Partner James L. Griffith, Jr. Secures Two ERISA Defense Victories
In recent months, partner James L. Griffith, Jr. (Philadelphia), secured victory for the defense in two ERISA misrepresentation/non-disclosure cases brought under ERISA § 502(a)(3).
In June 2020, the District Court for the Eastern District of Pennsylvania granted our client’s motion to dismiss a claim for life insurance benefits. The plaintiff alleged that our client should have paid death benefits on the life of her ex-husband because she enrolled her ex-husband for life insurance coverage, she told her employer she was divorced, the employer continued to collect group life insurance premiums from her paycheck and to provide them to our client, and our client did not disclose that divorced spouses were not eligible for coverage under the plan until the ex-husband passed away. The district court agreed that our client was not obligated to insure those benefits. See 465 Fed. Supp. 3d 501 (attached). On the benefits claim under ERISA § 502(a)(1)(B), it rejected arguments that the incontestability clause could be applied to defeat the express terms of the plan that denied coverage to ex-spouses. On the fiduciary duty claim under ERISA § 502(a)(3), the court rejected plaintiff’s argument that the employer’s alleged knowledge of the divorce could be imputed to our client under the agency theory espoused in the Ninth Circuit’s Salyers decision. It also found plaintiff had not alleged any breach of fiduciary duty or an entitlement to relief in the form of estoppel or waiver.
In January 2021, the District Court for the Western District of Pennsylvania granted our client’s motion for summary judgment in a lawsuit seeking to force our client to consider an application for long-term disability benefits, even though the plaintiff had not submitted one. The plaintiff alleged that our client provided him with false information about his ability to file for long-term disability benefits that caused him to forego submitting the requisite application. Our client used discovery to show that plaintiff engaged in behaviors during the short-term disability phase that our client alleged were fraudulent and gave rise to an equitable “unclean hands” defense. Plaintiff made the tactical decision to withdraw the misrepresentation claim to prevent the Court from considering this alleged fraud, and argued that the Court could instead provide the requested relief under ERISA § 502(a)(1)(B). However, the Court held that withdrawal of the misrepresentation claim left plaintiff without a “rational reason” why his claim was late, and thus denied the relief based on the plan terms. It also discredited the misrepresentation claim and disapproved of plaintiff’s procedural maneuvers. See 2021 U.S. Dist. LEXIS 13514 (attached). The litigation strategy played an important role in the outcome.