Sixth Circuit Reverses District Court, Finding Long-Term Disability Beneficiary Entitled to Cost of Living Increase
On March 25, 2015, in an unpublished opinion, the United States Court of Appeals, 6th Circuit, found that Michael Stiso was entitled to a cost of living adjustment with regards to his long-term disability benefit. Mr. Stiso had been receiving long-term disability benefits under his employer’s disability insurance plan and believed he was entitled to a seven percent per year cost-of-living adjustment as described in the long-term disability plan and summary plan description.
The Sixth Circuit, in reversing the District Court’s ruling, stated
By providing plaintiff with a summary plan description that led plaintiff reasonably to understand that he would receive a 7% yearly increase in benefit and then denying his claim despite the explicit language in the summary plan description, both [his employer] International Steel and defendant [plan administrator] Metropolitan Life Insurance Company breached their fiduciary responsibilities to plaintiff.
After explaining that the plan was covered under ERISA and that employer’s generally only give their employees the summary plan description, and not the plan itself, the Sixth Circuit concluded International Steel had “breached its fiduciary duty by issuing a summary plan description that did not accurately reflect the terms of the plan.” Next, the court explained how MetLife, as the administrator of the plan, also had a fiduciary duty to Mr. Stiso. The court agreed with Mr. Stiso’s argument that MetLife’s “interpretation of the Plan in a manner which benefited itself rather than the plan beneficiaries and in a manner to serve its own financial interests and knowingly contrary to the promises of the summary plan description” was a breach of its fiduciary duty. (Internal quotes omitted).
The Sixth Circuit concluded that based on the breaches of fiduciary duty, it must reverse the District Court’s decision in favor of International Steel and MetLife, and remand the case back to district court where Mr. Stiso is entitled to seek appropriate equitable relief.