The Friday Five: Five Current ERISA Litigation Highlights - February 2018
ERISA cases related to life insurance policies and related benefits were the focus of a number of reported decisions at the end of 2017 and continuing into the new year. This month’s issue of The Friday Five highlights four such cases, and also provides an update on the DOL’s new claims procedures requirements.
The Saul Ewing Arnstein & Lehr Employee Benefits/ERISA Litigation Team
- Is a Beneficiary Change Form Executed Via an Insured’s Thumbprint but Never Processed by the Insurance Company Effective? The Southern District of Florida answered in the affirmative. In granting summary judgment for the newly designated beneficiary, the court determined that the thumbprint of a disabled insured was sufficient to authorize a change of beneficiary. Also, although the form was never processed by the insurer, the court determined that the form could not be avoided, and the insured’s wishes defeated, merely by the insurer’s administrative error. Hassoun v. Reliastar Life Insurance Co., No. 17-cv-60528, 2018 WL 490617 (S.D. Fla. Jan. 19, 2018).
- Does an Insurer’s Apparent Confusion Evidence an Abuse of Discretion? The District of Nebraska determined that the insurer abused its discretion and awarded the plaintiff more than $90,000 in life insurance benefits and the opportunity to move for attorney fees. The court focused on confusion between the employer and insurer related to the requirements for obtaining optional life coverage, along with the insurer paying “lip service” to inapplicable policy language, ignoring the plaintiff’s requests for information, and making coverage decisions before obtaining all records. Sepulveda-Rodriguez v. Metlife, No. 16-cv-507, 2017 WL 6628116 (D. Neb. Dec. 28, 2017).
- Does a Lump Sum Payment Provision of a Life Insurance Policy Mandate Strict Enforcement? The Eastern District of Pennsylvania found that an insurer breached its fiduciary duties by giving a life insurance beneficiary access to a retained asset account generating interest for the insurer where the plan provided for a lump sum payment. Huffman v. Prudential Life Insurance, No. 10-cv-5135, 2017 WL 6055225 (E.D. Pa. Dec. 7, 2017). The beneficiaries later won certification for a subclass of the plaintiffs.
- Is an Insurer’s Mistaken Ten-Fold Increase in Life Insurance Enforceable? The Northern District of Alabama excused an insurer that issued an acknowledgement form stating that the face value of a life insurance policy was $250,000, when the correct value was only $25,000. The court determined that the form was not sufficient to increase coverage without any corresponding increase in premiums, in addition to other defects in the claimant’s position. Patterson v. MetLife, No. 16-cv-1189, 2017 WL 6508581 (N.D. Ala. Dec. 20, 2017).
- DOL Announces April 1, 2018 Application of New Claims Procedure Requirements. The DOL announced that a final rule amending the claims procedure requirements for employee disability benefit plans governed by ERISA will now go into effect on April 1, 2018. Our ERISA team will be monitoring any trends in litigation resulting from claims filed after the effective date.