Our client was injured at work on Dec. 19, 2011. As a result, two claims arose: a workers’ compensation claim and an ERISA long-term disability benefits claim. Under its ERISA group disability policy purchased by the employer, Reliance Standard began paying benefits, recognizing our client’s disability.
However, in August 2014, our client settled his workers’ compensation claim and signed a “resignation and release agreement” with his former employer in furtherance of that settlement. That agreement was between our client, his former employer and the employer’s workers’ compensation insurance carrier. It stated that our client was releasing his former employer and its “affiliates, subsidiaries, directors, officers and others from ANY and ALL claims for damages related to the work injury, including claims arising under The Employee Retirement Income Security Act (ERISA).”
After this agreement, Reliance immediately terminated benefits, claiming that our client had also released his ERISA long-term disability claim.
An extensive legal argument was made in the administrative appeal, asserting that Reliance was not an intended beneficiary of the release; that Virginia contract law, not the general body of ERISA law governed the issue; that there was no consideration for the release of Reliance; and that the employer never intended that the workers’ compensation release would also release the ERISA benefits claim. Documents exchanged during the workers’ compensation claim between attorneys working on that case also were used to show that there was no intent whatsoever to have the ERISA benefits stop.
Upon administrative appeal, Reliance reversed its decision and reinstated benefits. Our client has several years of benefits remaining with a total payout of just under $400,000.