Dive Brief:

• The 8th U.S. Circuit Court of Appeals reinstated the allegations of a late MasterCard worker's spouse, who claimed the company breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 (Delker v. MasterCard International, Inc., No. 20-3600 (8th Cir., Jan. 5, 2022)).
• The spouse argued that MasterCard neglected its fiduciary duty "by failing to pay life insurance premiums as it had promised, by making material misrepresentations … respecting [the worker's] coverage, and by failing to provide adequate information about [her] life insurance benefits."
• The spouse filed suit after receiving a life insurance payout of $144,000, which amounted to one year of his late wife's salary. He alleged his wife had selected life insurance amounting to three times her salary, but the company said its records did not show she made such a purchase. A district court found that MasterCard did not make misleading misrepresentations about its life insurance benefits. But the 8th Circuit reinstated the worker's claims.

Dive Insight:

According to the U.S. Department of Labor, ERISA "is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans." The 8th Circuit specified that "materially misleading statements" can constitute a violation of an organization's duty of loyalty and prudence under ERISA.

This particular duty requires employers to do more than simply refrain from making obvious misrepresentations, the court said. Instead, it includes "a duty to advise and inform about circumstances that threaten the interests of one to whom a fiduciary duty is owed," the 8th Circuit wrote. "In this context, a statement is materially misleading if substantially likely to mislead a reasonable employee making decisions about employer benefits and entitlements."

As the court noted, the worker's spouse alleged she wanted life insurance that amounted to three times her salary. And because of that decision, she and her husband purchased no other life insurance. 

MasterCard argued that the worker failed to properly elect the triple-salary life insurance benefit on its open enrollment forms. But the court disagreed, arguing that her selections on her forms signaled her enrollment. "If that proves true, MasterCard's failure to pay premiums would constitute a breach of the fiduciary duty it owed its employees participating in its ERISA-governed benefit plan," the 8th Circuit opined.