ERISA-Sixth Circuit Rules That A Plaintiff Cannot Recover Life Insurance Policy Proceeds Under Section 502(a)(2) of ERISA

In Walker v. Federal Express Corporation, No. 11-5201(6th Cir. 2012) (Unpublished), the plaintiff, Frances Walker, filed the suit on behalf of her deceased spouse, Clyde Walker (“Walker”), alleging violations of ERISA.

Walker was hired by one of the defendants, Federal Express Corporation (“FedEx”), on November 17, 1983, and worked as a Senior Supply clerk for FedEx from 1994 until his death on June 9, 2002. As an employee with FedEx, Walker was participating in the company’s group term life insurance policy (the “Plan”). After suffering a debilitating stroke, Walker requested a personal leave of absence and was granted time off by FedEx starting on October 24, 2001. In accordance with FedEx policy, while on leave, Walker continued to pay premiums under the Plan to maintain his life insurance coverage. FedEx terminated Walker’s employment on March 24, 2002 after he failed to return to work from his illness. Walker did not exercise his right to convert the group life insurance coverage under the Plan to individual life insurance coverage. FedEx claims this right expired 31 days after May 1, 2002. The parties dispute as to whether FedEx gave Walker notice of his right to convert. Walker died on June 9, 2002. The Plan refused to pay any life insurance benefit on Walker’s behalf, on the grounds that he did not convert. This suit ensued. The district court granted, among other things, summary judgment in favor of FedEx on the issue of whether any life insurance benefit may be payable with respect to Walker.

In analyzing the case, the Sixth Circuit Court of Appeals (the “Court”) ruled that the plaintiff could not seek recovery under section 502(a)(2) of ERISA. Section 502(a)(2) allows a participant or beneficiary to sue a fiduciary for appropriate relief under section 409 of ERISA, and section 409 permits only recovery for the plan as a whole, not the individual recovery the plaintiff seeks. The plaintiff’s claim-made with respect to a Plan offering life insurance coverage- is beyond the Supreme Court’s decision in Larue v. Dewold, Boberg & Associates, Inc., which allows individual recovery under section 409 in the case of a defined contribution pension plan. As such, the Court upheld the district court’s summary judgment in favor of FedEx on the issue of whether the life insurance benefit may be recovered.

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