As CPAs engaged in tax and ERISA practice, understanding the nuances of fiduciary duties under the Employee Retirement Income Security Act of 1974 is paramount. A recent decision from the United States District Court for the District of Colorado in Marie Watson v. EMC Corp., Civil Action No. 1:19-cv-02667-RMR-STV, decided May 7, 2025, provides valuable insights into a plan administrator’s obligation to provide complete and accurate information to beneficiaries.

Case Background

The case centers on Plaintiff Marie Watson, who brought an action for breach of fiduciary duty against her husband’s former employer, EMC Corporation ("EMC"), after being denied life insurance benefits under an ERISA-governed employee welfare benefit plan.

Mr. Watson had separated from EMC under a Voluntary Separation Plan and Separation Agreement effective December 31, 2015. The Separation Agreement specified eligibility for continued participation in EMC’s group life insurance plans "during Pay Continuation," which lasted through November 24, 2016. Health benefits could be continued at the employee rate after this period. On November 9, 2016, Mr. Watson enrolled in Dell’s employee benefits plan, including a basic group term life policy.

Plaintiff’s claim stems from an email Mr. Watson sent to EMC on November 29, 2016, five days after his Pay Continuation period ended. He inquired, "How do I start paying for my benefits at the employee rate for the next year?" and provided contact information. EMC responded, "Good morning. You will be receiving a bill form [sic] adp pay flex to continue paying for your benefits. Benefits remain active during the transition".

It was undisputed that the Watsons paid the bills received from ADP. However, these bills were only for group health care coverage and did not include premiums for life insurance. To maintain his life insurance, Mr. Watson was required to convert his group life insurance coverage under the Plan to an individual policy when his group coverage ended on November 24, 2016, his last date of employment under the separation terms. Mr. Watson did not convert the policy. Consequently, when he died on September 18, 2017, he had no life insurance coverage under the Plan or a converted individual policy.

Plaintiff alleged that EMC breached its fiduciary duty by responding to Mr. Watson’s email with incomplete and inaccurate information, and that his reliance on this information led to his failure to convert the life insurance, thus depriving her of the policy’s proceeds.

Requested Relief

Acknowledging she could not recover benefits under the terms of the plan due to the failure to convert, Plaintiff sought equitable relief in the form of a surcharge for the breach of fiduciary duty pursuant to 29 U.S.C. § 1132(a)(3).

Applicable ERISA Law as Discussed by the Court

The Court outlined key aspects of ERISA relevant to the case:

Purpose of ERISA: Congress enacted ERISA to protect the interests of participants and beneficiaries, setting substantive requirements and providing for appropriate remedies and access to courts.
Fiduciary Duties: ERISA imposes fiduciary duties on plan providers under 29 U.S.C. § 1104. Fiduciaries must discharge their duties solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits. The standard of care is that of a "prudent man acting in a like capacity and familiar with such matters". This duty of prudence is context-specific and judged objectively by the fiduciary’s conduct at the time, not by the results with hindsight.
Civil Enforcement: Beneficiaries may enforce their rights via civil actions under 29 U.S.C. § 1132.
- Section 1132(a)(1)(B): Permits actions "to recover benefits due . . . under the terms of his plan" or "to enforce his rights under the terms of the plan".
- Section 1132(a)(3)(B): A "`catchall’ provision" allowing actions "to obtain other appropriate equitable relief" to redress violations or enforce ERISA provisions/plan terms. It serves as a safety net for injuries caused by violations not adequately remedied elsewhere, including breach of fiduciary duty. Plaintiffs with an "adequate remedy" under § 1132(a)(1)(B) cannot obtain relief under § 1132(a)(3)(B).
Appropriate Equitable Relief & Surcharge: The Supreme Court has recognized that surcharge "fall[s] within the scope of the term `appropriate equitable relief’ in [§ 1132(a)(3)]" [17, citing CIGNA Corp. v. Amara, 563 U.S. 421, 440-42 (2011)]. This monetary compensation for a loss from a trustee’s breach was historically an "exclusively equitable" remedy [17, citing Amara, 563 U.S. at 441]. A fiduciary can be surcharged under § 1132(a)(3) only upon a showing of actual harm, proved by a preponderance of the evidence [18, citing Amara, 563 U.S. at 442].
Fiduciary Duty to Provide Information: Drawing on persuasive guidance from other circuits (as the Tenth Circuit had not directly addressed the issue), the Court highlighted the established principle that ERISA imposes a duty on fiduciaries to provide complete and accurate information regarding beneficiary inquiries.
- This duty may extend to conveying complete and accurate information material to the beneficiary’s circumstance, even when not specifically asked for (Barker v. American Mobil Power Corp., 64 F.3d 1397, 1403 (9th Cir.1995); Eddy v. Colonial Life Ins. Co., 919 F.2d 747, 750 (D.C. Cir. 1990); Farr v. U.S. W. Commc’ns, Inc., 151 F.3d 908, 914 (9th Cir. 1998)).
- Fiduciaries "must give complete and accurate information in response to participants’ questions," and providing "materially misleading" information, by statement or omission, breaches this duty (Krohn v. Huron Mem’l Hosp., 173 F.3d 542, 547 (6th Cir. 1999)).
- The duty is to provide beneficiaries with accurate information (Adams v. Brink’s Co., 261 Fed. Appx. 583, 595 (4th Cir. 2008)) and disclose information material to the beneficiary’s circumstances once aware of them (Farr, 151 F.3d at 914, quoting Barker, 64 F.3d at 1403).
- ERISA fiduciaries cannot avoid their duties based on the technicalities of a participant’s questions (Harris v. Life Ins. Co. of N. Am., 419 F. Supp. 3d 1169, 1174 (N.D. Cal. 2019)).

Application of Law to Facts

The Court applied these principles to determine whether EMC breached its fiduciary duty. EMC did not dispute its fiduciary status.

EMC argued that Mr. Watson’s group life insurance had already expired when he emailed, and thus it could not reasonably understand his question about paying "for benefits at the employee rate" to pertain to life insurance. EMC contended that any misunderstanding was Mr. Watson’s fault for not clarifying.

The Court found this argument "unavailing". It reasoned that Mr. Watson asked about his benefits "as a whole," relying on EMC, as Plan Administrator, for information on continuation. As an ERISA fiduciary, EMC had an obligation to respond with complete and accurate information regarding all benefits, including informing him that his life insurance needed conversion to an individual policy.

The Court was persuaded by authority in other circuits that a fiduciary must provide complete and accurate information in response to an inquiry like Mr. Watson’s, and found that EMC breached this duty. Similar cases supported this finding:

In Erwood v. Life Ins. Co. of N. Am., No. CV 14-1284, 2017 WL 1383922 (W.D. Pa. Apr. 13, 2017), an administrator breached its duty by failing to inform a participant’s husband of conversion rights despite meeting with him to discuss continuing benefits. The court there held that once an ERISA fiduciary is aware of a beneficiary’s status and situation and receives a request for information, it has an obligation to convey complete and accurate material information.
In Echague v. Metropolitan Life Ins. Co, 43 F. Supp. 3d 994 (N.D. Cal. 2014), a plan administrator breached its duty by failing to provide clear and complete information about continuation/conversion of coverage despite an inquiry and known terminal illness.

The Court noted that EMC, as plan administrator, was aware of Mr. Watson’s status and that he would need to convert his life insurance benefits or lose coverage. Although his group policy had ended, he was still within the eligibility window for converting it to an individual policy (by February 23, 2017). Thus, a prudent fiduciary should have responded with complete and accurate information about continuing health benefits and informing him that his life insurance needed conversion with MetLife.

Crucially, the Court found that Mr. Watson’s possession of documents (Separation Agreement, Certificate of Insurance) explaining the end date and need to convert did not relieve EMC of its fiduciary duty to respond to his inquiry with complete and accurate information. At minimum, EMC should have explained he would lose life insurance without conversion and directed him back to those documents [15, citing Echague, 3 F. Supp. 3d at 1019]. Instead, EMC simply told him to pay bills and did not reference the documents explaining the conversion requirement.

Therefore, the Court concluded that EMC breached its fiduciary duty by failing to provide complete and accurate information in response to Mr. Watson’s inquiry about how to continue his benefits.

Equitable Relief and Conclusion

Having found a breach, the Court considered the appropriate remedy. Plaintiff sought surcharge under § 1132(a)(3).

Applying the Amara standard, the Court found that EMC’s breach resulted in actual harm to Plaintiff. Because EMC failed to provide accurate and complete information, Mr. Watson did not convert his coverage, and Plaintiff was denied her expected benefits.

The Court determined that surcharge in the amount of the lost benefits—$633,000—is appropriate equitable "make-whole relief" under § 1132(a)(3) [18, citing Amara, 563 U.S. at 442].

The Court agreed with Plaintiff that the surcharge amount should be reduced by the amount of any premiums required to maintain Mr. Watson’s coverage. The reasoning is that if EMC had not breached its duty and the coverage had been properly converted, Mr. Watson would have paid those premiums. The Court did not find that interest was appropriate equitable relief.

In conclusion, the Court GRANTED the Joint Stipulation and Motion for Determination consistent with the order. It found in favor of Plaintiff and against EMC, GRANTING IN PART Plaintiff’s request for equitable relief in the form of surcharge. Plaintiff was awarded an equitable surcharge of $633,000, reduced by the amount of premiums required to maintain Mr. Watson’s coverage. The parties were ordered to submit a proposed judgment, and Plaintiff was permitted to file a separate motion for reasonable costs and attorneys’ fees under ERISA § 1132(g).

This case serves as a critical reminder for ERISA plan administrators and the CPAs advising them: the duty to act prudently includes the affirmative obligation to provide complete and accurate information to participants and beneficiaries, especially in response to inquiries about continuing coverage, and this duty is not necessarily excused by the participant’s possession of other documents or the technical phrasing of their question. Failure to uphold this duty can result in significant liability through equitable remedies like surcharge.

Prepared with assistance from NotebookLM