Many employees are in the dark when it comes to what rights and benefits they have. But just because a benefit may have expired does not mean that they do not have a claim. Check out a recent decision which confirms that there is light in the darkness.
Many employees believe they have a benefit in place, such as life insurance, but in fact they have no benefit and are being kept in the dark. The life insurance may have been in place for many years and then, due to sickness, there is a termination of employment or coverage lapses due to a divorce. Perhaps the employer never provided the summary plan description, policy or certificate of insurance to the employee. There simply may be a few pieces of paper in the former employee's possession showing enrollment and deduction of premiums from pay stubs. There may have even been assurances that the life insurance would continue after the employment ended. Snitselaar v. Unum Life Insurance Company of America, 2019 WL 279995 (N.D. Iowa Jan. 22, 2019, is a recent case that involves this common situation where the insured has no idea that coverage is no longer in place.
The employer failed to give notice to the employee of his right to convert his life insurance to individual coverage. If someone ceases employment due to some life-threatening condition such as cancer, it is important that they know that their coverage must be converted to continue. Such notice would at least let the employee know that the coverage was not continuing unless he or she took some affirmative action. Without some notice or means to identify the potential problem, those who are due to receive life insurance benefits will not discover that they have no coverage until the insured dies and they make a claim. Then, it is too late. The employer will contend that the life insurance terminated, and no benefits are due.
Knowing how to handle this claim scenario is important. While some lawyers may simply say there is no case, the lawyer in this case knew that a breach of fiduciary duty claim could be asserted. The insured was never given a copy of the policy or certificate of insurance nor a conversion notice. Neither the employee nor the covered dependent had any way of knowing that coverage had lapsed. They did not know their rights. The documents they had, while not an official policy, did give some indication that the coverage continued in place.
It is important to know ERISA and its case law in cases such as these. Experience matters! A common argument from defense attorneys will be that you cannot maintain a benefit claim and a breach of fiduciary duty claim in the same lawsuit, but that's not true. A breach of fiduciary duty claim can be asserted in the alternative and is especially critical when the claim for benefits is iffy. The Court understood that here. It denied the benefit claim and let the insurer, Unum, out of the case. However, the employer remained on the hook for the damages it caused which was $60,000 — the full amount of the dependent basic and supplemental life insurance coverages.
Many employees are in the dark regarding their benefits. That is why we are here. We like to shine a light on the problem so fairness and justice may prevail.