An employee welfare plan administrator may be held liable for unintentional misrepresentations made concerning the plan by its non-fiduciary agent
In Re Derogatis v Board Of Trustees of the Welfare Fund of The International Union of Operating Engineers Local 15, 15A, 15C & 15D, AFLCIO, et al., USCA, 2nd Circuit, Dockets Nos. 16-977-cv, 16-3549-cv
Emily DeRogatis appealed a District Court ruling awarding summary judgment to the Welfare Fund on her claims for relief asserted under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§1001 et seq. The genesis of these actions were certain "oral miscommunications" by Plan personnel to the DeRogatises before Mr. DeRogatis' death in 2011 involving  the Pension Plan governing the benefits payable to Mrs. DeRogatis as a surviving spouse after the death of her husband and  the Welfare Plan governing Mrs. DeRogatises’ entitlement to health benefits during and after Mr. DeRogatis' lifetime.
The Circuit Court agreed with the lower court's ruling that the Pension Fund trustees correctly denied DeRogatis’s request for an augmented survivor benefit following her husband’s death because the Pension Plan’s summary plan description adequately described the eligibility requirements for the benefits in question and thereby satisfied the trustees’ fiduciary duty to provide complete and accurate information to plan participants and beneficiaries and affirmed the lower court's granting the Fund's motion for summary judgment in Docket No. 16-3549-cv.
Significantly, however the Circuit Court rejected the District Court's holding that "a plan administrator cannot be held liable for unintentional misrepresentations made about the plan’s operation by its non-fiduciary, 'ministerial' agent and on this basis denied the claim."
As to claims involving No. 16-977-cv, noting that the District Court granted summary judgment for defendants on this claim on the same “ministerial employee” ground, the Circuit Court rejected the District Court’s conclusion that the Welfare Plan summary plan description explained clearly its participants’ options to receive post-retirement health benefits."
Rather, said the court, given the evidence that Welfare Fund agents misstated material aspects of those same benefits when communicating with the DeRogatises, the Circuit Court identified as an open question of material fact "whether the Welfare Fund trustees breached their fiduciary duty to provide plan participants with complete and accurate information about their benefits" and vacated the judgment entered in favor of the Welfare Fund defendants by the lower court with respect to No. 16-977-cv.
Althought the Circuit Court opined that Welfare Fund defendants "may yet be entitled to summary judgment if they demonstrate that DeRogatis is not entitled to any equitable relief, thereby negating the final element of DeRogatis’s §502(a)(3) claim," the District Court's judgment with respect to No. 16-977-cv was vacated and the matter remanded to the lower court for further proceedings "consistent with this opinion."
In contrast, the same is not always the rule where the administrative error is to the benefit of the individual.
In Morley v Arricale, 66 N.Y.2d 665, the Court of Appeals said that "Estoppel is not available against a local government unit for the purpose of ratifying an administrative error ... made without compliance with formally adopted selection standards and procedures while in Galanthay v New York State Teachers' Retirement Sys., 50 NY2d 984, the court held that the retirement system "is obligated to correct errors in the computation of retirement benefits and the recoupment of funds erroneously paid is proper."
The DeRogatis decision is posted on the Internet at: