When an Employer’s Premium Withholding Can’t Rewrite the Plan: District Court Denies ERISA Life Insurance Benefits and Civil Penalties on a Default Judgment Motion

In Thomas v. UACJ Automotive Whitehall Industries, Inc., No. 1:25-cv-944, 2026 WL 3056814 (W.D. Mich. Oct. 13, 2026), Chief United States District Judge Hala Y. Jarbou denied a widower’s renewed motion for default judgment in an ERISA dispute over supplemental life insurance benefits, holding that the voluntary plan unambiguously barred the coverage amount the insured had tried to elect and that the plaintiff had not shown the prejudice needed to support civil penalties. Even though the employer never appeared and had defaulted, the court explained that a defaulting party does not concede the law, and the claims failed on their merits.

How did a $300,000 election become a $50,000 payout?

UACJ offered employees both a basic life insurance plan, with premiums paid by the company, and a voluntary plan, with premiums paid by the employee. Under the voluntary plan, an employee could select coverage from $5,000 to $300,000, but “[i]n no event” could the amount exceed five times annual earnings, rounded up to the next $5,000, and any coverage over $100,000 required an evidence-of-insurability form. Plaintiff’s late husband elected the $300,000 maximum. His salary of $47,340.80 capped his eligibility at $240,000, and he never submitted an insurability form. UACJ withheld weekly premiums consistent with $300,000 in coverage, but never confirmed the election and never told the insured he was ineligible for the maximum. After his death, United of Omaha, the plan’s claims administrator and insurer, determined that UACJ had enrolled him at only $50,000. Plaintiff ultimately received $50,000 under the voluntary plan and $48,000 under the basic plan, then sued UACJ to recover the remaining $250,000.

Can an employee recover benefits the plan never allowed under ERISA § 502(a)(1)(B)?

No. The court held that ERISA § 502(a)(1)(B) lets a beneficiary recover only the benefits due “under the terms of his plan,” and that the plan’s text governs. Both the plan schedule and the summary plan description capped voluntary coverage at five times salary, so the insured was never eligible for $300,000. Relying on CIGNA Corp. v. Amara, 563 U.S. 421 (2011), and Hayes v. Prudential Insurance Company of America, 60 F.4th 848 (6th Cir. 2023), the court reasoned that a § 502(a)(1)(B) claim sounds in contract and leaves little room to reform an unambiguous plan. Plaintiff argued that the insured detrimentally relied on UACJ’s silence and on the premium withholding, but the court found the plan documents themselves gave notice of the eligibility limits. The court also noted that the Sixth Circuit has not settled whether equitable estoppel belongs under § 502(a)(1)(B) or the equitable catchall of § 502(a)(3), and that circuits disagree on the question. It declined to resolve that issue because Plaintiff had not alleged that UACJ intended its representations to be acted upon, a required element of estoppel under Sprague v. General Motors Corp., 133 F.3d 388 (6th Cir. 1998) (en banc).

Did a due process theory change the result?

No. Plaintiff argued in the alternative that UACJ’s failure to properly administer the plan denied him due process under Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609 (6th Cir. 1998). The court rejected that theory, explaining that a procedural violation alone does not create a substantive remedy and that the cited portion of Wilkins said nothing about what constitutes a denial of process. The court added that any shortfall in process traced back to Plaintiff, who bypassed the plan’s appeal procedures and filed suit instead of appealing the $50,000 determination.

Why did the court deny civil penalties under ERISA § 502(c)?

Section 502(c) permits a court, in its discretion, to impose penalties of up to $110 per day on a plan administrator that fails to provide documents a beneficiary is entitled to request under § 104(b)(4). The court found that most of Plaintiff’s requests sought claims forms and enrollment forms, which the Sixth Circuit has held fall outside § 104(b)(4) under Allinder v. Inter-City Products Corp., 152 F.3d 544 (6th Cir. 1998). Although one broadly worded subpoena request for the documents constituting the life insurance policy did sweep in the plan and the summary plan description, the court declined to award penalties because Plaintiff never alleged prejudice. The word “prejudice” appeared nowhere in his brief or complaint, and he already possessed the plan and the summary plan description, which answered the eligibility question. Given the absence of articulated prejudice, the court exercised its discretion to award no penalties and denied the motion for default judgment in full.