Firm Wins ERISA Dispute

On April 16, 2024, an arbitrator ruled in favor of Gair Gallo’s client on an ERISA claim for wrongful denial of benefits. The Plan Administrator had ceased benefit payments and terminated the benefits plan on grounds that the Firm’s client had allegedly violated a non-solicitation provision on which his benefit payments were conditioned.

After exhausting administrative remedies, during which two committees of the Plan Administrator had upheld the company’s denial of benefits, Gair Gallo pursued a claim under Section 502 of ERISA for wrongful denial of benefits in an arbitration proceeding administered by the AAA before a single arbitrator in Dallas, Texas.

The case involved novel issues pertaining to the standard of review and deference to be afforded to administrative decisions relating to “top hat” plans.

After extensive briefing and a one-day arbitration hearing, the arbitrator ruled in our client’s favor and held that the Plan Administrator abused its discretion in denying benefits. In particular, the arbitrator held that the Plan Administrator relied on a legally incorrect interpretation of the non-solicitation provision. Further, the arbitrator held that the Plan Administrator abused its discretion in disregarding evidence submitted by Gair Gallo’s client and instead improperly relied on “unsupported suspicions.” The arbitrator specifically noted that Gair Gallo obtained admissions in deposition testimony that showed that the Plan Administrator’s articulated reasons for denying the claim were not the true reasons for the denial.

The arbitrator awarded damages in the amount of improperly-withheld benefit payments, ordered payments to resume for the remainder of the term of the plan, and ruled that the claimant was entitled to an award of attorneys’ fees.