Schuyler v. Sun Life Assurance Company of Canada

Background

Kristen Schuyler sued Sun Life Assurance Company of Canada under the Employee Retirement Income Security Act of 1974 (ERISA), seeking long-term disability benefits. Benco Dental Supply Company provided its full-time employees with long-term disability coverage through the Benco Dental Supply Company Long Term Disability Plan. Sun Life was the plan’s insurer, claims administrator, and claim fiduciary.

The plan defined “Totally Disabled” as being unable to perform one or more material and substantial duties of the employee’s regular occupation. Schuyler worked as a Territory Sales Representative at Benco Dental beginning in May 2011. She alleged that a September 2015 fall down stairs caused traumatic brain injuries and that she continued to experience confusion, concentration and memory problems, fatigue, sleep problems, and sensitivity to noise and light. She continued working until May 22, 2019, then took medical leave. She submitted a claim for long-term disability benefits on May 31, 2019. Sun Life denied the claim in October 2019 and denied her administrative appeal in August 2020.

On December 12, 2019, between Sun Life’s initial denial and its decision on her appeal, Schuyler signed a Separation Agreement and Release with Benco Dental. The agreement released known and unknown employment-related claims, expressly including alleged ERISA violations. Schuyler later filed this lawsuit on December 24, 2020. The parties filed cross-motions for summary judgment, which ask the court to decide whether there is no genuine dispute of material fact and whether one party is entitled to judgment as a matter of law.

Court’s Analysis

Sun Life argued that the separation agreement waived Schuyler’s ERISA claims. The court agreed that a person may waive ERISA claims through a contract if the waiver was knowing and voluntary. It applied six factors concerning Schuyler’s education and business experience, the time she had to review the agreement, her role in negotiating it, the agreement’s clarity, whether she had an opportunity to consult an attorney, and whether she received consideration beyond benefits to which she was already entitled. The court stated that these factors are not exhaustive and that no single factor necessarily controls.

The court found that the factors strongly favored enforcement of the release. Schuyler had a bachelor’s degree, an MBA, extensive business experience, and experience managing sales for a territory of more than 250 dentists. She had the agreement for 20 days before signing it, had more than 14 days to consider it under the agreement’s terms, and had seven additional days to revoke it. She negotiated an increase in the payment from $19,584.06 to $25,000, as well as other terms.

The agreement twice referred to the release of ERISA claims. It also stated that Schuyler had read and understood the agreement, had an opportunity to consult an attorney, was signing voluntarily, and understood that she was waiving potential claims under ERISA and other listed laws. Schuyler stated that her disability attorney reviewed the agreement before she signed it. The court concluded that this consultation supported finding that the waiver was knowing and voluntary.

The court also rejected Schuyler’s arguments that the release did not bar this lawsuit. She had asked an attorney for Benco Dental whether the agreement would affect her ability to appeal Sun Life’s decision or apply for Social Security Disability Insurance, and the attorney told her it should not affect those actions. The court distinguished an administrative appeal from a federal lawsuit and found that the agreement clearly released legal actions and suits, including ERISA claims. The court also rejected Schuyler’s later statements that she would not have signed the agreement had she understood that it could affect her disability benefits.

Finally, the court rejected Schuyler’s argument that Sun Life was not among the entities released by the agreement. The agreement covered Benco Dental and its related or affiliated entities and parties-in-interest. The court stated that plan administrators can qualify as related or affiliated entities and that ERISA defines a party-in-interest to include a fiduciary of an employee-benefit plan. Because the parties did not dispute that Sun Life was a fiduciary of the disability plan, the court concluded that Sun Life was a released entity.

The court noted that the cited Second Circuit cases involved waivers of pension benefits, but it found no reason to treat pension and disability benefits differently for this purpose. It therefore concluded that Schuyler released her right to bring ERISA claims in exchange for the negotiated payment.

The court also denied both parties’ motions to strike. It considered Schuyler’s affidavit only for the limited purpose of deciding whether she knowingly and voluntarily released her ERISA claims.

Disposition

Sun Life’s motion for summary judgment was granted. Schuyler’s motion for summary judgment was denied. The court concluded that the release barred the lawsuit, directed the Clerk of Court to terminate the pending motions, and closed the case.