On May 7, 2025, in Watson v. EMC Corp., a U.S. District Court in Colorado ruled in favor of a plaintiff’s claim against the defendant, EMC Corporation, granting the plaintiff’s request for equitable relief on an ERISA fiduciary breach claim.
Background
The plaintiff, Marie Watson, sued EMC Corporation, her husband’s former employer, for leading her husband to believe his basic life insurance coverage remained in force following the termination of his employment. The plaintiff’s husband was insured under the group plan for basic life insurance benefits totaling $663,000. The group life insurance policy was issued by MetLife, and EMC was the ERISA plan fiduciary with a duty to act in the interests of participants and beneficiaries.
The plaintiff’s husband accepted a voluntary separation plan (VSP) in 2015. Under the VSP, he stopped working for EMC, but EMC continued to pay his employee benefits without interruption through November 24, 2016. At the end of the VSP, he emailed EMC to ensure his benefits would remain in place. EMC informed him that his benefits would remain active and that he would be billed by EMC’s payroll vendor, ADP, to continue benefits. Nine months later, he unexpectedly passed away. However, he had paid all the bills sent to him by ADP prior to his death.
MetLife subsequently denied the plaintiff’s beneficiary claim based on her husband’s failure to convert his group life insurance coverage to individual coverage at the end of the VSP period. She later sued EMC for a breach of fiduciary duty under ERISA, alleging that EMC provided misleading information, which led to her husband’s failure to convert his group life insurance coverage to an individual policy. The court ruled in favor of EMC, and the plaintiff later appealed the case to the Tenth Circuit. The Circuit court ruled that the plaintiff may be able to recover under ERISA’s equitable remedy and sent the case back to the district court to consider the plaintiff’s claim for breach of fiduciary duty under ERISA’s equitable relief provision. Specifically, ERISA provides a “catchall” equitable relief for beneficiaries harmed by breaches of fiduciary duties, regardless of whether benefits are due under the terms of either the group plan or a converted individual policy.
The Court’s Opinion
Ruling in favor of the plaintiff, the district court cited EMC’s fiduciary duty to provide complete and accurate information, especially in response to direct inquiries from beneficiaries. While the defendant argued that it had no duty to provide information regarding the husband’s life insurance policy because he failed to clarify that he was inquiring about life insurance benefits, the court held the argument was unavailing. Specifically, the court ruled that as an ERISA fiduciary, EMC had an obligation to respond to his inquiry with complete and accurate information regarding all benefits, including the information that his life insurance policy would need to be converted in order for him to maintain those benefits.
In considering the appropriate remedy for the plaintiff’s claim, the court concluded that a surcharge was justified. The court noted that EMC's breach of fiduciary duty resulted in actual harm to the plaintiff, as she was denied her expected benefits under the life insurance policy. The court, therefore, awarded a surcharge equal to the policy’s value ($663,000) minus any premiums that would have been paid to maintain the coverage.
Employer Takeaway
The court’s ruling underscores the risk for plan fiduciaries when providing inaccurate or incomplete communications with employees on life insurance or similar plan coverage. As noted in our previous article regarding the case, ERISA plan sponsors should always take great care to adequately communicate with plan participants regarding when group life insurance coverage terminates under the terms of the plan, including any conversion options. For further information regarding compliance aspects of group life insurance benefits, please ask your broker or consultant for a copy of the NFP publication Group Term Life Insurance: A Guide for Employers.