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En Banc Sixth Circuit: No Disgorgement of Profits in ERISA Benefits Denial Claim

The U.S. Sixth Circuit Court of Appeals recently held that a disability plan participant was not entitled to disgorgement of an insurance company?ÇÖs profits when the participant had recovered on his wrongful denial of benefits claim. The en banc Sixth Circuit reversed a prior panel?ÇÖs opinion that held the participant could recover both for the value of unpaid disability benefits plus approximately $3.8 million in profits the insurance company earned on the unpaid amounts. The Sixth Circuit reasoned that equitable relief under ERISA, such as disgorgement of profits, is a ?Ç£catch all?Ç¥ remedy only available where a participant is not otherwise made whole under another of ERISA?ÇÖs remedial provisions. Here, the participant had been made whole by recovering the unpaid disability benefits plus his attorneys?ÇÖ fees. Accordingly, to permit him to also recover the insurance company?ÇÖs profits would result in a double recovery.

The Sixth Circuit’s en banc opinion can be found here.

For a summary of the Sixth Circuit’s prior opinion, please see our newsletter post here.

The lawyers of our Employee Benefits and Executive Compensation Practice Group are readily able to assist companies on a nationwide basis with implementing sophisticated benefit plans and providing answers to their most challenging compensation issues. Additionally, our lawyers are well aware of the daily employee benefits challenges facing companies of all sizes and are capable of helping in-house lawyers and human resources personnel with the day-to-day advice and guidance necessary to properly administer employee benefits plans.

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