Court Recognizes Plausible Fiduciary Breach Based on Failure to Affirmatively Disclose Waiver-of-Premium Life Insurance Benefit in Special Circumstances

In Atkins v. Prudential Insurance Co. of America, No. 1:25-CV-2912-TWT, 2026 WL 86659 (N.D. Ga. Jan. 12, 2026), the Northern District of Georgia granted in part and denied in part an employer’s motion to dismiss, holding that the plaintiff plausibly alleged an ERISA § 502(a)(1)(B) benefits claim based on the employer-plan administrator’s failure to affirmatively disclose a waiver-of-premium death benefit to a terminally ill, totally disabled employee, while dismissing claims for equitable relief and negligent misrepresentation.

The plaintiff, the surviving spouse and estate administrator of a former employee, alleged that his wife became totally disabled due to ovarian cancer, qualified for a life insurance “death benefit” provision that waived premiums during total disability, but lost coverage because she was never informed of the need to submit written proof of continued disability. Although the employee stopped working in December 2022, the employer continued issuing benefit statements and premium invoices until her formal termination in August 2024. After her death, the plaintiff discovered that coverage had lapsed.

Count I – ERISA § 502(a)(1)(B) (Benefits Claim)

The court first addressed whether the employer, Arch Capital Services LLC, could be liable as an ERISA fiduciary for the conduct alleged. Emphasizing that fiduciary status under ERISA is “activity-specific,” the court analyzed two distinct theories of liability.

Conversion Notice Error.
The plaintiff alleged that Prudential, the claims administrator, issued an incorrect conversion deadline and that Arch breached its fiduciary duties by failing to correct it. The court rejected this theory, holding that Arch could not be liable for a single alleged error made by Prudential in claims processing. While a delegating fiduciary has a duty to monitor its delegate, the complaint did not plausibly allege a systemic failure of oversight. A single mistaken deadline, without more, was insufficient to trigger fiduciary liability.

Failure to Advise Regarding Death Benefit.
The court reached a different conclusion regarding Arch’s alleged failure to inform the employee of the waiver-of-premium death benefit. The court first held that Arch’s routine benefit statements and invoices were not misleading in themselves, noting that the plan permitted employees on disability leave to remain “employed” for coverage purposes and that the statements accurately reflected the employee’s status at the time.

However, the court emphasized that fiduciary duties may extend beyond correcting misstatements. Relying on a growing body of case law, the court recognized that “special circumstances” can give rise to an affirmative duty to disclose material plan provisions—even absent a direct inquiry from the participant. Those circumstances include situations where the fiduciary knows that a participant is terminally ill or totally disabled, will not return to work, and stands to lose significant benefits without timely information.

Accepting the allegations as true, the court found that the plaintiff plausibly alleged such special circumstances. The employer allegedly knew that the employee was totally disabled, would never return to work, and qualified for a valuable death benefit that could preserve life insurance coverage despite termination. Under those facts, the court held that the plaintiff stated a viable benefits claim based on a breach of fiduciary duty tied to the failure to affirmatively disclose the waiver-of-premium provision. Accordingly, the court denied the motion to dismiss Count I.

Count II – ERISA § 502(a)(3) (Equitable Relief)

The court dismissed the plaintiff’s claim for equitable relief, holding that it was impermissibly duplicative of the benefits claim. The only injury alleged was the loss of life insurance benefits, and ERISA § 502(a)(1)(B) already provides a remedy for that harm. Citing Eleventh Circuit precedent, the court reiterated that § 502(a)(3) is unavailable where a plaintiff seeks the same relief available under § 502(a)(1)(B), even if styled as a breach of fiduciary duty claim.

Count III – Negligent Misrepresentation

Finally, the court held that ERISA preempted the plaintiff’s state-law negligent misrepresentation claim. The claim arose directly from alleged misrepresentations concerning plan benefits and coverage timing and would require interpretation of the ERISA plan itself. Because the plaintiff could—and did—seek relief under ERISA for the same conduct, the state-law claim “related to” an ERISA plan and was conflict-preempted. The court rejected the plaintiff’s reliance on cases involving pre-plan sales conduct, distinguishing those decisions from misrepresentations allegedly made by a plan administrator in the course of administering an existing ERISA plan.

Takeaway

This decision reinforces that ERISA fiduciaries may face liability not only for misleading statements, but also for silence, where they possess specific knowledge that a participant is terminally ill or permanently disabled and at risk of losing valuable coverage. While routine, accurate plan communications may satisfy ERISA’s baseline disclosure requirements, they may be insufficient in “special circumstances” requiring affirmative disclosure of critical benefit protections.