Friday, May 16, 2014
The United States Court of Appeals recently released an opinion highlighting the importance of ensuring ERISA plan documents permit plan administrators the discretion to construe and interpret the terms of the plan. In Hall v. Metro. Life Ins. Co., the Appeals Court determined whether a widow, Jane Hall, was a beneficiary of her late husband’s life insurance policy.
Dennis Hall obtained a life insurance policy from MetLife through an employee benefit plan and named his son as the beneficiary of his policy. Twenty years later, Mr. Hall completed and signed, but did not submit, a beneficiary designation naming his wife, Jane Hall, as the sole beneficiary of his policy. After Mr. Hall’s death, MetLife distributed Hall’s life insurance to his son, as it was the most recent valid document naming a beneficiary.
Jane argued that her husband almost satisfied the requirements for effecting a change of beneficiary, and therefore the common law doctrine of substantial compliance would deem the beneficiary designation form operative. However, the Eighth Circuit stated while the substantial compliance doctrine may be appropriate in some circumstances, “the doctrine does not operate to interfere with discretion granted to a plan administrator by an ERISA plan.” The Eighth Circuit affirmed the district court’s decision, granting summary judgment to MetLife.
This case offers employees with a pertinent example of the importance of ensuring their plan administrators are granted the discretion to construe plan terms and establish eligibility for benefits.
See Samuel Butler, Eighth Circuit Decisions Reminds Employers of Importance of Granting ERISA Plan Administrators Discretion to Interpret Plan Terms, ERISA Wonk, May 15, 2014.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.