Emotional Distress ERISA Violation Charge Upheld By Court

March 28, 2003 (PLANSPONSOR.com) - The estate of a long-term disability (LTD) benefit plan participant is not preempted by ERISA in its claim that the participant's employer intentionally caused emotional distress when it fired her for taking leave to attend chemotherapy sessions.

>In the ruling, the US District Court for the District of Massachusetts found the estate’s claim did not relate to the ERISA-governed disability benefit plan. However, in upholding many of the estate’s claims against the employer, the court also found the same claims of intentional causing emotional distress were preempted by ERISA when asserted against the plan’s insurer, according to Washington-based legal publisher BNA.

>The court made the preemption determination in claims against the insurer because the estate only sought individual damages, and under ERISA, fiduciary breach claims must be brought on behalf of the plan itself.

>Additionally, on both the employer and insurer front, the court found ERISA preempted separate claims made by the estate that the employer and the insurer breached their common law fiduciary duties in their capacities as the plan’s administrator and insurer when the participant was discharged without notice following the expiration of her disability benefits.

The case is Estate of Palanzi v. Bell Atlantic Corp., D. Mass., No. 02-10940-RWZ, 3/24/03.