Duty of Care in Responding to Request for Forms?

[Guest newtobenefits]

What are yourt thoughts on the following:

Lets say an employee has a designated beneficiary for his pension plan death benefit as person A. Person A is his beneficiary for mulitple plans and benefits. At some point employee goes into HR and requests to change the beneficiary on all of his plans. HR rep gives him the change form for all plans but the pension plan. Employee changes beneficiary to Person B for all of his plans but since he never got the designation form for the pension plan that remains unchanged. Employee never realizes this nor asks for a pension form. Employee dies. Pension death benefits are paid out to Person A. Person B now says wait, I was supposed to be the beneficiary and Employee had asked for change forms for every plan.

Is there a duty of care in responding to such requests? the plan was paid out based on the designation form on file, but is there some negligence at play on the part of HR?

Thoughts?

[GBurns]

This is an issue for which a good experienced lawyer should be used.

I cannot cite the cases, but my memory tells me that i have heard of a few cases where the employee prevailed. But that depends on the facts and circumstances etc.

I recall that they hinged on what the employee asked for and the usual level of assistance provided. Think about it. If the employer aggressively promotes benefits counseling etc as one of its reasons why they should be or are the employer of choice in the area, and the employee aks for all forms etc needed to satisfy the stated issue, then is given a batch of forms with the assurance that those are all that HR needs from him/her. Those forms are duly completed by the employee and accepted by HR as being satisfactory. Should the employee be able to rely on that representation made by HR ? Does the employee have any means or way to question the validity of the assurances given by HR ? Is HR holdable to any standard of competence ?

I am not sure what area of the practice of law covers this issue, but another poster should know.

[Guest Sieve]

Another question to ask, George: is the employee required to perform even minimal due diligence and read the headings on the forms and take remedial action when no form appeared to cover the pension plan? (Or, how about this one: did the employee notice that none of the forms required spouse consent even though the pension SPD indicates that spouse consent is necessary to change the pension beneficiary?)

Your following inquiries again show your complete attempt to shift from the employee any form of normal due diligence whatsoever: "Should the employee be able to rely on that representation made by HR ? Does the employee have any means or way to question the validity of the assurances given by HR ?" The employee just has to open his eyes and read something other then "name, address, beneficiary, sign, date" to be able to see what he has & what he does not have. Common sense, please. How many "plans" could the participant be changing beneficiary for, anyway?

Now, if HR said "Here is an all-purpose form that covers beneficiary designation for all our benefit programs" when, in fact, it did not cover the pension plan, then that's another story. I'm pro-employee, too, but I would expect to see some kind of acceptance of responsibility for some pretty basic due diligence on the part of an employee.

That all being said, newtobenefits, I don't know what the cases say--and, at a minimum, of course, the facts will be determinative.

[Guest mjb]

What are yourt thoughts on the following:

Lets say an employee has a designated beneficiary for his pension plan death benefit as person A. Person A is his beneficiary for mulitple plans and benefits. At some point employee goes into HR and requests to change the beneficiary on all of his plans. HR rep gives him the change form for all plans but the pension plan. Employee changes beneficiary to Person B for all of his plans but since he never got the designation form for the pension plan that remains unchanged. Employee never realizes this nor asks for a pension form. Employee dies. Pension death benefits are paid out to Person A. Person B now says wait, I was supposed to be the beneficiary and Employee had asked for change forms for every plan.

Is there a duty of care in responding to such requests? the plan was paid out based on the designation form on file, but is there some negligence at play on the part of HR?

Thoughts?

Under ERISA participants are responsible for changing beneficiary designations for each plan that they participate in and this requirement is stated in plan SPD which participant receives and puts participant on notice of requirements for changing beneficaries including obtaining spousal consent where required. Plan is not liable to B for the failure to give employee a beneficiary designation form because B was not a beneficiary under the plan to which a duty is owed by the plan admin at the time the request was made by the employee.

Q1 -Does Plan administrator periodically remind participants to update beneficiary designations?

Q2- How long has it been since A was paid?

[Guest mjb]

This is an issue for which a good experienced lawyer should be used.

I cannot cite the cases, but my memory tells me that i have heard of a few cases where the employee prevailed. But that depends on the facts and circumstances etc.

I recall that they hinged on what the employee asked for and the usual level of assistance provided. Think about it. If the employer aggressively promotes benefits counseling etc as one of its reasons why they should be or are the employer of choice in the area, and the employee aks for all forms etc needed to satisfy the stated issue, then is given a batch of forms with the assurance that those are all that HR needs from him/her. Those forms are duly completed by the employee and accepted by HR as being satisfactory. Should the employee be able to rely on that representation made by HR ? Does the employee have any means or way to question the validity of the assurances given by HR ? Is HR holdable to any standard of competence ?

I am not sure what area of the practice of law covers this issue, but another poster should know.

George:

The duty only extends to the participant or a beneficiary. Since B was never designated as beneficiary, B cannot claim any rights owed by plan due to failure to provide employee with beneficiary designation form.

[GBurns]

Then a party with standing could be the executor of the participant's estate.

What then if B gets the executor to object ?

If the executor does have standing to bring an action, Is it worthwhile or reasonable for the payor to defend or rely on the actions of HR ?

[Guest mjb]

Then a party with standing could be the executor of the participant's estate.

What then if B gets the executor to object ?

If the executor does have standing to bring an action, Is it worthwhile or reasonable for the payor to defend or rely on the actions of HR ?

Why in the world would executor object if there is no benefit to the estate? Executor would have to expend estate funds to file claim with plan/commence lawsuit for benefit of non heir under the will without possibility of getting any tangible benefits. It would be a waste of estate's assets to pursue such a claim.

You are also assuming that the estate has not been closed. What if the estate is is wound up and assets distributed? Who would pay for reopening the estate?

Even if you can overcome the standing issue there is still the basic problem with this claim which is that the participant was on notice of the procedures for changing the beneficiary designation for the plan and failed to comply.

why would the pla not defend it actoins if the benefits have been paid out?

[GBurns]

I do not see enough details to make such assumptions. I do not even know if A was really still eligible to be a beneficiary for a pension plan.

It could be that the participant divorced A then married B, hence the need for a beneficiary change.

It could be that B is also the executor ?

The heirs could be the minor children of B and participant.

The money could be meaningful to the beneficiary and/or heirs.

Any of the above answers questions regarding why and for what benefit.

We do not know if the estate has been closed.

We do not know how long ago the benefit was paid.

As for the PA deciding to defend, that should depend on the facts and circumstance particular to this case, viewed in light of any case law that might be found relevant, and not on our gut feeling.

[Guest mjb]

I do not see enough details to make such assumptions. I do not even know if A was really still eligible to be a beneficiary for a pension plan.

It could be that the participant divorced A then married B, hence the need for a beneficiary change.

It could be that B is also the executor ?

The heirs could be the minor children of B and participant.

The money could be meaningful to the beneficiary and/or heirs.

Any of the above answers questions regarding why and for what benefit.

We do not know if the estate has been closed.

We do not know how long ago the benefit was paid.

As for the PA deciding to defend, that should depend on the facts and circumstance particular to this case, viewed in light of any case law that might be found relevant, and not on our gut feeling.

George:

We could discuss all of the above hypothetical questions forever but I will limt my responses to the facts given. B can file a claim with the plan but I dont see what standing B would have under ERISA if he or she was never designated as a beneficiary under the retirement plan.

Here is one hypo you havent considered: Maybe A was the employee's spouse and the retirement plan does not permit a non spouse to be designated as a beneficiary which explains why no beneficiary change form was provided.

[GBurns]

The possible hypos and lack of details brings us right back to the first sentence of my initial post:

"This is an issue for which a good experienced lawyer should be used."

[Guest mjb]

The possible hypos and lack of details brings us right back to the first sentence of my initial post:

"This is an issue for which a good experienced lawyer should be used."

George:

Eveyone understood that counsel should be retained. The question presented was whether the plan owed a duty of care to Beneficiary B.

[Guest Sieve]

mjb -- The question presented in the OP is whether the PA had a duty to participant, when participant requested the beneficiary designation forms, to provide all the appropriate forms to the participant, NOT whether the PA owes a duty to potential beneficiary B.

[jpod]

I am curious: how does the OP, or for that matter person B, know what the deceased individual intented to do or not do vis a vis the pension plan? Are we merely assuming that he intended to change the beneficiary of the pension plan? Obviously neither B nor A is the deceased individual's spouse, or we would not be having this exchange. Is there someone at the employer who has admitted as much, or does the employer deny this? Even if the answers are good answers insofar as B is concerned, what is A's cause of action, even assuming A has standing, which she may not? Recovery of losses incurred due to breach of fiduciary duty? What losses? Failure to administer the plan in accordance with its terms? How so?

[GBurns]

That's just it. The devil is in the details that we do not know.