In Vest v. Resolute FP US Inc., No. 18-5046 (6th Cir. 2018), plaintiff Mead Vest contends defendant Resolute FP US Inc. breached its fiduciary-duty obligations set forth in ERISA when it failed to notify her late husband of his right to convert a group life insurance policy to an individual life insurance policy after he ceased employment and began drawing long-term disability benefits. The district court ruled plaintiff did not adequately plead a breach-of-fiduciary-duty cause of action. The Sixth Circuit Court of Appeals (the “Court”) agreed with the district court and affirmed its decision.
In this case, Arthur Vest worked nearly forty years for Resolute. During his employment, Resolute offered group life insurance benefits (“the Plan”) to its employees in the form of base and optional additional life insurance coverage; Resolute provided coverage equal to an employee’s annual salary and permitted employees to purchase optional additional coverage. Arthur purchased an additional $300,000 of coverage.
Due to complications arising from diabetes, Arthur ceased working in September 2015, and began drawing short- and then long-term disability benefits. Under the Plan, employees maintained base life insurance coverage when receiving long-term disability benefits, but lost the optional additional coverage. However, employees had the right to port or convert the expiring additional group coverage to individual coverage within 31 days of ending active employment. Accordingly, Resolute ended Arthur’s additional coverage on May 18, 2016. Resolute did not, however, provide him with any information concerning his right to port or convert the coverage that ended, and Arthur never did port or convert. He died in October 2016, and Resolute’s life insurance carrier paid Vest’s beneficiary, plaintiff here, only the base coverage amount.