More MS news articles for Aug 2001

Finding the limits of a full release

August 13, 2001
Volume: 2   Number: 36_law
Daily Record Assistant Legal Affairs Editor

The release a woman signed to settle her disability claim while working for a New York company did not bar her from seeking disability benefits five years later from the same insurance company, which was administering the benefit plan for her new Maryland employer, the 4th U.S. Circuit Court of Appeals held last week.

The court said the insurance company, UNUM Life Insurance, was acting on behalf of the first employer’s benefit plan when it settled the first claim in exchange for the release.

“[I]t could not derive from that Release benefits for its own personal account — benefits that it could claim in administering other plans and reducing its costs in connection with them,” Judge Paul V. Niemeyer wrote for the three-judge appellate panel.

Nancy Ross Barron worked for Advanced Computer Techniques when she was diagnosed with multiple sclerosis in 1974 and began receiving long-term disability payments. She was entitled to receive benefits through August 2008, but negotiated a lump-sum payment of $36,000 with UNUM, the plan’s administrator. In exchange, she signed a settlement release.

The release, executed in May 1993, stated that the money was “full, final and complete satisfaction and settlement of its past, present, and future liability” under the Advanced Computer policy, and that Barron relinquished “any and all claims I have or may have against UNUM.”

Barron’s MS went into remission and she was able to return to work about 16 months after she signed the release. By September 1997 she was working for Comcast Cablevision of Delmarva Inc. when her MS flared up again.

She filed for short-term disability through Comcast’s benefits plan, which UNUM provided. When Barron then applied for long-term benefits, UNUM denied the claim based on the 1993 release.

Barron sued in federal court in Baltimore, seeking a declaration that the release did not bar her claim and an injunction ordering UNUM to process her benefits request. But U.S. District Judge William M. Nickerson granted UNUM’s motion for summary judgment, ruling that the language of the release provided that it was not limited to the Advanced Computer benefit plan.

The appeals court disagreed and reversed the lower court’s decision.

“While obtaining such a release was clearly within UNUM’s authority as a fiduciary to resolve claims under that plan, what it obtained through the Release could only be used to serve the interests of the Advanced Computer Plan and not those of UNUM personally,” Niemeyer wrote.

“Even though the Release states that it bars claims against UNUM, UNUM was acting for the Advanced Computer Plan and all benefits obtained by UNUM in its role as fiduciary of that plan belonged to the plan.”

UNUM also owed a fiduciary duty to Comcast in administering its benefits plan, the court said.

“The only explanation for UNUM’s use of the Release ... to bar benefits under the Comcast Plan is UNUM’s interest in reducing its insurance risk,” Niemeyer wrote. “Yet, this interest in reducing its own personal liability would conflict with its duty to apply the Comcast Plan’s language and, if permitted, would amount to a breach of fiduciary duty.”

Finally, the court held that the language of the release only applied to claims arising from events that occurred before Barron signed the release.


Case: Nancy Ross Barron v. UNUM Life Insurance Co. of America, US4th No. 01-1065. Published. Opinion by Niemeyer, J. Filed Aug. 6, 2001.

Issue: Did a release a woman gave to an insurance company in exchange for lump-sum payment of disability payments bar her claim five years later against a different employee benefit plan administered by the same insurer?

Holding: No. The release was obtained by the insurer on behalf of the first employer’s benefit plan, not for its own benefit. Also, the release only applied to claims arising from events that had already occurred.

Counsel: Stephen M. Tilghman for appellant; John Snowden Stanley Jr. for appellee.

RecordFax: #1-0806-60 (12 pages)