In this several-part blog series titled The Basics of an ERISA Life, Health, and Disability Insurance Claim, we discuss the basics of an ERISA life, health, accidental death & dismemberment, and disability claims, from navigating a claim to handling a claim denial, through the subsequent appeal and litigation. In Part Eighteen of this series, we discuss misrepresentations about employee benefits. Employee benefit plans are complicated. Every employer offers its own unique set of benefits to its employees, the plan participants. Plan participants naturally develop a wide variety of questions about their benefits. They will seek out the answers to those questions from whatever sources seem natural to them. Naturally, plan participants then rely on this information when making significant life plans. Unfortunately, the information relied upon may not always be correct. If that misinformation harms the employee, then a significant legal battle can arise. The question naturally becomes: What sources of information is an employee legally entitled to rely on?

As an initial matter, certain entities – ERISA fiduciaries – have a fiduciary duty not to provide misinformation to a plan participant. When they provide misinformation to a plan participant, the participant may have a meritorious claim against the ERISA fiduciary for breach of fiduciary duty. See Barker v. Am. Mobil Power Corp., 64 F.3d 1397, 1403 (9th Cir. 1995); In re Unisys Corp. Retiree Medical Benefits ERISA Litigation, 579 F.3d 220 (3d Cir. 2009). ERISA fiduciaries are usually the employer as the plan sponsor and administrator and an insurance company as the claims administrator who exercise discretion in making decisions regarding the plans or the claims under the plan. These entities are legally responsible for managing the employee benefits plan and any claims for benefits made thereunder. If a plan participant sues an ERISA fiduciary for breach of fiduciary duty and is successful at trial, they can often receive the promised benefits regardless of what the plan actually provides. See Warmenhoven v. Netapp, Inc., 13 F.4th 717 (9th Cir. 2021); McCravy v. Metro. Life Ins. Co., 690 F.3d 176, 180 (4th Cir. 2012). The court will use a variety of equitable remedies, including surcharge, equitable estoppel, reformation, and waiver, to award the promised benefits. See id.

Certain sources of information are or may be deemed reliable as a matter of law. Oral representations made over a period of time can be enough to constitute misinformation that breaches a fiduciary duty. Thus, where a plan administrator or claim administrator misrepresents that an insurance policy provides coverage for a certain event or that a death benefit is at a certain amount that conflicts with the plan language, this can constitute a breach of fiduciary duty giving rise to equitable relief. See, e.g., Sullivan-Mestecky v. Verizon Commc’ns, Inc., 961 F.3d 91, 104-05 (2d Cir. 2020) (noting that a series of oral promises over a period of time could give rise to the plan administrator breaching its fiduciary duties by making misrepresentations about the amount of the death benefit of a life insurance policy).

Another source of reliable information is written communications that come directly from the Plan Administrator. Plan administrators usually offer means of contacting them directly about plan benefits. Because of the obligation not to provide misinformation, misinformation from this source can give rise to legal liability and a meritorious breach of fiduciary duty claim. If the plan administrator provides the misinformation orally, and a legal conflict arises, the plan administrator’s employee who provided the misinformation will undoubtedly claim that they actually said something different from what the plan participant remembers. Plan participants should avoid this when possible. If a plan participant seeks information about their benefits, they should attempt to get the answer to their question in writing. If the answer comes via email to a work email address, the plan participant should forward the email to a personal email address in case they lose access to the work email account. In most jurisdictions, receiving misinformation directly from the plan administrator’s representative triggers serious legal repercussions for the plan administrator, who will have breached its fiduciary duties to the plan participant.

Another potential source of information is official employer or insurer Websites. Most employee benefit plans for large employers have some form of online website that the employee logs onto to check on the status of their benefits. The website’s information comes from the plan administrator. If a dispute over the benefits arises, the value of this representation in court is usually strong if it is the website the creates the misinformation. The case law addressing these forms of representations is not fully developed, and a plan participant should contact the plan administrator and receive confirmation of the information from a person.

Even though the above sources of information all involve the plan administrator, many plan participants receive information about employee benefits from different sources, such as their employer’s human resources department. The legal implications of misinformation from an employer depend on the particular employee benefit plan. As noted above, many times, the employer is the plan administrator. When that is the case, the above information likely applies to the employer. However, for some particularly large corporations, the plan administrator may be a different legal entity. Under these circumstances, the employer’s misrepresentations could become more problematic. That entity will usually be a plan fiduciary and if it makes misrepresentations, then it may breach fiduciary duties owed to the plan participant. If it is unclear whether an entity is a fiduciary under ERISA, then plan participant would potentially include a state-law claim for negligent misrepresentations.

The relevant information may also come from the claims administrator. The claims administrator determines when a person is entitled to benefits under the plan. The claims administrator, usually an insurance company, is also an ERISA fiduciary. However, it may not have fiduciary obligations for all aspects of its interactions with the plan participant. See Salyers v. Metro. Life Ins. Co., 871 F.3d 934, 941-42 (9th Cir. 2017). Ultimately, this aspect of the law is extremely complicated. When a claims administrator provides misinformation, this will likely be a breach of fiduciary duty. However, the individual facts will decide whether a breach occurred.

Given the complicated nature of breach of fiduciary duty claims under ERISA, it is important to confer with an ERISA attorney. Consulting with knowledgeable ERISA attorneys, such as those at the McKennon Law Group PC, is critical if you want to receive the benefits that you are entitled to under the applicable law.