Clarification of ERISA Fiduciary Duties in the First Circuit: Scope of Informing and Availability of Surcharge Damages

Lisa Erban, the widow of Dr. John Erban, sought $801,000 in life insurance benefits under her late husband's employer-sponsored Employee Retirement Income Security Act (ERISA) plan. The employer's HR Director, Nicholas Martin, provided partial information about the costly "conversion" option but omitted the cheaper "continuation" provision. This incomplete information led to the claim being denied after Dr. Erban's coverage lapsed. The court denied Defendants' motion to dismiss and, after discovery, both parties filed cross-motions for summary judgment.

Key Takeaways:

• An HR representative acts as a functional fiduciary under ERISA when they affirmatively assume the role of guiding a beneficiary through the benefits process, especially when aware of the beneficiary's vulnerable circumstances.
• A fiduciary breaches its duty by providing incomplete or misleading information in response to specific inquiries, even if written plan documents exist, when the fiduciary knows or should know that the beneficiary is laboring under a material misunderstanding that could be harmful.
• The court held that surcharge damages are a form of "appropriate equitable relief" available under ERISA section 502(a)(3) against a fiduciary to make a beneficiary whole for losses caused by the fiduciary's breach.
• The court found Martin was a functional fiduciary because he wasn't just performing ministerial tasks; he invited questions, provided advice, explained options, and made representations about post-employment benefits.
• The plan language allowed coverage to continue for 12 months from the last day worked if premiums were paid, but Martin only explained the more expensive "conversion" option, constituting a breach of duty.
• Defendants adequately informed the Erbans about converting the basic life policy but breached their duty regarding the supplemental policy by omitting its existence and need for separate conversion.
• The court conducted a thorough analysis of CIGNA Corp. v. Amara and circuit splits, rejecting the Fourth Circuit's minority view and joining the majority of circuits in holding that surcharge is a traditional equitable remedy available under section 502(a)(3).

Statistics:

• $801,000: The amount in life insurance benefits that Lisa Erban sought under her late husband's ERISA plan.
• 12 months: The duration for which coverage can continue from the last day worked if premiums were paid, as per the plan language.
• 1st Circuit: The circuit court that explicitly held, as a matter of first impression, that surcharge damages are available under ERISA section 502(a)(3) against a fiduciary.

Sources:

• Erban v. Tufts Medical Center Physicians Organization, Inc., No. 22-cv-11193-PBS, 2025 WL [Not Yet Available] (D. Mass. Aug. 12, 2025)