When ERISA Defendants Switch Their Denial Rationale: A Minnesota District Court Refuses to Dismiss a Disability Claimant’s STD and Fiduciary Claims

In Huynh v. Schwan’s Shared Services, LLC, No. 25-3988 (JRT/LIB), 2026 WL 2363632 (D. Minn. Aug. 14, 2026, United States District Judge John R. Tunheim denied a motion to dismiss brought by an employer-plan administrator and its claims administrator, allowing a short-term disability claimant’s ERISA claims to proceed past the pleading stage. Plaintiff worked as Schwan’s Director of Enterprise Architecture and, following two motor vehicle accidents, received diagnoses of Persistent Postural-Perceptual Dizziness, post-trauma vision changes, convergence insufficiency, headaches, and increased anxiety. Schwan’s terminated Plaintiff for unsatisfactory performance on the morning of October 12, 2022, before Plaintiff submitted a leave request that a Mayo Clinic neuropsychologist had recommended days earlier. Plaintiff filed a claim under the self-insured short-term disability plan, identifying the termination date as the disability date. Sedgwick, the claims administrator, denied the claim on the ground that Plaintiff became an ineligible class of employee, and Schwan’s later took the position that no second-level appeal was available. Plaintiff sued Schwan’s, Sedgwick, and Prudential (which insured a separate long-term disability plan not at issue on this motion), and Schwan’s and Sedgwick moved to dismiss the STD benefits, document-disclosure, and breach-of-fiduciary-duty counts.

Can an ERISA Administrator Defend a Denial on a Plan Provision It Never Cited in the Final Denial Letter?

The court applied abuse-of-discretion review because both the plan document and the incorporated wrap document contained discretionary clauses. Judge Tunheim observed that the plan’s coverage-termination provision appeared to bar coverage, because Plaintiff’s coverage ended when his employment terminated and he was not entitled to continuation coverage after a termination for cause. The court’s inquiry did not end there. The final denial letter rested on the general eligibility provisions in the wrap document, not the coverage-termination provision that defendants now advanced in litigation. Reviewing courts focus on the final claims decision, and the Eighth Circuit has cautioned against allowing administrators to sandbag claimants with after-the-fact plan interpretations devised for litigation. Because defendants advanced a new rationale, the court declined to dismiss the benefits count and deferred any Finley reasonableness analysis until after discovery clarified who the decisionmaker was and on what basis benefits were denied.

Is a Claims Administrator a Proper ERISA Defendant When the Plan Documents Are Ambiguous About Delegated Authority?

Sedgwick argued it was not a proper defendant because it did not fund benefits and Schwan’s had reserved eligibility determinations to itself. The court held dismissal premature. Both plan documents delegated authority to decide claims to the claims administrator except for determinations of eligibility to participate in the plan, and it was unclear whether the coverage-termination question fell within that carve-out. The complaint alleged that Sedgwick issued the denial letters and served as the primary point of contact, while also alleging that Schwan’s emailed Sedgwick that Plaintiff was ineligible. Those allegations left a factual dispute over which entity controlled administration, so the court kept Sedgwick in Count One.

Must an ERISA Plan Administrator Produce a Third-Party Administrative Agreement and a Complete Wrap Document on Request?

On the disclosure count, the court held that Plaintiff adequately alleged that the third-party administrative services agreement between Schwan’s and Sedgwick qualifies as a contract or other instrument under which the plan is established or operated under 29 U.S.C. § 1024(b)(4). Although the Eighth Circuit has not decided the question, the court found persuasive the Tenth Circuit’s decision in M.S. v. Premera Blue Cross and the Seventh Circuit’s decision in Mondry, both of which recognized that such agreements can fall within the statute because they inform beneficiaries of their rights under the plan. Because the agreement had not been produced, dismissal was premature. As to the wrap document, Schwan’s conceded it had sent only the relevant portion and cited no authority permitting selective production, so that claim survived as well.

Can a Breach-of-Fiduciary-Duty Claim Proceed Alongside a Benefits Claim Under ERISA?

The court allowed the fiduciary-duty count to proceed on all three challenged grounds. Because the record did not yet establish whether Sedgwick exercised discretionary authority or acted in a purely ministerial claims-processing role, Plaintiff plausibly alleged that Sedgwick was a fiduciary. The court read the complaint as a whole and found that Plaintiff plausibly alleged breaches of the duty of loyalty, including allegations that Schwan’s influenced Sedgwick’s decision, that defendants failed to produce requested plan documents, and that Sedgwick advised Plaintiff of a second-level appeal that later proved unavailable. Finally, the court rejected the argument that the equitable-relief claim was impermissibly duplicative of the benefits claim, holding under Silva and Jones that a plaintiff may plead § 1132(a)(1)(B) and § 1132(a)(3) theories in the alternative and that any duplicative-recovery concerns are better resolved at summary judgment.

The court denied the motion to dismiss in its entirety, allowing Counts One, Two, and Four to proceed.