Plan Language Defeats ERISA Claims

An employee was severely injured while on the job and was placed on leave by his employer. The employee filed a claim for workers' compensation and continued to participate in the employer's group medical plan under which he incurred substantial medical claims. A new entity then acquired the employer and became the plan administrator of the medical plan under which the employee was covered. After three years, the employer asked the employee to submit a letter proving his ability to come back to work or face termination. The employee did not submit such letter and was terminated from employment. Subsequently, his coverage under the employer's group medical plan was terminated. The employee then filed suit for benefits and breach of fiduciary duty under ERISA. The district court dismissed the claim, which the Seventh Circuit upheld because the employee did not allege that the terms of the plan provided the employee with a right to continued benefits post-employment, and the employer's offering of long-term disability insurance did not suggest the employee was entitled to benefits post-employment. With respect to the breach of fiduciary claim, the court held that the employer was acting as the employer when it terminated the employee and not in its capacity as a fiduciary of the plan. This case demonstrates the importance of ensuring that group medical plan documents clearly state what benefits an employee is entitled to post-termination.

For more information read Brooks v. Pactiv Corp., No. 12-1155 (7th Cir. Sept. 6, 2013).