Court Opinion

ID: 9007098
Source: CourtListenerOpinion
Date Created: 2022-11-27 13:40:47.591564+00
Date Added: 2024-06-11T17:11:19.365063
License: Public Domain

WIDENER, Circuit Judge,
concurring in part and dissenting in part:
I concur in all of the majority opinion except for part III(B), and as to that, I respectfully dissent. I suggest that it is contrary to logic to hold, as does the majority, that Margaret is entitled to all future benefits of the group life insurance policy because she is Leonard’s “widow” while also holding that she is not entitled to the benefits already paid. Margaret, as the proper beneficiary, I think, is entitled to all policy benefits, both past and future.
The general law is that an insurer can only discharge its obligation by paying the person entitled to the proceeds of the insurance policy. See Appleman, Insurance Law and Practice § 1661. If a named beneficiary of a policy is described as the insured’s wife and the insurer pays that beneficiary in good faith, then the insurer’s obligation is discharged even if the insured’s true wife later makes a claim upon the proceeds. See Appleman § 1661. However, if the beneficiary is described as the insured’s widow, then the insurer can only discharge its obligation by paying the true widow of the insured. See Union Labor Life Ins. Co. v. Parmely, 270 Md. 146, 311 A.2d 24, 26 (1973); Appleman § 1661. If the insurer pays the wrong widow, the true widow may still recover from the insurer, and the insurer must bear the burden of recouping the wrongly paid proceeds. See Parmely, 311 A.2d at 26; Appleman § 1674.
There is no denying that Parmely is factually on point with the instant case in every respect, yet the majority does not find persuasive its holding because the majority claims that its result is inconsistent with principles developed under ERISA. The majority states, “(1) a court should not disturb a plan administrator’s discretionary determination of benefit eligibility when such a determination involved construing ‘disputed or doubtful terms,’ and (2) an insurer discharges its liability under an insurance policy by making good faith payments to a purported beneficiary without notice of competing claims.” Slip op. 8-9 (citations omitted). When applied to the facts of this ease, I submit that reasoning does not withstand scrutiny.
First, I suggest that “widow” does not qualify as a disputed or doubtful term.* It was the duty of the insurance company to ascertain who was Crosby’s widow; the fact that it erred in this determination does not convert widow into a disputed or doubtful term. Second, it is true that under general principles of insurance law an insurer may discharge in some circumstances its obligation by a good faith payment to a purported beneficiary. See Appleman § 1661. However, such a discharge occurs only under limited circumstances which are not present here. See Appleman § 1661. If Joan had been the named beneficiary under the policy and described as Crosby’s wife, then the majority would be correct in holding that the insurer discharged its obligation by making a good faith payment to Joan. See Rogers v. Unionmutual Stock Life Ins. Co., 782 F.2d 1214, 1217 n. 2 (4th Cir.1986) (distinguishing Parmely because beneficiary specifically designated by name); Appleman § 1661. However, Crosby’s widow was the designated beneficiary of the policy, and a good faith payment to Joan does not discharge the insurer’s obligation to Margaret. See Parmely, 311 A.2d at 26; Appleman § 1661. This too is a general principle of insurance law, and I suggest that since the majority relies on general principles of insurance law to support its holding, all of them which apply should be considered. This principle would require the reversal of the district court and the award to Margaret of all benefits wrongly paid to Joan.
Finally, I would add a note of caution. I find it quite disturbing that hardly a term passes in which a claimant under a group insurance policy for the benefit of employees has not had his claim turned down by *86the insurance company on account of ERISA preemption. There is no doubt that under general principles of insurance law Margaret should recover in this case all of the payments, past and future. But by basing the outcome, at least in part, on the favorable discretion of the Plan Administrator, the insurer evades liability it would have had under the policy had the ERISA statutes never been enacted. It does not require much foresight to predict that a Plan Administrator which is also the insurer will exercise its discretion in favor of non-payment under the policy. That is the case here. In such cases, I would simply hold that a violation by a Plan Administrator of a clearly established legal principle is an abuse of discretion.

 widow—A woman who has lost her husband by death; the female survivor of a marital union. Webster’s New Collegiate Dictionary 978 (2d ed. 1956).