This month’s Friday Five covers an appellate ruling on a complicated case raising both state and federal claims, an instance of procedural improprieties in the administrative review process informing the court’s substantive benefits decision, an equitable ERISA claim for an administrator’s payment of benefits to an incorrect party, another court refusing to allow equitable ERISA relief for an innocent misrepresentation of benefits, and a court insisting on an orderly process for the review of ERISA claims during litigation.
- Eleventh Circuit Quickly Disposes of Complicated Long-Term Disability Case. The claimant was a radiologist in a long-running long-term disability case implicating benefits under four individual disability policies, and one group disability policy. The individual policies were governed by state law and proceeded to a jury trial, where the jury determined that the claimant failed to establish his disability or show a breach of contract. The group disability policy was governed by ERISA and proceeded to summary judgment. After a lengthy opinion examining whether the jury’s decision that the claimant was not disabled had preclusive effect on the ERISA claim, the trial court determined that the claimant was not entitled to relitigate his disability under ERISA. As a result, the trial court entered summary judgment for the administrator. Despite the lengthy and technical background, the Eleventh Circuit quickly disposed of the appeal, upholding the trial court’s decision in a one-page per curiam opinion without further analysis. Allen v. First Unum Life Ins. Co., No. 23-11039, 2025 WL 289490 (11th Cir. Jan. 25, 2025).
- Administrator’s Procedural Errors Impact Substantive Denial of Benefits. In a recent short-term disability case, the court initially expressed its skepticism of the administrator’s review process after the administrator denied a claim when the claimant failed to show disability for eight consecutive months, despite the policy only requiring disability for eight consecutive days. This initial administrative blunder impacted the court’s substantive review of the administrator’s decision to deny benefits. Even under the arbitrary and capricious standard, the court harshly discounted the administrator’s reliance on a medical resource that did not physically examine the claimant. Instead, the court credited the treating providers, while criticizing the administrator’s medical resource for failing to perform an adequate review. The court granted summary judgment for the claimant. Liggett v. Principal Financial Group, No. 22-11183, 2025 WL 275119 (E.D. Mich. Jan. 23, 2025).
- Court Allows Section 1132(a)(3) Equitable Relief Claim to Proceed Against Retirement Benefits Administrator That Misdirected Funds. The decedent had two retirement funds with her former employer, which collectively held over $2 million in funds. Despite only having beneficiary designations for one of the retirement funds, the administrator distributed both accounts according to the beneficiary designations, which resulted in a dispute. The administrator demanded that the beneficiaries return the amounts distributed in error but failed to recover over $945,000 in benefits. The court, on a motion to dismiss, concluded that the plaintiff alleged sufficient facts to state that the administrator had requisite discretionary authority to qualify as a fiduciary for purposes of an ERISA Section 1132(a)(2) claim. As a result, the plaintiff was permitted to proceed with the breach of fiduciary duty claim and seek equitable relief in the form of a surcharge to recoup the misdirected funds. McKinney v. Principal Financial Services, Inc., No. 23-1578, 2025 WL 283210 (N.D. Ala. Jan. 23, 2025).
- Employer’s Mistake in Informing Claimant of Benefit Amounts Insufficient to Change Benefit Caps Identified in the Plan Documents. The Sixth Circuit recently reviewed “an unfortunate set of circumstances” where an employer mistakenly informed an employee that his long-term disability benefits would total around $92,000 per year, when, in reality, he was only entitled to $60,000 in benefits. After the employee discovered the error while making a claim for benefits, the employee sued, arguing that the employer should be estopped from relying on the lower amount to cap benefits. The trial court granted a motion to dismiss the estoppel claim, and the Sixth Circuit affirmed. The appellate court agreed that the plan documents capping benefits at $60,000 were unambiguous, while the surrounding circumstances were not extraordinary enough to alter the plan terms. For example, according to both courts, the plaintiff could have calculated his own benefits, and there was no evidence of intentional misconduct by the employer. While the Sixth Circuit was sympathetic to the plaintiff’s claims, it agreed with the trial court that no relief was warranted. Higgins v. Lincoln Electric Co., No. 23-5862, 2025 WL 213846 (6th Cir. Jan. 15, 2025).
- Court Rejects Premature Attempt of Parties for Merits Rulings Before Full Record is Before the Court. Parties to a recent long-term disability dispute jumped-the-gun on briefing substantive issues before the court. The court issued an order directing the parties to brief the narrow issue of the applicable standard of review. In response, the plaintiff filed a motion styled as a request for partial summary judgment. The defendant focused more directly on the standard of review but only provided selective excerpts of the administrative record to the court. The court denied both motions without prejudice, noting that they were premature. Instead, the court sent the parties back to the drawing board and asked them to meet and confer in order to submit the complete administrative record to the court, then agree upon an orderly process to dispose of the case. Andrews v. Reliance Standard Life Ins. Co., No. 23-415, 2025 WL 93001 (S.D. Ala. Jan. 15, 2025).
