First Circuit Finds Fiduciary Duty under ERISA for Insurers Accepting Group Premiums from Employers

The life insurance plan in Shields provided that the insurer had discretion to make eligibility determinations and to determine whether an employee is entitled to the coverage for which premiums were paid. [...]the court held, if a plan confers on an insurer the discretion to choose when to accept premiums from an employee and when to determine if an employee is eligible for coverage, then the insurer has the kind of discretion that would suffice to impose a functional fiduciary duty on the insurer. [...]the insurer "has a fiduciary duty to make eligibility determinations for each employee from whom the insurer accepts premiums reasonably proximate to the acceptance of those premiums." Plan language could impose complete responsibility on the employer for enrollment and eligibility verification. [...]plan sponsors, especially those within the First, Fourth, and Eighth Circuits, should evaluate their benefit plans and ascertain whom the plans identify as being responsible for enrollment and eligibility verification.