The Court now turns to the heart of the present controversy: whether either party is entitled to summary judgment on Ms. Staropoli’s claims that the Benefits Executive breached its fiduciary duties. A fiduciary may breach its duties by “either a misrepresentation or an omission.” In re Unisys Corp. Retiree Med. Benefits ERISA Litig., 579 F.3d 220, 228 (3d Cir. 2009).
Staropoli v. Metropolitan Life Ins. Co. (E.D. Pa. 2021)
The plaintiff filed a claim for death benefits with the insurer, MetLife, following the death of her husband. MetLife denied her claim on the grounds that her husband was not an eligible dependent because they had been divorced.
The gist of the matter lies in whether the plaintiff or the insurer bore the fault for enrollment of the plaintiff’s husband for dependent coverage for which he was ineligible.
As for the omission claim, “Ms. Staropoli’s breach-by-omission claims fail because she has not introduced any evidence showing that the Benefits Executive had actual knowledge of her confusion.” Likewise, her misrepresentation claims failed because she was charged with knowledge of the plan provisions. “Ms. Staropoli’s belief was objectively unreasonable because the law charged her with knowledge of the contents of the summary plan document, as well as other supplementary documents, all of which stated in plain English that only spouses could be covered, and that divorce would terminate coverage.”
Note: The court stated the law on breach of fiduciary duty by misrepresentation or omission as follows:
A fiduciary may breach its duties by “either a misrepresentation or an omission.” In re Unisys Corp. Retiree Med. Benefits ERISA Litig., 579 F.3d 220, 228 (3d Cir. 2009). To succeed, Ms. Staropoli must show that “(1) the defendant was ‘acting in a fiduciary capacity’; (2) the defendant made ‘affirmative misrepresentations or failed to adequately inform plan participants and beneficiaries’; (3) the misrepresentation or inadequate disclosure was material; and (4) the plaintiff detrimentally relied on the misrepresentation or inadequate disclosure.” Id. (quoting Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am., U.A.W. v. Skinner Engine Co., 188 F.3d 130, 148 (3d Cir. 1999)).
Contrasting Outcome – In a case where evidence of insurability was not provided, a federal court held for the plaintiff. The Ninth Circuit held that the plaintiff was entitled to the benefits for which she paid. Because the plan was self-administered and Armani handled “nearly all the administrative responsibilities,” its “direct interaction with plan participants” would have suggested it was acting with “apparent authority on the collection of evidence of insurability.” Cho v. First Reliance Standard Life Insurance Co. (9th Cir. July 9, 2021) (unpublished). It seems that the Ninth Circuit in that case viewed the burden was on the plan administrator to ask for the information where in Staropoli v. Metropolitan Life Ins. Co the district court viewed the plaintiff as responsible for knowledge that her divorce precluded coverage eligibility.