The first quarter of 2011 continued to be an active time for courts adjudicating challenges to insurers’ use of retained asset accounts (RAAs) to pay ERISA-governed employee benefits. In late March, the U.S. District Court for the District of Nevada entered final approval of a class settlement in McCreary v. Aetna Life Insurance Company and dismissed the class complaint with prejudice. In McCreary, the representative plaintiff had alleged that the defendant violated ERISA’s fiduciary duty provisions by delaying the payment of life insurance benefits. According to the plaintiff, the benefits were delayed as a result of their being paid through RAAs rather than through a lump sum payment, as mandated by the plan.
Elsewhere, a Pennsylvania federal district court declined to grant an insurer’s motion to dismiss an action involving RAA s. The court instead allowed the parties to conduct discovery, and noted that the defendant could reassert its substantive arguments in support of dismissal after such discovery occurred.