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In a case of first impression for the court, the U.S. Court of Appeals for the First Circuit recently ruled that an insurer owes a fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) to all employees enrolling in group benefit plans to verify eligibility for coverage at or near the time of enrollment.
In Shields v. United of Omaha Life Insurance Co., 50 F.4th 236 (1st Cir. 2022), the plaintiff-appellant was supposed to be the beneficiary of a $100,000 excess voluntary life insurance policy that her late husband tried to acquire through his employer. The decedent enrolled in 2008 and, according to the plan's terms, was supposed to have provided evidence of insurability at the time of enrollment. However, at the time of enrollment, neither the insurer nor the employer provided him with any forms to prove his insurability or "evidence of good health." Following the employee's plan enrollment, the employer deducted premiums for the life insurance policy from his paycheck from 2008 until his death in 2018, remitting those premiums to the insurer in one lump sum along with premiums for other plan participants.1
Following the death of her husband, the plaintiff-appellant submitted a claim for life insurance benefits. The insurer denied payment for the $100,000 excess voluntary life coverage explaining that because the decedent had not provided "evidence of good health" at the time...
