Sixth Circuit Expands Availability of Remedies Under ERISA

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The Sixth Circuit recently concluded that a disability plan participant was entitled to relief consisting of benefits under the plan and disgorgement of defendant’s profits for delaying payment. In so ruling, the Court found that this case presented a “a logical extension” of its precedent allowing a plaintiff to pursue in limited circumstances both a claim for benefits and a claim for breach of fiduciary duty where, as here, the claim for benefits would not prevent defendants’ unjust enrichment. Rochow v. Life ins. Co. of N. Am., 2013 WL 6333440 (6th Cir. Dec. 6, 2013). Moreover, relying on copyright law that permits actual damages and disgorgement of profits, the Court determined that disgorgement did not result in double compensation. Nor did it represent punishment because it left defendant no worse off than it would have been had it paid benefits to plaintiff when they were due. Lastly, the Court noted that “[i]f no remedy beyond the award of benefits were allowed, insurance companies would have the perverse incentive to deny benefits for as long as possible, risking only litigation costs in the process.” A sharply worded dissent criticized the ruling, not only as contrary to precedent, but also counter to ERISA’s goal of expeditious claims resolution based on the administrative record.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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