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The U.S. Supreme Court recently declined to review a significant decision of the Second Circuit which (1) clarified the scope of California’s statutory ban on discretionary clauses in life and disability insurance contracts, and (2) clarified the meaning of a “full and fair review” under the version of ERISA’s claims-procedure regulation applicable to all claims…

In Vest v. Resolute FP US, Inc., 905 F.3d 985 (6th Cir. 2018), the Sixth Circuit Court of Appeals upheld dismissal of a claim by the beneficiary of a deceased employee that the employer breached its fiduciary duty under ERISA §502(a)(3), 29 U.S.C. §1132(a)(3) by failing to notify the decedent of his right to port or convert his group life insurance coverage to an individual life insurance policy after he ceased active employment.
Continue Reading Sixth Circuit Finds No Fiduciary Duty To Give Notice Of Conversion/Portability Rights On Termination Of Employment

In Hannan v. Hartford Financial Services, Inc., (2d Cir., April 25, 2017), the Second Circuit Court of Appeals affirmed dismissal of a potential ERISA class action against Family Dollar Stores, its employee benefits plan, and the plan’s group life insurance provider (Hartford), rejecting allegations by plan participants that the plan defendants had engaged in a so-called “cross-subsidization” scheme in violation of federal law. The Second Circuit confirmed that neither the negotiation of premium rates nor any alleged subsidization component between different types of life insurance provided under the plan constituted a breach of fiduciary duty or prohibited transaction under ERISA.

The background facts, as alleged in the complaint and summarized in the court decisions, are as follows. Family Dollar contracted with Hartford to provide group life insurance coverage to employees under the Family Dollar Stores, Inc. Group Insurance Plan (the “Plan”).  All employees were automatically enrolled in basic life insurance under the Plan at no cost to them. They also were offered the option (but were not obligated) to purchase supplemental life insurance coverage for which they would pay the premiums. 
Continue Reading Second Circuit Upholds Dismissal of ERISA Claims Against Plan Defendants for Alleged “Cross-Subsidization” Scheme

In Erwood v. Life Ins. Co. of N. Am., Civil Action No. 14-1284, 2017 U.S. Dist. LEXIS 56348 (W.D. Pa. 2017), a Federal Judge ruled after a bench trial that WellStar Health System Inc., the plan administrator of a Group Life Insurance Program (“Plan”), breached its fiduciary duty “by misrepresenting and failing to adequately inform [plaintiff] of the need or the means to convert two group life insurance policies purchased by her now-deceased husband[.]”

Plaintiff initially asserted claims for benefits (under 29 U.S.C. § 1132(a)(1)(B)) against the Plan and Life Insurance Company of North America (“LINA”), and for breach of fiduciary duty (under 29 U.S.C. § 1132(a)(3)) against WellStar and LINA. The court granted summary judgment dismissing the benefits claim, but denied summary judgment on the fiduciary duty claim. Plaintiff and LINA subsequently settled, leaving WellStar the sole defendant for trial, with the sole claim of breach of fiduciary duty.

The Plaintiff is the widow of a neurosurgeon who was employed by WellStar. The Plaintiff’s husband purchased life insurance policies as part of the Plan. The Plaintiff’s husband was diagnosed with a malignant brain tumor, forcing him to take FMLA leave, which subsequently became an approved claim under WellStar’s long term disability (“LTD”) plan. While her husband was on disability, plaintiff told WellStar that she had questions about her husband’s benefits, and WellStar set up a meeting with a benefits representative familiar with the Plan. The Court found that WellStar repeatedly assured plaintiff and her husband that “all [of their] coverage [is] going to remain the same[.]” A subsequent mailing by WellStar disclosed that conversion of life insurance coverage would be necessary after 36 weeks of leave, but did not include forms or more information about conversion, or the date by which conversion was required. After plaintiff’s husband’s death, LINA denied her claim under the Plan on the ground that the coverage had lapsed.
Continue Reading ERISA Plan Administrator’s Failure to Notify Beneficiary of Life Insurance Conversion Rights Breaches Fiduciary Duty

In Becker v. Williams, — F.3d –, 2015 WL 348872 (9th Cir. Jan. 28, 2015), the plan participant called the plan administrator to change the beneficiary of his pension plans from his ex-wife to his son. His employer sent him beneficiary change forms, but he never completed them in the years before he died. After his death, both the son and ex-wife claimed the benefits, and the employer interpleaded.
Continue Reading Beneficiary Designation Forms Are not Plan Documents; Change of Beneficiary By Phone Was Sufficient

In Rice v. ReliaStar Life Ins. Co., 770 F.3d 1122 (5th Cir. 2014), the police responded to a 911 call about the decedent, Rice, sitting in his car, in his garage, with a gun to his head, threatening suicide. After various failed efforts by the police to get him to surrender, he walked toward the police, refused to drop his gun, said “I want to commit suicide,” and was shot and killed.
Continue Reading Insurer Reasonably Denied AD&D Claim Following “Suicide By Cop”

In Hall v. Met. Life Ins. Co., 750 F/3d 995 (8th Cir. 2014), the plaintiff’s husband participated in a life insurance plan, in which he named his son as beneficiary. After he married plaintiff, he executed a change of beneficiary form, but it was not filed until after he died. Shortly before his death, he executed a will that purported to designate plaintiff as beneficiary of the life benefit. Met Life denied plaintiff’s claim, and the court upheld the determination.
Continue Reading Administrator is Entitled to Require Strict Compliance With Plan Procedures

Life insurance plans, accidental death and dismemberment plans, and disability plans often exclude coverage for losses that occur while the participant is intoxicated, or where the loss is intentionally self-inflicted. Though these exclusions are often very clear, they are often the subject of contentious disputes over what, exactly, they mean, or were intended to mean, or should be interpreted as meaning.

A example of this can be found in Rau v. Hartford Life & Acc. Ins. Co., 2013 WL 1985305 (D. Conn. May 13, 2013). In Rau, Katie Rau went out one night and got monumentally intoxicated (0.3% blood alcohol level). While being driven home by a friend, she pulled herself from the passenger seat into the open window of the pickup truck, with only her legs inside. After exclaiming “look what I can do,” she fell backwards out of the pickup, hit her head on the pavement, and died.
Continue Reading “Injured While Intoxicated” Means What It Says

The Second Circuit recently issued a decision on autoerotic asphyxiation (which I will call AEA because typing autoerotic asphyxiation really difficult). The decision doesn’t break any new ground, but it’s as good an excuse as any to write about this never-boring topic.

For those of you that have led a highly sheltered life (or were not fans of INXS or Kung Fu) the idea behind AEA is that, if you restrict oxygen while masturbating, the resulting orgasm is better than it would have been had you been able to breathe. According to Wikipedia: “The carotid arteries (on either side of the neck) carry oxygen-rich blood from the heart to the brain. When these are compressed, as in strangulation or hanging, the sudden loss of oxygen to the brain and the accumulation of carbon dioxide can increase feelings of giddiness, lightheadedness, and pleasure, all of which will heighten masturbatory sensations.” Occasionally, electricity is also used, apparently to similar effect.

Which, of course, brings us to ERISA.Continue Reading Autoerotic Asphyxiation and ERISA