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Breach of Fiduciary Duty: E.D. Ark.

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  • Breach of Fiduciary Duty: E.D. Ark.

    In a recent case from Arkansas, the court deals with a case in which the Defendant refused to pay benefits on a life AD&D claim. The Defendant filed a claim for benefits based on her son' s death: $10,000 (the basic amount of life insurance for dependents) and, because he died in an accident, an AD&D benefit (set at 20% of Frye's elected AD&D coverage on her own life, which was four times her annual salary). Acting as the plan's claims administrator, MetLife denied the Plaintiff's claim. MetLife explained that the life insurance and AD&D policy only covered dependents less than twenty-three years old and the Plaintiff's son had turned twenty-three on March 17, 2014 and as such was ineligible for coverage during the 2015 plan year. Through a salary credit, American Greetings refunded The Plaintiff's premiums for that year.

    With respect to the fiduciary duty, the court found that:

    American Greetings and MetLife failed to administer this plan solely in the interests of participants and beneficiaries situated like Frye and Gyngard. This way of doing plan business gave MetLife 11 essentially risk-free windfall profits from employees who paid premiums on non-existent benefits but who never filed a claim for those benefits." McCravy v. Metropolitan Life Insurance Co., 690 F.3d 176, 182-83 (4th Cir. 2012). In its path-marking application of Amara, the Silva Court recognized this very point during its discussion of remedies, citing the McCravy case with approval. Silva, 762 F.3d at 725. McCravy involved MetLife. And a substantially similar plan provision and administrative structure were at issue.
    In the end, the court entered judgment for the Plaintiff as a surcharge against American Greetings and MetLife for the amount she would have received had the plan's coverage been in place when her son died in the accident and held that she was also entitled to a reasonable attorney's fee, costs, and interest as allowed by law. The opinion is attached below.
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