Employee Can't Get Back Insurance Premiums via ERISA Suit

April 20, 2007 (PLANSPONSOR.COM) - A woman whose employer failed to add one of her daughters as dependents on the employee's workplace insurance policy can't get back her premium payments under the Employee Retirement Income Security Act (ERISA), a judge has ruled.

Even though the judge agreed that the employer’s plan administrator was an ERISA fiduciary and that the administrator had breached his or her fiduciary duties by fouling up the paperwork between the employee and the insurance carrier, the plaintiff still can’t sue for the return of her premiums under ERISA, the judge said, according to EBIA.

Citing several Supreme Court rulings, the court concluded that this remedy did not constitute equitable relief under ERISA (the only relief available to the participant for breach of fiduciary duty) because the participant did not seek recovery of particular funds or property in the employer’s possession.

Noting, however, that the “constrained remedies available under ERISA. do little to deter other breaching fiduciaries in similar situations,” the court did award the participant attorneys’ fees and costs.

According to EBIA, the employee requested that the employer add both daughters to her policy and submitted the appropriate paperwork. The employer deducted additional premium payments and verbally assured the employee the additional coverage for the daughters was in place.

However, shortly after that, one of the daughters had surgery and the plan’s insurer denied the resulting claim because the girl had not been added to the plan.

The case isHughes v. Legion Ins. Co., 2007 S.D. Tex.2007.