In Prouty v. The Hartford Life & Acc. Ins. Co. & C&S Wholesale Grocers Inc., 997 F. Supp. 2d 85, 88 (D. Mass. 2014), the plaintiff asserted an ERISA claim against her former employer and the issuer of her employer’s group life insurance plan, claiming that both breached their fiduciary duties by failing to provide proper notice and explanation of the plaintiff’s life insurance conversion rights. In rejecting the plaintiff’s claim, the court noted that, “other courts who have addressed the issue of whether plan administrators and insurers are required to provide plan participants with post-termination notice of life insurance conversion rights have found no such requirement. Walker v. Fed. Express Corp., 492 Fed. Appx. 559, 565 (6th Cir. 2012) (noting that ‘ERISA does not contain any provision that requires a plan administrator to provide notice to plan participants other than a summary plan description and information of the benefits plan as discussed under 29 U.S.C. §§ 1021(a)(1) and 1022,’ which do not include life insurance conversion rights); Howard v. Gleason Corp., 901 F.2d 1154, 1161 (2d Cir. 1990) (stating that ERISA does not mandate notice of life insurance conversion privileges); Weeks v. W. Auto Supply Co., 2003 WL 21510822, at *5 (W.D. Va. June 25, 2003) (post-termination notice requirements under ERISA apply to a group health plan, but not to a life insurance plan).” Id. at 91.
The court also concluded, “there is no requirement under [ERISA] to provide notice of conversion rights for life insurance policies.” Prouty, 997 F.Supp.2d at 91. This concept applies to both the insurer as well as to the administrator. Id.
Plan Administrator Considerations in Light of this Decision
Plan Administrators should beware of Prouty’s broad rejection of any requirement under ERISA to provide notice to participants of life insurance conversion rights as other courts have taken a different position on this issue. See Weaver Bros. Ins. Assocs., Inc. v. Braunstein, No. 11-5407, 2014 U.S. Dist. LEXIS 78626, at *36-37 (E.D. Pa. June 9, 2014) (The Court disagreed with Prouty and found that a conversion right must be included in an SPD where “failure to exercise the right functions as a ‘circumstance[] which may result in disqualification, ineligibility, denial or loss of benefits.’ 29 U.S.C. § 1022(b)”).
Prouty is more safely interpreted as further support for the proposition that individualized notice to participants of life insurance conversion rights is not required under ERISA, but may be required by the governing plan, and should still be provided as best practice.