Breach of Fiduciary Duty Claims Under ERISA
Long term disability, Life Insurance, and Accidental Death claims are normally brought under the statute allowing for benefits to be recovered. However, there are certain instances when a breach of fiduciary duty claim is appropriate under the ERISA statutes. A breach of fiduciary duty claim may be brought for equitable relief under 29 U.S.C. 1032(a)(1)(3)when the plan administrator, or employer that sponsors the plan, fails to fulfill their financial obligations to the participant or when the administrator does not disclose proper information and this breaches a fiduciary duty to the employee. This can occur in cases in which 401K plans are involved that were offered to the participant through work, as part of an employee benefits program. If the investments that were made by the administrator of the plan are not done in good faith or with the skill of a person in similar situations, or by using proper business judgment, and the stock drops to an unreasonably low amount, certain cases allow for a breach of fiduciary duty claim to be brought if the plan administrator did not give the participant full and adequate information on these investments.
In other cases, the plan sponsor or administrator may fail to give the participant plan documents. For example, a Life Insurance Plan may say the plan is for one amount and a plan administrator may represent orally to the employee that the plan is worth more than the written plan states. In recent cases like this, our firm has brought cases against large employers and the insurers for breach of fiduciary duty alleging that the oral misrepresentation of the benefits by the plan administrator breaches their fiduciary duty to the employee/participants. This is because the participants do not always have access to the written plan information that they are supposed to be given.
For example, a case against a Missouri company (which remains confidential) that was brought by Phillip A. Tatlow on behalf of the client, against the employer, for offering insurance coverage for approximately $400,000.00, when the written plan stated that the benefits were less than that (approximately $200,000.00) was recently litigated and settled after mediation. However, the higher amount of insurance coverage is what the participant thought she was buying when she paid premiums to purchase the plan because a company/employer representative told her that she could purchase the higher amount; she did so and paid premiums over a number of years. Later, when it came time to make a claim under the plan, the plan sponsor and employer stated that the benefits were limited to the lower number because of what the written plan documents stated in the fine print of the plan. However, the plan participant claimed that she had never been given the plan documents as required under ERISA, through the mail or through the internet and that the company defrauded her by orally misrepresenting the terms of the plan. We represented the client against the employer and insurance company and claimed that the Defendants were liable for oral misrepresentation of the terms of the plan under a breach of fiduciary theory and we asked for equitable relief under 29 U.S.C. 1032(a)(1)(3). In the end, this case was resolved in mediation for a substantial sum of money. The case name and details are subject to a confidential agreement. However, cases in which employers misrepresent the terms of the coverage, can be brought under 29 U.S.C. 1032(a)(1)(3) to:
(A) enjoin any act or practice which violates any provision of the …plan, or
(B) obtain other equitable relief (i) to redress such violations….
For the duties required of a fiduciary under ERISA, other parts of the statute should be consulted.
[A] fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and-
(A) for the exclusive purpose of:
(i) providing benefits to participants and their beneficiaries; and :
(ii) defraying reasonable expenses of administering the plan;
(B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;
(C) by diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and
(D) in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this subchapter and subchapter III of this chapter.
29 U.S.C. 1104(a)(1)(A)(B)(C) & (D).
To determine whether you have a valid claim for benefits under ERISA or a valid breach of fiduciary duty, you should choose an attorney that regularly handles ERISA cases because this is a technical area of the law and many attorneys lack the knowledge to handle such cases.