District Court Allows Life Insurance Beneficiaries to Allege an Alternative ERISA Breach of Fiduciary Duty Claim Against Unum

In Morales v. CoAdvantage Corp., No. 6:24-cv-117-JA-DCI, 2024 WL 1678250 (M.D. Fla. Apr. 18, 2024), Florida Middle District Judge John Antoon, II granted in part Defendants’ motions to dismiss finding that although Plaintiffs’ complaint had not adequately stated claims for breach of fiduciary duty under ERISA Section 1132(a)(3), that the Count could be rewritten and brought in the alternative to the Section 1132(a)(1)(B) claim for benefits.

The Complaint alleges that Plaintiffs are the primary beneficiaries to a group life insurance plan insured by Unum in which the decedent was a participant through his former employer, CoAdvantage Resources. CoAdvantage Corp. is a related business entity. Decedent enrolled in the plan and paid all required premiums, but upon his death Defendants failed to pay benefits due under the plan. Plaintiff beneficiaries sued and brought claims for failure to pay under ERISA Section 1132(a)(1)(B) and for breach of fiduciary duty under Section 1132(a)(3).

The Court held that Plaintiffs adequately alleged facts to suggest that a policy was issued to the decedent for purposes of the Section 1132(a)(1)(B) claim. The Court further held that although CoAdvantage Corp. was not the named plan administrator, given the business relationship between the two CoAdvantage entities, Plaintiffs could amend their Complaint to make plausible the allegation that CoAdvantage Corp. oversaw the plan’s administration.

With regard to the breach of fiduciary duty claim, Defendants argued (1) Plaintiffs cannot bring failure-to-pay and breach of fiduciary duty counts based on the same facts, (2) Plaintiffs cannot use breach of fiduciary duty counts to recover benefits due under the plan, and (3) with respect to Unum, Plaintiffs failed to allege fiduciary duties. The Court held that Plaintiffs could maintain their failure to pay claim which sought relief that the Court declare that accepting premiums was tantamount to confirming coverage and award damages for breach of contract – consistent with their allegations of a valid policy. As for the breach of fiduciary duty claim, Plaintiffs could rewrite the count consistent with the nonexistence of a valid policy and bring it in the alternative. The Court further held that a life insurance company with the discretionary authority to make coverage determinations may be a plan fiduciary with respect to those determinations. Here, Unum’s alleged duties aligned with that authority.

If Unum or your insurer has denied your life or disability insurance claim, contact us for assistance.