ERISA-Second Circuit Upholds Decision Denying Pension Plan Benefit, But Vacates Decision Denying Welfare Plan Benefit

In Re: Derogatis, Docket Nos. 16-977-cv, 16-3549-cv (2nd Cir. 2018) has tandem cases, in which plaintiff-appellant Emily DeRogatis appeals the judgment of the district court awarding summary judgment to defendants-appellees, the trustees of two union-affiliated employee benefit plans, on her claims for relief asserted under ERISA.  The benefit plans at issue are the Pension Plan, which governed benefits payable to Emily as a surviving spouse after the death of her husband, Frank, and the Welfare Plan, which governed the DeRogatises’ entitlement to health benefits during and after Frank’s lifetime.  The conflict arises primarily because of certain oral miscommunications by Plan personnel to the DeRogatises before Frank’s death in 2011.

Upon reviewing the case, as to the Pension Plan, the Second Circuit Court of Appeals (the “Court”) concluded that the Pension Plan trustees correctly denied DeRogatis’s request for an augmented survivor benefit following her husband’s death.  It therefore affirmed the district court’s decision denying DeRogatis’s claim under ERISA § 502(a)(1)(B) against the Pension Plan for benefits due.  As to DeRogatis’s claim under ERISA § 502(a)(3) for breach of fiduciary duty, the District Court reasoned that a plan administrator cannot be held liable for unintentional misrepresentations made about the plan’s operation by its non-fiduciary, “ministerial” agent and on this basis denied the claim.  The Court rejected that ruling.  Nonetheless, it affirmed the judgment denying DeRogatis relief under this section because the Pension Plan’s summary plan description (“SPD”) adequately described the eligibility requirements for the benefits in question and thereby satisfied the trustees’ fiduciary duty to provide complete and accurate information to plan participants and beneficiaries.  Therefore, the summary judgment entered by the district court for the Pension Plan defendants is affirmed.

As to the Welfare Fund, DeRogatis asserts an ERISA § 502(a)(3) claim for breach of fiduciary duty against the trustees of the Welfare Fund.  The district court granted summary judgment for defendants on this claim on the same “ministerial employee” ground as described above.  Again, the Court rejected that analysis.  It disagreed, too, with the district court’s conclusion that the Welfare Plan SPD explained clearly its participants’ options to receive post-retirement health benefits. Given the evidence that Welfare Fund agents misstated material aspects of those same benefits when communicating with the DeRogatises, the Court identifies an open question of material fact concerning whether the Welfare Plan trustees breached their fiduciary duty to provide plan participants with complete and accurate information about their benefits.  Therefore, the Court vacated the judgment entered in favor of the Welfare Plan defendants, and remanded that part of the case back to the district court.

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