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.
Mead Vest commenced this one-count ERISA action thereafter. She alleges Resolute breached its fiduciary duty by failing to inform Arthur of his right to port or convert the optional additional life insurance coverage and requests “appropriate equitable relief” under ERISA § 502(a)(3). The district court held Resolute had no such duty, and dismissed the complaint.
Upon reviewing the case, the Court said that it has recognized three conditions under which a fiduciary may breach its disclosure duty:
(1) an early retiree asks a plan provider about the possibility of the plan changing and receives a misleading or inaccurate answer or (2) a plan provider on its own initiative provides misleading or inaccurate information about the future of the plan or (3) ERISA or its implementing regulations required the employer to forecast the future and the employer failed to do so. In this case, plaintiff’s allegations – that Resolute was required to disclose life insurance conversion information- did not meet any of these conditions, and thus does not please a breach of fiduciary duty claim under ERISA.