ERISA-Sixth Circuit Rules That Defendant, Responsible For Sending Conversion Notices For Life Insurance, Is Not A Fiduciary Under ERISA

In Walker v. Federal Express Corporation, No. 11-5201(6th Cir. 2012)(Unpublished; discussed in yesterday’s blog), one of the issues faced by the Court was whether one of the defendants, ADP, Inc. (“ADP”), was a fiduciary for ERISA purposes.

The Sixth Circuit Court of Appeals (the “Court”) said that, under section 3(21)(A) of ERISA, a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.

The Court then said that, in this case, ADP had a limited role in administering the employer’s benefit plans and was not directly involved in plaintiff’s claim for life insurance benefits. ADP’s role-as it pertains to the case- was limited to sending notices pertaining to the conversion of group life insurance offered under a plan to individual insurance. There was no evidence that this role involved more than performing administrative duties. ADP never attempted to insert itself in the appeal process pertaining to the plaintiff’s claim. Additionally, an applicable agreement between ADP and the employer explicitly stated that ADP is not a fiduciary under ERISA. ADP did not have any authority to perform managerial functions with respect to the plan in question. Further, ADP did not perform any fiduciary function with respect to any aspect of its involvement with this plan. As such, the Court concluded that ADP was not a fiduciary for ERISA purposes.

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