U.S. District Judge John D. Rainey of the U.S. District Court for the Southern District of Texas ruled that the mailing of the forms to the wrong address was merely an oversight and did not qualify as an Employee Retirement Income Security Act (ERISA) fiduciary breach.
Rainey dismissed the suit filed by the widow of David Hobbs at the request of the employer, Baker Hughes Oilfield Operations Inc. Rainey asserted: “Although it is true ERISA requires people who are involved in the administration or maintenance of benefits plans to act in good faith and in a timely and prudent manner, slight ministerial errors such as Baker Hughes’ do not rise to the level of a breach of fiduciary duty.”
According to the opinion, when Hobbs departed Baker Hughes, a summary plan description he was provided explained how he could convert his group life coverage at the employer to an individual policy. The company told Hobbs that the necessary paperwork would be mailed to him and he would have 31 days from his employment termination to complete and return it.
However, Rainey said Baker Hughes accidentally sent the documents to Hobbs’s former Baker Hughes office instead of to his house. Nine months after his termination from Baker Hughes, Hobbs died unexpectedly from a brain aneurism.
Hobbs ‘s widow and children asked the firm for the life insurance benefits, but were told that no benefits would be paid because Hobbs had never carried out the policy conversion in the time limit.
Rainey added that even if there was a Baker Hughes breach there was no causal link between that breach and the losses allegedly incurred by Hobbs’s widow and children.
The case is Hobbs v. Baker Hughes Oilfield Operations Inc., S.D. Tex., No. V-06-97, 11/28/07.