Merrimon v. Unum Life Insurance Co. of America
845 F. Supp. 2d 310
D. Me.2012Background
- Plaintiffs Merrimon and Mowery are beneficiaries of employer-provided group life policies administered by Unum; ERISA governs the plans with Maine law also cited.
- GISBs govern payment to beneficiaries, specifying RAAs for claims over $10,000 and lump-sum payments for smaller claims, with defined terms of a Retained Asset Account.
- Unum retains and invests funds backing the RAAs; the claim proceeds are not immediately transferred to beneficiaries but funded through Unum’s accounts until drafts are presented.
- Interest on RAAs has been set at 1% since 2004, with Unum researching rates and considering market competition to influence the rate.
- Plaintiffs allege ERISA fiduciary breaches, contract breaches, and Maine late-payment statute violations; they also seek class certification.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RAAs render Unum a fiduciary liable for self-dealing. | Mogel treats funds backing RAAs as plan assets under ERISA; Unum’s discretion constitutes breach. | Faber and DOL opinion hold funds backing RAAs are not plan assets; fiduciary duties end when RAAs are created. | Unum breached 404(a) by administering RAAs in its own interest; funds backing RAAs are not plan assets for 406(b). |
| Whether Unum’s use of RAAs constitutes breach of contract and Maine late-payment statute claims. | The GISBs require timely payment and straightforward payment, so RAAs breach timing and form of payment. | RAAs satisfy payment obligations under the contracts; late-payment statute not violated. | Unum granted summary judgment on breach of contract and Maine's late-payment claims. |
| Whether the ERISA class should be certified and the Maine subclass denied. | Common questions and damages support a Rule 23(b)(3) class; Maine subclass should cover additional issues. | Commonality exists; distinctions among individuals suggest subclassing may be appropriate. | ERISA class certified under Rule 23(b)(3); Maine PMI Subclass denied. |
Key Cases Cited
- Mogel v. Unum Life Ins. Co., 547 F.3d 23 (1st Cir. 2008) (whether funds backing RAAs remain plan assets and fiduciary duties in plan administration)
- Faber v. Metropolitan Life Ins. Co., 648 F.3d 98 (2d Cir. 2011) (RAAs do not necessarily keep ERISA fiduciary duties after payment via RAAs)
- Dodge v. United Services Auto. Ass’n, 417 A.2d 969 (Me. 1980) (ME late-payment guidance on payment timing and methods)
- Commonwealth Edison Co. v. Vega, 174 F.3d 870 (7th Cir. 1999) (funds treated as assets for ERISA analysis in retirement-like contexts)
- Varity Corp. v. Howe, 516 U.S. 489 (U.S. Supreme Court 1996) (fiduciary duties extend beyond explicit plan documents to the administration of plan objectives)