Potential Erosion Of The Distinction Between Benefits Denials And Breach Of Fiduciary Duty Under ERISA In The Tenth Circuit

A recent decision from a federal district court in the Tenth Circuit provides an example of the potential erosion of the distinction between claims for wrongful denial of benefits and breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA), following the Sixth Circuit's 2013 decision in Rochow v. LINA, 737 F.3d 415 (6th Cir. 2013) (Rochow II), in which a three-member panel of that court affirmed the district court's order requiring disgorgement of profits flowing from the wrongful denial of benefits.

In Faltermeier v. Aetna Life Ins. Co., No. 15-CV-2255-JAR-TJJ (D. Kan. May 28, 2015), the district court allowed a plan participant to amend his complaint to include a breach of fiduciary duty based on the insurer's alleged failure to consider an expert report that was submitted just one day before the final decision denying benefits was issued.

Although the Sixth Circuit sitting en banc ultimately vacated the Rochow II decision in Rochow v. Life Ins. Co. of North America, 780 F.3d 364 (6th Cir. Mar. 5, 2015) (Rochow III), thus maintaining the distinction between denial of benefits and breach of fiduciary duty, the rationale of Rochow II may have nevertheless inspired some creative advocacy on behalf of plan participants/beneficiaries to which counsel for insurers and claims fiduciaries should be prepared to respond, as illustrated by the Faltermeier decision.

ERISA Background

ERISA provides for six remedial provisions, including review and recovery of wrongfully denied benefits pursuant to §502(a)(1), and the "catch-all" breach of fiduciary duty provision pursuant to §502(a)(3).

Federal district courts are permitted to review the denial...