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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 

 

Established in 1996, The Wagner Law Group has 23 attorneys engaged exclusively in employee benefits, estate planning and employment law. Seven of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

San Francisco Office

Tel: (415) 625-0002

Fax: (415) 358-8300

315 Montgomery Street

Suite 904

San Francisco, CA 94104

 

www.wagnerlawgroup.com

 

 

December 12, 2013

 

 State and Federal Law Alert

 

Punitive Damages Appropriate for Breach of Fiduciary Duty 

 

The Sixth Circuit Court of Appeals recently upheld a lower court's decision to award a plaintiff $1 million in disability benefits plus $3.8 million in punitive damages because the disability insurer breached its fiduciary duty. In doing so, the Sixth Circuit has signaled that a plaintiff may simultaneously maintain a claim for benefits and a claim for breach of fiduciary duty under ERISA, and that punitive damages are appropriate to redress breaches of fiduciary duty.

 

In Rochow v. Life Insurance Company of North America, the plaintiff sued a long-term disability insurer after the insurer denied his claim for benefits. The lawsuit sought the withheld disability benefits and also asked for "appropriate equitable relief" for the insurer's breach of fiduciary duty.

 

The lower court concluded that the insurer had acted arbitrarily and capriciously when it denied the plaintiff's long-term disability claim and, in addition to the LTD claim, awarded the plaintiff ERISA-permitted attorneys' fees, plus punitive damages for the breach of fiduciary duty. The insurer appealed the decision to the Sixth Circuit Court of Appeals, arguing that ERISA only allows "make whole" relief for breaches of fiduciary duty and therefore, under ERISA, the additional $3.8 million could not be awarded.

 

On appeal, the Sixth Circuit affirmed the decision, holding that ERISA does not bar tandem claims for denied benefits and breach of fiduciary duty claims. In response to the defendant's argument that relief under ERISA for a breach of fiduciary duty is limited to make-whole relief, the Sixth Circuit held that where ERISA allows equitable relief to redress breaches of fiduciary duty, such relief is not limited to relief aimed at setting right the wrong, but also includes relief to "avenge the wrong."

 

The dissenting opinion reasoned that the decision was incorrect because it contradicted the Supreme Court's 1996 decision in Varity Corp. v. Howe, which stands for the proposition that when a plaintiff has a remedy for benefit denials, there is no an additional remedy on the same claim for breach of fiduciary duty. Moreover, the dissent predicted that the majority's decision would serve to undermine ERISA's goal of creating an efficient system of benefit determinations which is necessary to ensure that employers continue to offer affordable benefits.

 

The insurer is expected to appeal the decision to the U.S. Supreme Court. For the time being, however, there is no doubt that Rochow will spawn further litigation as benefit claimants and benefit plan fiduciaries grapple with how the decision may apply to their particular situations. 

 

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Pursuant to Internal Revenue Service Circular 230, we hereby inform you that any advice set forth herein with respect to US federal tax issues is not intended or written by The Wagner Law Group to be used and cannot be used, by you or any taxpayer, for the purpose of avoiding penalties that may be imposed on you or any other person under the Internal Revenue Code.

 

This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.