A federal judge in Pennsylvania has issued what’s being considered a mixed ruling in an ERISA lawsuit. Beneficiaries alleged that the manager of retirement funds was not acting in their best interest, a basic tenet of ERISA.
ERISA is a federal law with many complex regulations affecting businesses that provide benefits such as pensions or disability insurance. In order to ensure the management of these benefits is handled in a standard fashion, the law requires compliance and allows injured beneficiaries to file a breach of fiduciary duty lawsuit.
ERISA Lawsuit Names Prudential for Breach of Fiduciary Duty
The ERISA lawsuit accuses Prudential Insurance Company of violating the federal law and the federal judge’s recent ruling granted the beneficiaries a win on their claim of breach of fiduciary duty. However, the alleged ERISA violation is being left up to a jury and all state law claims are being thrown out.
According to the life insurance beneficiaries in the ERISA lawsuit, Prudential breached their duty by paying out claims using retained asset accounts.
This enabled Prudential to use the funds inside those accounts for investment, which the judge determined was a breach of fiduciary duty. Since managers of such an account have a responsibility to act only in the best interests of the beneficiaries, any actions consider their own profit gains could be illegal.
What Is the Fiduciary Duty Responsibility?
The fiduciary duty responsibility under ERISA and similar laws and regulations is to act solely in the interest of the beneficiaries.
The judge stated that Prudential ignored their obligations under the plan documents and instead chose to focus on making a profit for themselves and therefore had their own best interests in mind, not those of the beneficiaries.
The request for summary judgment in the ERISA lawsuit brought by Prudential, however, was granted by the judge because he stated that the deferral claims preempted the state law claims originally brought forward by the plaintiffs.
The ERISA lawsuit in question was originally proposed as a class action in 2012 and the plaintiffs lost a bid for past certification in 2016 and decided to move forward as individuals. The plaintiffs involved in the ERISA lawsuit are those who are beneficiaries of life insurance plans provided to Conway Inc. and JP Morgan Bank employees.
These life insurance plans were administered by Prudential and subject to ERISA. Prudential paid by giving beneficiaries access to retain assets accounts rather than the one lump sum provision that was outlined in the plans.
The judge in the ERISA lawsuit determined that the use of a retained asset account was incompatible with the requirements of the plan as it stood.
If you or someone you know has already been affected by a breach of fiduciary duty and other violations of ERISA, you need to consult with the attorneys at Bradley/Grombacher today. Fill out the form on this page to learn more about how to file a lawsuit.
Note: Bradley/Grombacher is not representing the plaintiff in this lawsuit.