In Delker v. MasterCard Int’l, Inc., No. 20-3600, __F.4th__, 2022 WL 38468 (8th Cir. Jan. 5, 2022), the Eighth Circuit determined that Plaintiff-Appellant Edward Delker plausibly alleged a claim for breach of fiduciary duty under the Employee Retirement and Income Security Act (ERISA) against MasterCard International, Inc. and MasterCard Technologies, LLC (MasterCard) for life insurance benefits under MasterCard’s employee benefits plan. Delker’s deceased wife, Julie Decker, was a MasterCard employee, and according to Delker, was enrolled in life insurance coverage for three times her annual salary as she elected in her open enrollment forms. After Julie’s death, MasterCard represented to Delker multiple times that the benefit amount was three times Julie’s annual salary. However, Prudential, MasterCard’s life insurance carrier, denied Delker’s claim for benefits beyond one year of salary because MasterCard did not pay the premiums for the additional two years of salary. MasterCard then took the position that Julie was entitled to “credits” based on her hire date to elect the additional life insurance but that she had failed to make the election. In other words, MasterCard claimed that Julie’s election to receive the “credits” for the life insurance coverage did not amount to an election of the coverage or enrollment in the benefit plan. Delker’s breach of fiduciary duty claim against MasterCard rests on the allegations that MasterCard failed to pay the life insurance premiums as promised, made material misrepresentations about Julie’s coverage, and failed to provide adequate information about Julie’s benefits.
A claim for breach of fiduciary duty under ERISA § 502(a)(3) requires three elements: “1) defendant was a fiduciary of the plan, 2) defendant was acting in that capacity, and 3) defendant breached a fiduciary duty.” An ERISA fiduciary has a duty of loyalty and prudence to communicate any material facts which could adversely affect a plan member’s interest. A fiduciary who makes a materially misleading statement about benefits violates its duties. The district court and the Eighth Circuit considered MasterCard to be an ERISA fiduciary based on Delker’s allegations that the company provided plan information, was directly involved in plan enrollment, and paid employee premiums. The question is whether Delker plausibly alleged that MasterCard breached its fiduciary duty to the Delkers.
The Eighth Circuit concluded that Delker plausibly alleged that his wife elected a total amount of three times her salary in life insurance, for which MasterCard promised to pay premiums. MasterCard’s Open Enrollment Guides stated that employees hired on or prior to December 31, 2001 (which Julie was) would receive enough credits to elect up to three times their basic annual salary for life insurance. Julie signed the “Submit Elections Confirmation” form used for electing benefit plans wherein she elected to enroll in the core plan for “1 X Salary” and the Life Employer Credit plan for a benefit of “2 X Salary” with coverage and deductions paid for in its entirety by MasterCard. The court disagreed with the district court that MasterCard’s statements would not mislead a reasonable employee that the credits were in fact used to purchase additional life insurance. If MasterCard made the promise to pay premiums, then its failure to do so would constitute a breach of fiduciary duty. Delker also plausibly alleges that if Julie’s election was deficient for any reason, it was due to MasterCard’s materially misleading statements which caused her to believe she had made the election of three times her salary. Julie’s waiver of optional insurance, construed most favorably to Delker, may show reliance. Further, MasterCard’s representations to Delker on multiple occasions that he was entitled to three times her salary could show that the Delker’s belief that Julie was insured at this amount was reasonable. The district court should have given Delker the benefit of such reasonable inferences when it ruled on MasterCard’s motion to dismiss. The Eighth Circuit reversed as to the issue of breach of fiduciary duty.
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