Employee's widow can sue Walmart for life insurance benefits - 6th Circ - Reuters

The logo of a Walmart Superstore is seen during the outbreak of the coronavirus disease (COVID-19), in Rosemead, California, U.S., June 11, 2020. Picture taken June 11, 2020. REUTERS/Mario Anzuoni

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SummaryCompaniesLaw firmsLower court tossed ERISA claims, saying Walmart was just performing ‘ministerial function’Appeals court said Walmart didn’t qualify for that defense since it controlled the benefit plan

A federal appeals court on Tuesday revived much of lawsuit by a Walmart greeter’s widow who blames the mega-retailer for the cancelation of her husband’s life insurance policy and for overcharging him for disability insurance premiums.

The 6th U.S. Circuit Court of Appeals said a lower court erred in dismissing Ruth Mae Chelf’s claims for breach of fiduciary duty based on the “ministerial function” exception to ERISA, the federal law governing employee benefit plans.

That defense was unavailable to Walmart because it protects only those “who have no power to make any decisions as to plan policy, interpretations, practices or procedures” from being held to the high standard of care required of fiduciaries, Circuit Judge Jane B. Stranch wrote for the appeals court.

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“To the contrary, (Walmart) was a fiduciary as it indisputably exercised control over the Plan’s assets when it handled Mr. Chelf’s premiums, exercised control over the disposition of the Plan’s assets, and had discretionary authority over the administration of the Plan,” Stranch wrote, joined by Circuit Judges Karen Nelson Moore and Eric Clay.

Walmart and its attorney, J. Gordon Howard of Russell Oliver & Stephens, did not immediately respond to requests for comment.

Mrs. Chelf’s attorneys at Grabhorn Law|Insured Rights also had no immediate response.

According to an online obituary, Elmer Chelf worked in Kentucky as a Walmart greeter for 16 years after retiring from his career as an insurance salesman. He died in 2016 at the age of 80.

Mrs. Chelf sued Walmart and Prudential, which underwrote Walmart’s insurance benefits, in federal court in Louisville in 2017.

The suit alleged that Walmart and Prudential shared the blame for canceling a $25,000 extra-coverage policy without notice at some point before her husband’s death; that Walmart had failed to disclose information about various options to keep the policy active, such as applying his unused vacation time to cover the premium; and that he had been overcharged for 18 months of disability insurance.

Prudential settled with Mrs. Chelf after the judge dismissed her claims against Walmart. It did not participate in the appeal.

The 6th Circuit revived Mrs. Chelf’s claims that Walmart breached its fiduciary duties by mishandling plan assets (for example, by “misappropriating” the disability premiums rather than applying them to the life insurance policy).

It upheld the dismissal of her nondisclosure claims, but said the judge can decide on remand whether she should be allowed to refine them with an amended complaint.

The case is Ruth Mae Chelf v. Prudential Insurance Co, Administrative Committee For The Associates’ Health And Welfare Plan, Wal-Mart Associates Inc, 6th U.S. Circuit Court of Appeals No. 20-6097.

For Chelf: Andrew Grabhorn and Michael Grabhorn of Grabhorn Law|Insured Rights

For Walmart: J. Gordon Howard of Russell Oliver & Stephens