On November 14, 2018, Judge William Young of the United States District Court, sitting in Boston, denied Minnesota Life Insurance Company’s (“Minnesota Life”) motion to dismiss the claims filed against it by (“Mr. Flinn”) alleging that Minnesota Life had negligently paid $275,277.77 under his deceased’s wife employee group life policy to his wife’s attorney-sister based on a fraudulent power of attorney.
In making the motion to dismiss in the case of Eugene Flinn v. Minnesota Life Insurance Company, Minnesota Life Minnesota Life claimed Mr. Flinn’s suit for negligence and other state-law claims were barred by the Employee Retirement Income Security Act (“ERISA”).
In ruling on the motion to dismiss, Judge Young acknowledged the broad scope of ERISA in barring state law remedies relating to an employee benefit plan such as the group life insurance plan in question. However, he found that ERISA did not limit an action like Mr. Flinn’s, claiming an insurer violated its state law obligation to transfer agreed-upon benefits to a beneficiary or his legitimate legal representative.
Mr. Flinn’s wife dies with up to $2 million in assets her attorney-sister falsely claims have been left to her
According to filings in various lawsuits, Mr. Flinn is a retired cobbler and war veteran who served two tours of duty in Vietnam. He was married to Joyce Flinn for twenty-six years until her untimely death from cancer in 2009, at the age of fifty-six. During the marriage, they lived in a house owned by Mrs. Flinn in Maynard.
Joyce Flinn died without a will. However, she had worked for Digital Equipment Corporation, Hewlett-Packard, and at the time of her death, Fidelity Investments. While working she had accumulated a personal estate of between $1 million and $2 million contained in various bank accounts, brokerage accounts, annuities, IRAs, life insurance policies, 401K accounts, and real estate. Mr. Flinn was the beneficiary on a number of these accounts, and on a group life insurance policy Mrs. Flinn had purchased through her employer, Fidelity, with Minnesota Life
After Joyce Flinn passed away, Mr. Flinn and Mrs. Flinn’s sister, Joan Oliveira, who was an attorney licensed to practice in Massachusetts under her maiden name, Joan Delaney, (“Attorney Oliveira”), had several conversations about Mrs. Flinn’s affairs. Mr. Flinn alleged that Attorney Oliveira falsely led him to believe that his wife had died with a valid last will and testament that named her sister, Attorney Oliveira, as its sole beneficiary. However, in these conversations, according to Mr. Flinn, Attorney Oliveira represented that out of the “kindness of her heart” Mr. Flinn would be given a “devise” of approximately $250,000 and be “allowed” to live on the Maynard Property.”
Attorney Oliveira claims Minnesota Life benefit without authority by using a forged power of attorney
One of the assets had at the time of her death was a group life insurance plan (“Plan”) Minnesota Life administered for her employer, Fidelity, that provided for a $250 thousand death benefit.
Under the Plan’s terms, since Mrs. Flinn had not named anyone as a beneficiary, her husband, Mr. Flinn was the default beneficiary.
About six months after Mrs. Flinn’s death, Attorney Oliveira contacted Minnesota Life and claimed to be Mr. Flinn’s attorney and directed the company to deal directly with her instead of Mr. Flinn. In support of her claim of authority, Attorney Oliveira presented the insurer with a comprehensive power of attorney from Mr. Flinn effectively granting her power over all Mr. Flinn’s affairs.
Minnesota Life never contacted Mr. Flinn to confirm Attorney Oliveira’s representations or the validity of the power of attorney. If it had, Minnesota Life would have found Attorney Oliveira had no authority to represent Mr. Flinn, and the power of attorney she submitted was a forgery.
Although ostensibly representing Mr. Flinn in collecting the policy benefits, Attorney Oliveira attempted to convince Minnesota Life to pay the Plan’s benefits to her mother. After a second attempt, Minnesota Life requested that Attorney Oliveira provide it with a “letter of authority from the probate court as well as the tax ID for the estate, to demonstrate her authority to act on the estate’s behalf.” Attorney Oliveira never produced any such proof to Minnesota Life.
Finally, in 2011, Attorney Oliveira informed Minnesota Life that Mr. Flinn did want to claim the Plan’s benefits and requested documentation to begin the process. However, Attorney Oliveira instructed Minnesota Life to send Mr. Flinn’s benefit check to her and also to send the form 1099 reporting the interest paid for tax purposes to her and not to Mr. Flinn. Minnesota Life followed Attorney Oliveira’s instructions and sent a check payable to Mr. Flinn for $275,277.77–for the insurance benefit of the Plan plus interest to Attorney Oliveira’s business address. Minnesota Life never sent Mr. Flinn any notice of the transaction with Attorney Oliveira.
Mr. Flinn starts asking questions after receiving income tax notices on property he knows nothing about
After receiving IRS tax notices in 2013, for income on assets he had never received, Mr. Flinn began to ask questions of Attorney Oliveira that were never answered satisfactorily. In 2015, after having obtained counsel, Mr. Flinn sought to probate his wife’s estate. After his appointment as the estate’s personal representative, his lawyers discovered substantial assets—including the Plan’s payment—that should have been transferred to Mr. Flinn. These assets instead were converted by Attorney Oliveira to her own use.
Mr. Flinn filed suit in the Middlesex Massachusetts Superior Court to recover the stolen assets from Attorney Oliveira and obtained attachments against Attorney Oliveira’s property.
Attorney Oliveira countered Mr. Flinn’s suit by filing for bankruptcy in New Hampshire where she lived. In the bankruptcy proceeding, Mr. Flinn filed a proof of claim for Attorney Oliveira’s conversions for $2,115,351.17. However, by this time most of the stolen assets had been dissipated.
A settlement filed in the New Hampshire bankruptcy court, Mr. Flinn recovered some money from the sale of property in Waltham and Florida owned by Attorney Oliveira and her husband. However, most of the money claimed from Attorney Oliveira was unrecoverable.
Mr. Flinn files to get money Minnesota Life negligently paid to Attorney Oliveira without authority
After the bankruptcy proceeding concluded, Mr. Flinn’s attorneys Flinn sent a demand letter to Minnesota Life on February 23, 2018, requesting the Plan’s benefit amount, plus interest, and attorney’s fees as damages for “wrongfully release[ing]” the benefits to Attorney Oliveira.
The response from Minnesota Life, notwithstanding the evidence it had paid the money to an attorney who had no authority to represent Mr. Flinn and who had presented a forged power of attorney, was a flat denial. The March 14, 2018 response “To Whom It May Concern” claimed Minnesota Life had done nothing wrong because:
The payment was made to [Mr. Flinn] based on the enclosed letters of representation from the previous attorney representing him, the signed and notarized power of attorney document and the preference beneficiary statement. Also enclosed is a copy of the canceled check made payable to Mr. Flinn.
As stated above the claim was paid to the appropriate beneficiary, and our handling is complete.
Two weeks after receiving Minnesota Life’s response, Mr. Flinn filed suit in the Middlesex Superior Court against the insurer.
Minnesota Life removed the state lawsuit to the United States District Court for Massachusetts alleging the federal court had exclusive jurisdiction because the group life policy in question was an employee benefit subject to ERISA.
Minnesota Life’s motion to dismiss based on Mr. Flinn having no right to sue for negligence denied by Judge
Four days after the removal of Mr. Flinn’s suit to federal court, Minnesota Life moved to dismiss Mr. Flinn’s suit claiming his action was barred by the federal statute known as ERISA, that preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.”
There was no dispute that Mrs. Flinn’s life insurance was an ERISA employee benefit plan. Mr. Flinn’s defense was that his suit did not “relate to” the plan but to how Minnesota Life handled his benefit payment.
Judge Young in denying Minnesota Life motion to dismiss noted in passing a uniform federal law for employee benefit plans, Congress sought to preempt state “laws that present the threat of conflicting and inconsistent regulation that would frustrate uniform national administration of ERISA plans.”
In Mr. Flinn’s claims, the Judge found there was “no risk of creating a patchwork of inconsistent benefits-regulation schemes.” He ruled Mr. Flinn’s claims revolved around Minnesota Life’s conduct after adjudicating his claim and deciding to pay on it; he did not allege that Minnesota Life had analyzed his claim incorrectly or failed to follow proper procedures in analyzing his claim’s validity. “[Mr. Flinn] simply suggests that Minnesota Life violated Massachusetts law when they sent the agreed-upon benefits to someone masquerading as his legal representative.”
In a footnote, to the decision explaining Minnesota Life’s arguments that Mr. Flinn’s claims necessarily involved an ERISA plan the Judge summed up his view of the case neatly stating:
…the state law duties invoked by Mr. Flinn here do not implicate benefit determinations and thus do not relate to an ERISA plan…Had Minnesota Life left Mr. Flinn’s benefits check on the hood of a car, the fact that Mr. Flinn was to receive the check as an ERISA plan beneficiary would be irrelevant.”
The day after denying Minnesota Life’s motion to dismiss, Judge Young ordered Minnesota Life to mediate with Mr. Flinn the case.
Division of Insurance has a bulletin on P&C insurers notifying claimants of payments to attorneys
Since 2007, the Massachusetts Division of Insurance has advised property and casualty insurers paying $5 thousand or more in settlement of any third-party liability claim of an individual to give written notice if “the payment is delivered to the claimant’s attorney or other representative by draft, check or otherwise.”
In third-party liability cases, if a claimant has legal representation, the usual practice of liability insurers is to send settlement checks payable to the claimant and the claimant’s lawyer jointly. This practice recognized that under Massachusetts law the lawyer representing the claimant has a statutory attorney’s lien on the settlement for their fee. Unfortunately, while relatively rare, several cases of attorneys’ forging their clients’ names to insurers settlement checks and stealing the claimant’s share of the settlement led the division to issue a bulletin.
Bulletin 2007-15 contains the Division’s specific admonition that settling liability insurers should send a notice to the claimant at the same time the payment is sent to the attorney or other representative of the claimant stating:
- The amount of the check and the party to whom the check was mailed; and
- The address of the party to whom the check was mailed; and
- If payment is made by a draft or check, a copy of such draft or check; or
- If payment is made by the electronic transfer of funds, the amount of such transfer, the date of such transfer and the party to whom the transfer was made; and
Finally, the notice should state, “If you have any questions about this notice, please contact your attorney.”
While Minnesota Life, as a life insurer, does not have to comply with Bulletin 2007-15, the stated purpose of the bulletin in the context of Minnesota Life’s claimed negligence seems appropriate.
The primary purpose of this written notice requirement is to advise a claimant of the settlement of his or her liability claims by payment to the claimant’s attorney or other representative. Written notice provides the claimant with an independent and verifiable source of information concerning the facts of the settlement. Additionally, it provides certainty to the adverse party and insurer that the settlement has been concluded in a lawful manner. (Bulletin 2017-15).
Had Minnesota Life made one attempt to contact Mr. Flinn about the claim being made by his supposed attorney, this fraud may have been averted.