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ERISA • Employment Law

Court Awards Over $5.8 Million in Life Insurance Benefits and Interest

The United States District Court for the District of Connecticut recently awarded over $5,800,000 in life insurance benefits and prejudgment interest to a life insurance claimant whose husband worked for Stanley Black and Decker and participated in a life insurance plan governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. (“ERISA”). A copy of the Court’s opinion may be found here. The dispute in the case was centered on ambiguous language in the Plan as to the amount benefits payable to designated beneficiaries of Plan participants. My good friend and friend of the firm, Jonathan Feigenbaum, Esquire, and his co-counsel, Sean K. Collins, Esquire, represented the plaintiff.

The decedent worked for Stanley Black and Decker at the time of his death and earned an annual salary in excess of $1,000,000 per year. He died while traveling and his wife, the plaintiff, submitted a claim for life insurance benefits under the plan. Federal Insurance Company insured the Plan’s life insurance benefits and ultimately paid her $1,000,000 in life insurance benefits. The plaintiff filed suit under Section 502(a) of ERISA, 29 U.S.C. § 1132(a), and claimed that she was entitled to $5,000,000 in benefits, interest and attorneys’ fees. The Court described the life insurance policy and issue in the case as follows:

In the event of a “Loss of Life,” as a Class 1 Insured Person, Mr. Tyll was entitled to benefits equal to 100 percent of a principal sum in the amount of “Five (5) times Salary subject to a Minimum of $100,000 and a Maximum of $1,000,000.” AR 78. The issue in this case is “whether the limiting clause “subject to a Minimum of $100,000 and a Maximum of $1,000,000” modifies the noun . . . Salary (by placing a floor and cap on Salary) . . . or whether the limiting clause places a floor and cap on the benefits overall, as [the defendants] argue[ ].” Plaintiff’s Memorandum in Support of Summary Judgment (Pl.’s Mem. in Supp.) (Doc. No. 59-1) at 2–3. The first question for the court is whether the language defining the applicable principal sum is ambiguous.

Opinion at 7. The Court concurred with the plaintiff that the policy was ambiguous, that it had to be construed against the insurer, and that she was entitled to a total $5,000,000.

The Court also determined that the plaintiff was entitled to prejudgment interest on the life insurance benefits. After concluding that Connecticut’s statutory rate of prejudgment interest at the rate of 10% per annum did not apply to the Plaintiff’s claim, it determined that it had discretion to determine an equitable rate of interest to be applied to the claim. The Court found that 8% per annum, compounded annually, was equitable and adequate to make the plaintiff whole. As such, the Court awarded her $4,000,000 in back life insurance benefits, $198,308.72 in prejudgment interest on the $1,000,000 Federal had previously (but untimely) paid the plaintiff, and $1,693,134.01 in prejudgment interest on the $4,000,000 in life insurance benefits that had been previously withheld.

If you are seeking life insurance benefits under an ERISA life insurance plan or other life insurance policy, you should contact an experienced life insurance lawyer today.

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Mr. Garner is an ERISA employee benefits and employment attorney with over a decade of experience. The laws governing employee benefits, the employment relationship, and the workplace are complex.

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