Court Allows ERISA Claims Based on Long-Term Disability Premium Collection Without Evidence of Insurability

In two closely related decisions issued the same day, the U.S. District Court for the Western District of Washington denied motions to dismiss filed by both an employer and its insurer in an ERISA action arising from the denial of long-term disability (“LTD”) benefits after years of premium collection without obtaining required evidence of insurability (“EOI”). Hamilton v. Logic20/20, Inc., No. C24-916RSL, 2025 WL 3754023 (W.D. Wash. Dec. 29, 2025); Hamilton v. Logic20/20, Inc., No. C24-916RSL, 2025 WL 3754065 (W.D. Wash. Dec. 29, 2025).

Factual Background

The plaintiff began working for Logic20/20, Inc. in January 2019 at age 25. According to the complaint, the employer instructed her not to enroll in benefits until her 26th birthday because she remained covered under her parents’ insurance. The plaintiff alleged she was never informed that delaying enrollment would trigger an EOI requirement for LTD coverage. When she later completed enrollment paperwork, she believed she elected all available insurance, including LTD, and nothing in the enrollment materials referenced an EOI requirement.

Although the plaintiff did not submit an EOI, Logic20/20 and Prudential Insurance Company of America allegedly accepted her LTD elections and deducted premiums from her paychecks from January 2021 through March 2023. During that period, Prudential paid her short-term disability (“STD”) benefits following a diagnosis of Long COVID and related complications—again without raising any EOI issue.

In June 2022, after more than a year of premium deductions, the plaintiff applied for LTD benefits. Prudential allegedly confirmed she met the medical requirements for LTD but denied the claim on the grounds that no EOI was on file, asserting she had never been covered despite premium payments. Prudential denied her appeal and subsequent requests for reconsideration, while continuing to accept LTD premiums into 2023. The plaintiff also alleged that when she requested plan documents, Logic20/20 stated it did not have them.

The plaintiff asserted ERISA claims against Prudential under §§ 502(a)(1)(B) and 502(a)(3), and against Logic20/20 for breach of fiduciary duty, equitable relief, and statutory penalties for failure to provide plan documents.

The Prudential Decision

In denying Prudential’s motion to dismiss, the court held that the plaintiff plausibly stated a claim for benefits under § 502(a)(1)(B) and for equitable relief under § 502(a)(3). The court emphasized that, at the pleading stage, it was required to accept the plaintiff’s allegations that Prudential accepted LTD premiums for more than two years without enforcing the EOI requirement and that the plan documents were ambiguous as applied.

Relying heavily on Salyers v. Metropolitan Life Insurance Co., 871 F.3d 934 (9th Cir. 2017), the court concluded that the plaintiff plausibly alleged waiver of the EOI requirement. As in Salyers, the plaintiff described a “compartmentalized system” in which the employer handled enrollment and premium deductions while the insurer later denied coverage based on unmet requirements. The court explained that, under Ninth Circuit precedent, accepting premiums over time without enforcing eligibility requirements can be “so inconsistent with an intent to enforce” those requirements as to induce a reasonable belief that they have been relinquished. Salyers, 871 F.3d at 941 (quoting Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551, 1559 (9th Cir. 1991)).

The court further held that the plaintiff plausibly alleged breach of fiduciary duty, rejecting Prudential’s argument that its conduct was merely ministerial. At the motion-to-dismiss stage, the court found it premature to resolve whether Prudential acted in a fiduciary capacity when administering enrollment, collecting premiums, and failing to disclose the alleged lack of coverage.

Finally, the court denied Prudential’s request to strike allegations referencing Prudential’s prior settlement with the U.S. Department of Labor concerning EOI practices, concluding the allegations were relevant to the type of conduct at issue and not improper at the pleading stage.

The Logic20/20 Decision

In a separate order, the court denied Logic20/20’s motion to dismiss the claims against it. The court first held that the plaintiff plausibly alleged statutory standing as an ERISA “participant,” relying on Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117–18 (1989), because she asserted a colorable claim for LTD benefits.

The court rejected the employer’s statute-of-limitations defense, concluding that a March 2020 email referencing EOI did not establish “actual knowledge” of a fiduciary breach under Intel Corp. Investment Policy Committee v. Sulyma, 589 U.S. 178 (2020). Instead, the plaintiff plausibly alleged she did not become aware of the alleged breach until her LTD claim was denied in 2022.

On the merits, the court held that the plaintiff sufficiently alleged that Logic20/20 acted as a fiduciary by administering enrollment, collecting premiums, and serving as plan administrator. The plaintiff also plausibly alleged breach of fiduciary duty based on misleading communications, failure to disclose material eligibility requirements, and continued premium deductions despite lack of coverage.

The court allowed claims for equitable relief—including estoppel, waiver, reformation, and surcharge—to proceed, citing Gabriel v. Alaska Electric Pension Fund, 773 F.3d 945 (9th Cir. 2014), Skinner v. Northrop Grumman Retirement Plan B, 673 F.3d 1162 (9th Cir. 2012), and Salyers. The court emphasized that alternative pleading under §§ 502(a)(1)(B) and 502(a)(3) is permissible under Moyle v. Liberty Mutual Retirement Benefit Plan, 823 F.3d 948 (9th Cir. 2016).

The court also held that the plaintiff plausibly alleged violations of ERISA’s disclosure requirements under §§ 1024(b)(4) and 502(c) based on the employer’s failure to provide requested plan documents.

Takeaway

Taken together, these decisions reinforce that employers and insurers face meaningful ERISA exposure when they accept LTD premiums without clearly enforcing or disclosing EOI requirements. At least at the pleading stage, prolonged premium collection, ambiguous plan administration, and compartmentalized enrollment systems can support claims for waiver, estoppel, and fiduciary breach—despite plan language disclaiming agency relationships.