The recent Weaver Brothers Insurance Associates v. Braunstein decision, out of Pennsylvania, shows how different of a situation we're in now. In that case, life insurance beneficiaries were able to recover the amount of insurance proceeds, not because they were entitled to benefits, but because the fiduciary conduct of the plan (didn't provide an SPD; wrongly told the disabled worker who had died that her insurance remained in force) supported an equitable remedy (called "surcharge").
I'm not going to spend a lot of time weighing the pros and cons of this expansion of recoveries. Instead, I think we need to treat it as a learning moment. The lessons are:
- As the cost of "getting it wrong" increases, we need to make sure that only certain people can give advice about what a plan provides and doesn't provide and we need to make sure that those people have adequate training to "get it right."
- When a claim comes up, we need to process it according to the ERISA Section 503 requirements but, instead of just looking at the plan (which is basic ERISA practice), we need to make a litigation risk assessment earlier in the process than we would have in the past. All courts aren't going to use this theory, but the number is growing and, if we think that may happen in a given case, we should think about settling the claim early, before the costs of litigation (which may include both the plaintiff's and the plan's attorneys' fees) are incurred.