Jottings by an Employment Lawyer provides the following discussion of the case of Cruthis v. Metropolitan Life (7th Cir. 2/2/04) [pdf]:
MetLife was no doubt shocked when it removed a claim for disability benefits under an employee benefit plan to federal court on the basis of a federal question and had it remanded to state court. The district court relied on language in the STATEMENT OF ERISA RIGHTS which provides in part, “If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court.” Interpreting this as a contractual forum selection clause, the court held that MetLife was bound by an agreement that the case could be heard in state court. Since MetLife had copied a model form provided by the DOL for compliance with ERISA, it was less than pleased. Fortunately, the 7th Circuit had jurisdiction to hear the appeal of the remand since it was based on a choice of forum clause rather than a lack of jurisdiction.
On appeal, the 7th Circuit held that the statement was not a contractual agreement, but just a statement of rights, and sent the case back to the district court for a ruling on the merits, stating as follows:
We conclude that MetLife’s statement clearly was made to comply with ERISA’s disclosure requirements. Significantly, MetLife copied the model statement quoted above verbatim. Moreover, there is no evidence that the statement was intended to be part of the contract between the parties. The clause began with the capitalized title “STATEMENT OF ERISA RIGHTS” and the first sentence states that “[t]he following statement is required by federal law and regulation.” The statement further specified that “[u]nder ERISA there are steps you can take to enforce the above rights.” Thus, the plain language of the statement indicates that it is a disclosure of applicable law rather than a substantive contract provision.
Michael Fox notes the time, expense and attorneys fees caused by the erroneous opinion. While there is very little about the facts of the case in the opinion, it is interesting to note that this is one of those many “denial of disability benefits” cases which is making its way through the courts as discussed in this Workforce Management article.
Also, regarding the ERISA rights statement, remember this case? Prescott v. Little Six, Inc., 2003 U.S. Dist. LEXIS 17484 (D. Minn. 2003)? According to the court in Prescott, an Indian tribal government entity waived its tribal sovereign immunity from lawsuits in federal court based upon language in the model statement of ERISA rights. In deciding that the tribal entity had waived its immunity, the court relied in part on several plans’ SPDs, each of which contained language from the model statement. The court keyed in on this language that a plan participant “may file suit in a federal court” if a benefit claim was denied, in holding that the tribal entity had waived its sovereign immunity.