>The participant contended such action by her plan administrator constituted malicious prosecution and had nothing to do with the administration of employee benefits. US District Judge Barbara Crabb rejected the claim, finding “a plan fiduciary’s duties encompass the pursuit of legal actions intended to protect the financial integrity of an employee benefit fund. Bringing a criminal action for fraud against a beneficiary is not the act of a ‘rogue administrator, acting entirely outside the scope of its duties,’ ” according to Washington-based legal publisher BNA.
>Sandra Mennenoh participated in her employer’s long-term disability benefit plan, administered by UNUM Life Insurance Co. of America. In August 1999, Mennenoh applied for and was awarded disability benefits.However, after conducting video surveillance of Mennenoh, UNUM ceased paying Mennenoh benefits in February 2000. In October of that year, the insurance company filed a complaint of “possible insurance fraud” with local authorities.
>Mennenoh sued UNUM, alleging the insurance company was in violation of Wisconsin’s malicious prosecution and abuse of process laws by lodging a complaint of possible insurance fraud against her. UNUM asked the US District Court for the Western District of Wisconsin to dismiss the claims, a request granted by the court on the basis of ERISA preemption. The court found Mennenoh’s claims “an impermissible attempt to use state law to challenge defendant’s plan administration.”
“However couched, plaintiff’s claims are all claims of breach of fiduciary duty: defendant breached its duty to her by failing to process her claim properly and by initiating state criminal charges against her,” the court said.
The case is Mennenoh v. UNUM Life Insurance Co. of America, (W.D. Wis., No. 02-C-567-C, 4/1/03).