Vander Luitgaren v. Sun Life Assurance Co.
966 F. Supp. 2d 59
D. Mass.2012Background
- ERISA dispute over retained-asset accounts funding life-insurance benefits under Perini Corp policy.
- Perini designated Perini Corporation as plan administrator; Sun Life as claims administrator.
- Policy guaranteed a death benefit with payment methods determined by Sun Life offer at time of election, not necessarily lump sum.
- Retained-asset accounts are beneficiary-name accounts funded by the insurer's investment of benefit amounts; drafts allow access to funds.
- Sun Life opened a retained-asset account for Vander Luitgaren after claim approval on March 29, 2005 and informed him of 2% interest rate, subject to change.
- Following payment of a draft, the account balance fell below minimum and an amount of $74.48, representing interest, was returned to Vander Luitgaren.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sun Life was an ERISA fiduciary when establishing and maintaining retained-asset accounts. | Vander Luitgaren contends Sun Life acted as fiduciary by controlling plan assets. | Sun Life argues it did not have fiduciary duties regarding plan assets once accounts were created. | Sun Life was fiduciary for plan administration but not for plan assets. |
| Whether funds backing retained-asset accounts are plan assets. | Funds backing accounts remained plan assets until full payment. | Funds were not plan assets once accounts were created and credited. | Not plan assets; policy assets remained with Sun Life. |
| Whether Sun Life’s administration decisions (payment form, interest rate) created fiduciary status. | Discretion in payment method and interest rate constitutes fiduciary administration. | Discretionary decisions do not automatically create ongoing fiduciary duties when not tied to plan assets. | Sun Life acted as a fiduciary in administration by selecting retained-asset payments and setting interest rates. |
| Whether Sun Life breached ERISA §404(a) by retaining/investing benefits for its own profit. | Retaining and investing funds violated sole-beneficiary interest and exclusivity. | Insufficient undisputed facts show breach; policy design allowed retained-asset payments. | Summary judgment not warranted on this issue; factual development required. |
| Whether Sun Life breached ERISA §406(b) by self-dealing in plan assets. | Defendant profited from plan assets through retained-asset accounts. | Funds backing accounts were not plan assets; no self-dealing occurred. | Grant summary judgment for Sun Life on §406(b) claim. |
Key Cases Cited
- Mogel v. UNUM Life Insurance Co. of America, 547 F.3d 23 (1st Cir. 2008) (plan assets remain assets until actual payment; fiduciary duties during administration)
- Faber v. Metropolitan Life Insurance Co., 648 F.3d 98 (2d Cir. 2011) (retained-asset accounts discharge fiduciary duties; assets not plan assets; creditor-debtor relation under plan terms)
- Merrimon v. Unum Life Ins. Co. of Am., 845 F.Supp.2d 310 (D.Me. 2012) (district court applying Mogel/Faber framework; practical distinctions in plan design matter)
- Edmonson v. Lincoln National Life Insurance, 899 F.Supp.2d 310 (E.D. Pa. 2012) (district court favoring Faber on fiduciary status with retained-asset payments)