First Circuit Decision in Merrimon v. Unum Life Insurance Company of America in Alignment with DRI Amicus Brief
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A recent decision in the
This is a certified class action matter involving the payment of ERISA-governed life insurance benefits. As is common in the life insurance industry,
The named plaintiffs received all of the benefits to which they were entitled under the policy, but then filed a putative class action, alleging that paying benefits through RAAs violated Sections 404(a) and 406(b) of ERISA, 29 U.S.C. sections 1104(a), 1106(b), and seeking appropriate equitable relief under 29 U.S.C. section 1132(a)(3). On cross-motions for summary judgment, Judge
Specifically, the district court held that
The First Circuit reversed the district court's holding. The court rejected the plaintiffs' arguments that the insurer continued to act as a fiduciary after it established the RAAs. Instead, the First Circuit held that the insurer fully discharged its fiduciary duties by establishing the RAAs in accordance with the plan documents. The court further reasoned that once the insurer paid the death benefits under the terms of the plan, its duties as an ERISA fiduciary ceased, and any further obligation that insurer had to the beneficiaries constituted a creditor-debtor relationship governed by state law. The court concluded that setting the interest rate, even though the plan stipulated no specific rate, did not relate to plan management under ERISA, but rather to management of the RAAs, because the funds backing the RAAs were not plan assets, and no further fiduciary duties under ERISA attached once the insurer delivered the guaranteed death benefit to the beneficiary. Consequently, the First Circuit found that the plaintiffs were not entitled to relief and vacated the judgment against the insurer.
DRI brief author
To read DRI's brief in its entirety, click here (dri.org/ContentDirectory/Public/Amicus%20Briefs/2013%20Merrimon%20v.%20Unum%20%5BERISA%20fiduciary%20duties%5D.pdf).
[Category: Law/Legal]
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