The U.S. District Court for the Eastern District of Virginia held that an employer breached its fiduciary duty by misleading an employee regarding his eligibility to participate in the employer’s life insurance plan. In this case, an employee who was on long-term disability inquired on several occasions as to whether he was eligible to participate in the employer’s life insurance policy. The employer responded to these inquiries by allowing the employee to enroll in the plan and deducted amounts from his paycheck to pay for the premiums. Following the employee’s death, his beneficiary’s claim for benefits was denied because the employee was not working enough hours to be eligible for coverage under the terms of the plan. The court held that the employer had the exclusive role to determine eligibility and that the employer had a fiduciary duty to make these determinations “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use….” The court notes that the employer failed in carrying out this duty by allowing the employee to enroll in the plan, encouraged him to believe that he was covered by the plan, and deducted premiums from his salary to pay for the plan. As this case illustrates, plan administrators have a responsibility to understand and clearly communicate the eligibility provisions of their plans. (Lewis v. Kratos Defense & Security Solutions Inc., E.D. Va. 2013)
Register now for your free, tailored, daily legal newsfeed service.
Questions? Please contact email@example.comRegister
Employer breached fiduciary duty by allowing ineligible employee to enroll in plan
Popular articles from this firm
If you would like to learn how Lexology can drive your content marketing strategy forward, please email firstname.lastname@example.org.
Related topic hubs
Wal-Mart Stores Inc
"Generally, this service is wonderful. I find that the employment law newsfeeds are extremely helpful and relevant. The quality of the articles is usually quite good. The website provides an avenue for quick research regarding various employment law issues."