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Insurance Employer as joint insurance plan administrator had fiduciary duty

An employer who allegedly told a beneficiary it would pay death benefits, after the life insurance carrier denied the claim, has been sued by the beneficiary who alleges she relied on the promises to her detriment.


According to the complaint, while working for National Counseling Group Inc., or NCG, Wayne Murdock elected $150,000 in life insurance coverage. Wayne identified Rema Dawson-Murdock as his primary beneficiary. To secure that coverage, Wayne paid premiums to NCG, which forwarded those payments to Unum Life Insurance Co. of America.

On March 21, 2016, Wayne stopped working full-time for NCG and began working part-time. Although enrollment in the plan is limited to full-time NCG employees, NCG either never informed or misinformed Wayne about whether he remained eligible to participate in the plan. Additionally, although Wayne could have converted or ported his life insurance coverage after transitioning to part-time status, NCG never notified him of those options.

On Aug. 30, 2016, Wayne died. Rema, as Wayne’s widow and beneficiary, thereafter submitted a life insurance benefits claim to Unum. On Oct. 24, 2016, before Rema heard anything from Unum regarding her claim, Christopher Baham—NCG’s Vice President of Human Resources—emailed Rema to notify her that Unum had denied it. Baham assured Rema, however, that NCG would directly pay her the claim amount and work with Unum to recoup the payment.

Based on the representations made to her by Baham from October 2016 through February 2017, Rema did not appeal Unum’s denial of her benefits claim. By the time Baham informed Rema that NCG would not pay her claim, the 90-day window for her to file an appeal with Unum had closed.

Rema sued NCG under the Employee Retirement Income Security Act of 1974, or ERISA. The district court dismissed Rema’s ERISA claims pursuant to Federal Rule of Civil Procedure 12(b)(6), concluding that NCG’s relevant actions were not taken in a fiduciary capacity.


In concluding that the complaint fails to sufficiently allege NCG’s fiduciary status, the opinion failed to consider and assess the relevant decisions on plan administrators and named fiduciaries and their application to these ERISA claims. Indeed, it did not recognize the significance of NCG’s status as the joint plan administrator and named fiduciary, and it erroneously focused on our precedents addressing functional fiduciaries. Although those errors alone support a vacatur and a remand, the opinion also erred in making its functional fiduciary analysis.

Aside from NCG’s plausibly alleged fiduciary status resulting from its joint roles as the plan administrator and the named fiduciary, we are satisfied that the complaint sufficiently alleges that NCG is a fiduciary with respect to the particular conduct giving rise to Rema’s ERISA claims. That is, the complaint shows that NCG acted as a functional fiduciary, within the meaning of section 1002(21)(A) of Title 29, with respect to each of the ERISA claims.

In her first ERISA claim, Rema alleges that NCG failed to inform or misinformed Wayne about his continued eligibility under the plan. She further alleges that NCG neglected to notify Wayne that he had the option to convert or port his life insurance coverage. Based on the relevant precedents and the Department of Labor’s 1975 bulletin, we are satisfied that this claim adequately pleads NCG’s status as a functional fiduciary.

Turning to Rema’s second ERISA claim, she alleges therein that NCG breached the fiduciary duty that it owed to her as a beneficiary when Baham advised her not to appeal Unum’s denial of her benefits claim. Pertinent to this claim, the Supreme Court and our court have both recognized that conveying information about plan benefits to a beneficiary in order to assist plan-related decisions can constitute fiduciary activity. In these circumstances, we are satisfied that the complaint plausibly alleges that Baham engaged in a fiduciary activity when he instructed Rema that she need not appeal Unum’s decision denying her benefits claim.

Vacated and remanded.

Dawson-Murdock v. Nat’l Counseling Group Inc. (Lawyers Weekly No. 001-141-19, 21 pp.) (Robert Bruce King, J.) Case No. 18-1989. July 24, 2019. From E.D. Va. (John A. Gibney, Jr., J.) Elizabeth Hopkins for Appellant, Jeremy David Capps for Appellee.

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