The US 9 th Circuit Court of Appeals ruled that despite the fiduciary breach by Hispanic Business Inc.,(HBI) a Santa Barbara, California magazine publisher, no remedy was available because the breach was a procedural violation of ERISA’s rules for which there was no remedy unless a plaintiff can prove bad faith, active concealment, or fraud.
The appellate court ruling came in a case involving plaintiff Carmen Peralta, a special events manager at HBI, who was seriously injured in a car accident in October 2000. Peralta claimed she didn’t purchase outside insurance and applied for long-term disability (LTD) benefits because she wasn’t aware that the company had previously canceled the LTD coverage. According to the appellate opinion, a previous HR manager had ended the policy without telling employees.
Peralta’s LTD claim came after the policy cancellation, but before a successor HR manager notified employees that the LTD policy was no longer in effect.
After Peralta’s LTD benefits request was denied, she sued HBI over allegations that it had violated ERISA by not properly informing employees of the policy cancellation.
However, US District Judge Cormac Carney of the United States District Court for the Central District of California ruled that ERISA offered Peralta no form of equitable relief.
In the appellate opinion written by Judge Jane Restani, Chief Judge of the United States Court of International Trade, who was on the 9 th Circuit panel by special appointment, the appellate judges agreed with Carney, despite having found that HBI’s cancellation notice to employees was not timely.
The 9th Circuit ruling is here .
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