Liberty Mutual loses bid to deny retirement funds to former executivePosted On: Apr. 2, 2019 2:09 PM CST
Liberty Mutual Insurance Co. must pay $1.27 million in retirement benefits to a former executive who left the company to join a rival, a federal court judge ruled Sunday calling out the Boston-based insurer for a “lack of candor” and “deception.”
David Cohen, former president U.S. and global casualty chief underwriting officer at Liberty International Underwriters, worked at Liberty Mutual from 1999 to 2015 and was a participant in various company employee benefit plans, according to the court documents in David Cohen v. Liberty Mutual Group Inc. Executive Partnership Deferred Compensation Plan, which was heard in U.S. District Court for the Southern District of New York.
In 2015, Liberty Mutual planned to make Mr. Cohen redundant, unbeknownst to him, but three days before it intended to terminate his employment, he resigned and moved to Bermuda-based Aspen Insurance Holdings Ltd., according to the court opinion.
At around the same time, several other Liberty Mutual employees resigned and began working at Aspen, court documents say.
After he left, Liberty Mutual reclassified Mr. Cohen’s departure from voluntary resignation to “termination for cause” and notified him that as a result he was denied benefits under the plans, the court said.
In his opinion, Judge Vernon S. Broderick said the dual role played by Liberty Mutual as both the administrator of the ERISA benefits and executive compensation plans and as the entity that funds the plans creates “a classic conflict of interest.”
Liberty Mutual’s “pattern of lack of candor—which essentially amounts to deception by failing to disclose material information—toward Plaintiff indicates that the conflict of interest may have had an impact on the benefits determination,” Judge Broderick wrote in his opinion.
The insurer had also intended to terminate Mr. Cohen’s employment “without cause” on Oct. 15, 2015, before Mr. Cohen gave notice on Oct. 12, 2015, the opinion noted.
“This apparent conclusion that there was no basis to terminate Plaintiff’s employment for cause is inconsistent with Liberty Mutual’s Dec. 23, 2015, determination—after Plaintiff had already voluntarily resigned—that his departure should be reclassified as a termination for cause,” the judge wrote.
Liberty Mutual also “virtually ignored and dismissed as irrelevant 31 sworn affidavits from former Liberty Mutual employees employed at Aspen, each asserting under penalty of perjury that the affiants were ‘not recruited or solicited by [Plaintiff] to leave [their] employment with [Liberty Mutual]’,” according to the opinion.
Judge Broderick granted Mr. Cohen’s motion for summary judgment and directed Liberty Mutual to pay the benefits pursuant to the terms of the plans.
“We don’t comment on matters of litigation,” said a spokeswoman for Liberty Mutual.