Benefits Goofs: Employers Pay for Mistakes

By Brooke Colaizzi

In a recent ERISA case, the employer mistakenly believed a former employee had three more years of service than he actually did at retirement. (The employer thought the former employee was still on long term disability). Consequently, the employer told the former employee he could retire with full medical benefits for life. Based on his actual years of service, however, the former employee was not entitled to any medical benefits after retirement. When the employer discovered its mistake, it discontinued the former employee’s medical benefits. The former employee sued, claiming the employer had violated its fiduciary duty under ERISA. The employee only alleged that his former employer was negligent—nothing suggests that the employer intentionally misrepresented his eligibility for lifetime medical benefits. Nevertheless, the employer now has to defend itself against an ERISA claim. Gearlds v. Entergy Servs., Inc., No. 12-60461 (5th Cir. Feb. 19, 2013).

Double- and triple-check those benefits calculations: even a good-faith mistake could land you in a lawsuit.

Leave a Reply

Your email address will not be published. Required fields are marked *