Employer Held Liable For Service Provider's Error

Usually court cases involving proper remedies under ERISA are largely of interest only to ERISA attorneys and litigators. However, a recent Second Circuit Court of Appeals case is one that should be of interest to employers who sponsor plans. The case involves a retiree group term life insurance plan. The plaintiff's mother in this case was employed for a number of years and her annual income was $16,800. Under the terms of the plan, the mother was eligible for life insurance coverage equal to one times annual pay. However, the third party administrator incorrectly coded the mother's income as being $16,800 per week. The administrator sent various communications to the plaintiff's mother informing her of the level of coverage. The plaintiff's mother contacted the administrator and indicated that she was surprised by the level of coverage, but she was told the level was correct. The administrator's record showed that an employee asked a supervisor to look at the level