Circuit Split Remains On Availability Of Equitable Relief From ERISA Co-Fiduciaries

• Published date: 24 March 2022
• Subject Matter: Employment and HR, Insurance, Retirement, Superannuation & Pensions, Employee Benefits & Compensation, Insurance Laws and Products
• Law Firm: Holland & Knight
• Author: Mr Todd D. Wozniak, Lindsey R. Camp and Talis C. Trevino

Highlights

• The U.S. Supreme Court's recent denial of a petition for certiorari in First Reliance Standard Life Insurance Company v. Giorgio Armani Corporation is notable because it continues a circuit split on the key issue of whether the Employee Retirement Income Security Act of 1974 (ERISA) statutory scheme provides for and allows a fiduciary to obtain indemnification and contribution from a co-fiduciary for liabilities arising out of a violation of ERISA.
• Although some circuits have not taken a position on this issue as it currently stands, the U.S. Courts of Appeal for the Second and Seventh Circuits allow a fiduciary to seek contribution and indemnification from co-fiduciaries under ERISA, while the Eighth and Ninth Circuits do not.
• This Holland & Knight alert examines the First Reliance case and provides key considerations for ERISA fiduciaries in its aftermath.

The U.S. Supreme Court has denied a petition for certiorari in First Reliance Standard Life Insurance Company v. Giorgio Armani Corporation. Although the headlines typically come when the Supreme Court issues an opinion, its denial in this case is notable because it means there will continue to be a circuit split on the key issue of whether ERISA allows a fiduciary to obtain indemnification and contribution from a co-fiduciary for liabilities arising out of an ERISA violation.

Background

The First Reliance case concerns life insurance coverage for the late husband of a Giorgio Armani employee. Armani had established and sponsored an employee welfare benefit plan pursuant to ERISA for the benefit of its employees and their dependents. First Reliance issued a voluntary group term life insurance policy to Armani for the provision of life insurance benefits to Armani's eligible employees and dependents.

One of Armani's employees participated in open enrollment for the policy and elected life insurance coverage for her husband in the amount of $500,000. Although First Reliance had requirements to collect proof of good health and proof of insurability, at no time did Armani request or collect this information from the employee. Approximately a year and a half later, the husband passed away, and the employee submitted a claim under the policy for $500,000. After investigating the claim, First Reliance took the position that the employee was entitled only to a $50,000 benefit.

The Lawsuit

The employee filed suit against First Reliance, seeking payment of the full $500,000 requested. First...