Chelf v. Prudential Ins. Co. of Am.

Chelf v. Prudential Ins. Co. of Am.

Opinion

 [*462]   [***2]  JANE B. STRANCH, Circuit Judge. Elmer Chelf, a former employee of Wal-Mart, was on long-term disability leave when he passed away. His widow, Ruth Mae Chelf, was denied benefits under his work-based optional term life insurance policy. She brought claims against Wal-Mart and the Plan Administrator (collectively, Wal-Mart) for breach of fiduciary duty pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 (ERISA).¹ Her suit alleges that Wal-Mart breached its fiduciary duty to Mr. Chelf in several ways, including by assessing certain premiums in error; by failing to inform him that his premiums were assessed in error; by [**2]  failing to remit premiums to Prudential to cover his optional life insurance policy resulting in that policy's termination; by failing to inform Mr. Chelf that his accrued paid time off (PTO) could cover his life insurance premiums; and by failing to notify him of his right to convert his term life insurance policy. Wal-Mart filed a motion to dismiss, which the district court granted,  [*463]  dismissing Ms. Chelf's fiduciary breach claims with prejudice. We AFFIRM in part, REVERSE in part, and REMAND for further proceedings consistent with this opinion.

I. BACKGROUND

As a full-time, hourly associate at Wal-Mart, Mr. Chelf purchased basic life insurance, as well as short-term and long-term disability insurance, and had the premiums deducted from his paycheck. He also purchased $25,000 in optional term life insurance through Prudential, and that premium was also deducted from his paycheck.

Mr. Chelf requested and obtained a leave of absence from Wal-Mart, and applied for short-term disability benefits, with a last work day of October 17, 2014. In the spring of 2015, Mr. Chelf was still on medical leave and, because his short-term benefits (STDB) had maxed out, he applied for long-term disability [**3]  benefits (LTDB), which were approved. When he switched to  [***3]  LTDB, the long-term premiums were either paid directly by Mr. Chelf or deducted from other payments from Wal-Mart. Under the Plan documents, however, Mr. Chelf was not required to pay premiums for his short- or long-term disability benefits during the time he was receiving those benefits. Even so, Wal-Mart continued to charge him those premiums. While on disability leave, Mr. Chelf was eligible to continue his elected insurance benefits, such as the optional term life insurance that he had elected. He made life insurance premium payments during his leave. He had accrued 50.8 hours of PTO, and Ms. Chelf alleges that his accrued PTO was sufficient to cover any optional life insurance premiums he owed during his leave.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.