denials, and eliminates
Defendants’ autonomy to guarantee terms congenial to its own interests. Colorado insureds may
no longer agree to a discretionary clause in the absence of de novo judicial review and the right
to a jury trial in exchange for a more affordable premium. By requiring de novo judicial review,
and thereby removing the benefit of a deferential standard of review from insurers, such
litigation may lead to a greater number of claims being paid, thus increasing the benefit of risk

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pooling for consumers. See Standard Ins., 584 F.3d at 845; see also McClenahan v. Metro. Life
Ins. Co., 621 F. Supp. 2d 1135, 1140-42 (D. Colo. 2009) (holding that ERISA does not expressly
preempt Colo. Rev. Stat. § 10-3-1116(2) as enforcement of the statute would dictate to the
insurance company the conditions under which it must pay for the risk that it has assumed)
(citation omitted), aff’d, 416 F. App’x 693, 695-96 (10th Cir. Mar. 21, 2011) (unpublished).3
Thus, Section 10-3-1116(3) substantially affects risk pooling.
2.

Conflict Preemption

Even if a state law regulates insurance such that it falls within the Savings Clause, it may
nevertheless be preempted by ERISA’s civil enforcement provisions. See 29 U.S.C. §
1132(a)(1)(B) (“Section 1132”). ERISA’s civil enforcement provisions are the “sort of
overpowering federal policy that overrides a statutory provision designed to save state law from
being preempted.” Rush Prudential, 536 U.S. at 375. “[E]ven a state law that can arguably be
characterized as ‘regulating insurance’ will be preempted if it provides a separate vehicle to
assert a claim for benefits outside of, or in addition to, ERISA’s remedial scheme.” Aetna
Health, Inc. v. Davila, 542 U.S. 200, 217-18 (2004). If a state law operates to frustrate ERISA’s
purpose, it will be preempted. Boggs, 520 U.S. at 841. “The question whether a certain state
action is pre-empted by federal law is one of congressional intent. The purpose of Congress is
the ultimate touchstone.” Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45 (1987) (alterations,
internal quotations, and citations omitted). Because “Congress enacted ERISA to protect . . . the
interests of participants in employee benefit plans and their beneficiaries,” it set out “substantive
regulatory requirements for employee benefit plans and [provided] for appropriate remedies,

3

Section 10-3-1116(2) addresses insurance policies, contracts or plans which offer “health or disability benefits.”
Colo. Rev. Stat. § 10-3-1116(2). This matter involves life insurance benefits. (See ECF No. 26 at 1-2.)
Accordingly, Plaintiff may not resort to Section 10-3-1116(2) as a basis for her argument in support of de novo
review and the right to a jury trial.

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sanctions, and ready access to the Federal Courts.” Aetna Health, 542 U.S. at 208 (citation
omitted).
In relevant part, ERISA allows a plan participant or beneficiary to file a civil action “to
recover benefits due to him under the terms of his plan, to enforce his rights under the terms of
the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. §
1132(a)(1)(B). Under ERISA, an insured may seek an injunction or other appropriate equitable
relief to enforce ERISA or the plan’s provisions. See 29 U.S.C. § 1132(a)(3).
Defendants argue that application of Section 10-3-1116(3) conflicts with congressional
objectives by taking away the option of deferential review and mandating a jury trial relating to
ERISA benefits claims in Colorado, which would result in a patchwork of different plan
interpretations that would vary court-by-court and state-by-state. (ECF No. 29 at 14-21.) The
Supreme Court has held that “ERISA induces employers to offer benefits by assuring a
predictable set of liabilities, under uniform standards of primary conduct and a uniform regime
of ultimate remedial orders and awards when a violation has occurred.” Conkright v. Frommert,
559 U.S. 506, 517 (2010) (internal quotation and citation omitted). The Supreme Court has
stated that ERISA’s remedial provisions
set forth a comprehensive civil enforcement scheme that represents a careful
balancing of the need for prompt and fair claims settlement procedures against the
public interest in encouraging the formation of employee benefit plans. The
policy choices reflected in the inclusion of certain remedies and the exclusion of
others under the federal scheme would be completely undermined if ERISA-plan
participants and beneficiaries were free to obtain remedies under state law that
Congress rejected in ERISA.
Aetna Health, 542 U.S. at 208-09 (internal quotation and citation omitted). Accordingly, “any
state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement

13

remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is
therefore pre-empted.” Id. at 209 (emphasis added and citations omitted).
For the following reasons, the Court holds that Section 10-3-1116(3) conflicts with
ERISA’s remedial scheme, in part, and thus, ERISA preempts Section 10-3-1116(3).
a.

Standard of Review

It is worth noting that the de novo standard of review, is already the default standard in an
ERISA case, so it is difficult to imagine how Section 10-3-1116(3) which requires that level of
review would conflict with the ERISA. See Firestone Tire & Rubber, 489 U.S. at 115. Further,
in Rush Prudential, the Supreme Court held that ERISA requires only that (1) the plan grant a
“beneficiary some mechanism for internal review of a benefit denial”; (2) the plan “provide a
right to a subsequent judicial forum for a claim to recover benefits”; and (3) that the standard of
juridical review not conflict with anything in the text of ERISA, which the Supreme Court read
to require “a uniform judicial regime of categories for relief and standard of primary conduct, not
a uniformly lenient regime of reviewing benefit determinations.” Rush Prudential, 536 U.S. at
385 (internal citations omitted). Thus, the Court concludes that a de novo standard of judicial
review does not conflict with ERISA’s remedial scheme.
b.

Right to a Jury Trial

ERISA, by its express terms, does not prohibit a jury trial. The Tenth Circuit has
previously held that the Seventh Amendment to the United States Constitution does not
guarantee an ERISA claimant a right to a jury trial. Bigley v. Ciber, Inc. Long Term Disability
Coverage, 570 F. App’x 756, 761 (10th Cir. 2014) (unpublished) (citation omitted); Graham v.
Hartford Life & Acc. Ins. Co., 589 F.3d 1345, 1356-57 (10th Cir. 2009) (citations omitted), cert.

14

denied, 560 U.S. 939 (2010); Adams v. Cyprus Amax Minerals Co., 149 F.3d 1156, 1161-62
(10th Cir. 1998) (citation omitted).
The Court does not find Tenth Circuit precedent holding that ERISA does not permit a
jury trial based upon the Seventh Amendment controlling but it is persuasive for its logic. The
Tenth Circuit has “decided that the proper common law analogue for a § 1132(a)(1)(B) claim for
benefits is ‘an action to enforce a trust’ . . . which at common law was an equitable action. . . .”
Graham, 589 F.3d at 1356-57 (internal citations omitted). Because an action under Section
1132(a) of ERISA is equitable rather than legal in nature, the right to a jury trial offends
ERISA’s remedial structure.
Section 10-3-1116(3) offends ERISA because, under Supreme Court precedent, the right
to a jury trial “serve[s] as an alternate enforcement mechanism[] outside of ERISA’s civil
enforcement provisions.” See Am. Council of Life Ins., 558 F.3d at 607; see also Aetna Health,
542 U.S. at 217-18 (holding that “even a state law . . . regulating insurance will be pre-empted if
it provides a separate vehicle to assert a claim for benefits outside of, or in addition to, ERISA’s
remedial scheme”) (internal quotation marks omitted). The right to a jury trial is foreign to the
ERISA statute. In this case, Section 10-3-1116(3) changes the ultimate decision-making entity—
no longer is it the province of the federal court to determine whether a benefit denial conflicts
with ERISA or the plan’s provisions rather it is that of a jury. Congress did not foresee that a
jury would be the ultimate decision-maker. Section 10-3-1116(3), by providing the right to a
jury trial, interjects a procedure that undermines Section 1132(a) because it inhibits prompt
adjudication by the judiciary. See Rush Prudential, 536 U.S. at 381 n.11 (noting that a “State
might enact an independent review requirement with procedures so elaborate, and burdens so

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onerous, that they might undermine § 1132(a)”). Section 10-3-1116(3) supplants the remedial
structure of Section 1132(a). Thus, ERISA preempts Section 10-3-1116(3).
The Court does not find solace in the fact that under Rule 50(a)(1) of the Federal Rules of
Civil Procedure, it might be claimed that the Court retains ultimate decision-making ability. See
Fed. R. Civ. P. 50(a)(1). Under ERISA, generally, the Court addresses only the “administrative
record” before it. Murphy v. Deloitte & Touche Group Ins. Plan, 619 F.3d 1151, 1161 (10th Cir.
2010) (holding that a court is prohibited from “considering materials outside the administrative
record where the extra-record materials sought to be introduced relate to a claimant’s eligibility
for benefits” but that this “general restriction does not conclusively prohibit a district court from
considering extra-record materials related to an administrator’s dual role conflict of interest”)
(citation omitted); Allison v. UNUM Life Ins. Co. of Am., 381 F.3d 1015, 1021 (10th Cir. 2004)
(citation omitted). Thus, to the extent that Section 10-3-1116(3) calls for a jury trial with
evidence outside of the administrative record, the conflict with ERISA is evident given Tenth
Circuit precedent. To the extent that Section 10-3-1116(3) provides for a jury trial limited to a
review of the administrative record, the Court would have to address whether a reasonable jury
has a legally sufficient evidentiary basis to find for a party in light of the administrative record.
Thus, even this narrow right to a jury trial imposes a new procedural burden on the Court which
Congress did not foresee when enacting ERISA’s remedial scheme.
The Court does not find Kohut v. Hartford Life & Acc. Ins. Co., 710 F. Supp. 2d 1139,
1147-49 (D. Colo. 2008), on point as in that case there was no discussion as to whether conflict
preemption principles applied, specifically whether the right to a jury trial conflicts with
ERISA’s remedial structure. Timm, 259 P.3d at 527. Likewise, the Court does not find
McClenahan, 621 F. Supp. 2d at 1139-42, on point as in that case the court concluded that

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Section 10-3-1116(2) does not change the way federal courts review benefits claims under
ERISA and does not conflict with ERISA’s remedial scheme. Timm, 259 P.3d at 527. In
contrast, here the Court may be required to review whether the jury had a legally sufficient basis
for its determination.
C.

Severability of Colorado Revised Statute § 10-3-1116(3)

“The severability of a statute is an issue of state law.” Panhandle E. Pipeline Co. v. State
of Okla. ex rel. Comm’rs of Land Office, 83 F.3d 1219, 1229 (10th Cir. 1996) (citation omitted).
The statute at issue provides that
if any provision of this section or its application to any person or circumstances is
held illegal, invalid, or unenforceable, no other provisions or applications of this
section shall be affected that can be given effect without the illegal, invalid, or
unenforceable provision or application, and to this end the provisions of this
section are severable.
Colo. Rev. Stat. 10-3-1116(6). The Court reads Section 10-3-1116(6) as permitting it to sever an
entire subsection from the underlying statute. The Court does not read Section 10-3-1116(6) as
permitting it to sever a portion of a subsection, in this case a portion of a sentence, from the
underlying statute. Thus, the Court is unable to sever the right to a jury trial from the entirety of
Section 10-3-1116(3). As such, ERISA preempts Section 10-3-1116(3) in its entirety.

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IV.

CONCLUSION
Based on the foregoing, the Court:
(1)

DENIES Plaintiff’s motion for partial summary judgment regarding the proper

standard of review (ECF No. 26), to wit, the Court will engage in an “arbitrary and capricious”
standard of review regarding Defendants’ denying Plaintiff benefits under the 2012 Plan due to
the presence of a discretionary clause.
DATED this 19th day of February, 2015.
BY THE COURT:

____________________________________
RAYMOND P. MOORE
United States District Judge

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