You already know that evidence of a “conflict of interest” can change the standard of review the court applies in ERISA claims.

But proper structuring of multi-employer benefit plans can avoid an inherent conflict of interest.

Here’s the case of Foltz v. Barnhart Crane and Rigging, Inc., __ Fed. Appx. __ (6th Cir. February 29, 2016)(This case also shows that the Worker Compensation exclusion can trump ERISA disability benefits.) [PDF]

FACTS.  Foltz worked at an oil refinery and was exposed to toxic vapor, which caused chemical pneumonia. He required three months of hospitalization. Foltz submitted a disability claim under the ERISA plan. The plan excludes disability benefits if “benefits are payable under any Worker’s Compensation Act….”  The Plan concluded his illness was work-related and denied his disability claim.

TRIAL COURT: The Plan properly exercised its discretion in denying Foltz’s ERISA disability claim because of the Worker Compensation exclusion.

SIXTH CIRCUIT HELD: AFFIRMED.

  1. “When an ERISA plan relies on an exclusion to deny benefits,…the plan (not the employee) has the burden of proving the exclusion applies.”  Op. at 5.
  2. “[T]he evidence in the administrative record clearly shows that the Fund carried its burden to establish that Foltz’s illness was, in fact, work-related.”  Op. at 5.
  3. As a multi-employer benefit plan, “individual trustees on the Board receive no personal financial benefit from approving or denying claims.  This structure does not create an inherent conflict of interest….”  Op. at 6.