First Circuit Wins for Pierce Atwood, Unum Life Insurance Company and Sun Life Assurance Company

On July 2, 2014, a unanimous panel of the United States Court of Appeals for the First Circuit held that Unum Life Insurance Company’s practice of using Retained Asset Accounts (RAAs) to pay death benefits claims on group life insurance policies, which specifically provided for the use of RAAs, does not violate the Employment Retirement Income Security Act (ERISA). The decision, which comes after four years of class litigation, brings the First Circuit in line with prior decisions of the Second and Third Circuits involving other insurers, as well as opinions expressed by the Department of Labor. It also clarifies the reach of a prior First Circuit decision, which had held that paying group life benefits through RAAs violated ERISA where plan documents required payment by lump sum.

Unum was represented by a team of lawyers from Pierce Atwood’s Boston and Portland offices, including Donald R. Frederico, Cathy Connors, Byrne Decker, Gavin McCarthy, and Katherine Kayatta.

Read the Unum decision.

Several weeks later, on August 26, 2014, the same First Circuit panel upheld the District of Massachusetts’ ruling that Sun Life’s practice of paying group life claims by RAA does not violate ERISA, where the policies did not specifically provide for RAAs but permitted payment by means other than a lump sum. In the Sun Life decision, which also followed several years of class litigation, the court specifically held that where the policy allows the insurer to choose a payment method, and the choice does not “unfairly diminish, impair, restrict or burden the beneficiary’s rights,” no ERISA breach takes place.

The Pierce Atwood team representing Sun Life included Byrne J. Decker, Cathy Connors, and Gavin McCarthy.

Read the Sun Life decision.

Pierce Atwood assists its clients to vigorously defend class actions on the merits, to challenge class certification where appropriate, and to navigate the complex class litigation process.

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