Owo v. Life Insurance Company of North America

Background

Yvette Owo sued Life Insurance Company of North America (LINA), Accenture, LLP, and the Accenture United States Group Insurance Plan. She alleged that the defendants violated the Employee Retirement Income Security Act of 1974 (ERISA) by failing to produce the short-term disability wage-replacement policy and that she was entitled to a statutory penalty. She also alleged that the defendants breached a contract by denying her short-term disability benefits.

Accenture’s leave-of-absence policy described short-term disability wage-replacement benefits for eligible employees. The policy provided 100% of base pay for up to 60 calendar days and 60% of base pay for up to the next 120 calendar days when the employee met the policy’s medical and work-related requirements. The policy included an appeals process administered by Cigna. The opinion states that Owo exhausted the administrative remedies under the policy and that LINA denied her second-level appeal in February 2019.

Accenture and the Plan moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim for relief. They argued that the short-term disability benefit was a payroll practice exempt from ERISA and that no enforceable contract existed between Owo and Accenture.

ERISA claim

The court explained that ERISA covers certain employee welfare benefit plans but that Department of Labor regulations exclude payroll practices, including payment of normal compensation from an employer’s general assets during periods when an employee cannot work for medical reasons.

The court found that Accenture’s short-term disability wage-replacement policy was an undisputed self-funded payroll practice excluded from ERISA. Because ERISA did not govern that policy, Owo could not use ERISA to compel production of the policy or obtain the associated administrative-record production penalty. The court therefore dismissed Owo’s ERISA claim.

Breach-of-contract claim

Owo argued that Accenture’s leave-of-absence policy was part of her employment package and formed a contract. Applying New York law, the court stated that employee manuals, handbooks, and policy statements should not lightly be treated as binding employment agreements.

The court concluded that Accenture’s leave-of-absence policy was an internal policy describing leave and possible wage-replacement options, not an enforceable contract. It therefore dismissed Owo’s breach-of-contract claim against Accenture and the Plan. Because it reached that conclusion, the court did not address the defendants’ alternative argument that the parties lacked mutual agreement because Accenture could change the policy without notice.

Disposition

The court granted Accenture and the Plan’s motion to dismiss. The Clerk of Court was directed to close the motion. The opinion does not state that the order resolved Owo’s claims against LINA. It also notes that Owo told the court she had a separate, pending long-term-disability claim with Accenture outside the litigation.