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1968 A.B.A. Sec. Ins. Negl. & Comp. L. Proc. 491 (1968)
Employee Benefits Liability Insurance

handle is hein.journals/abasineg34 and id is 533 raw text is: EMPLOYEE BENEFITS LIABILITY INSURANCE
Wausau, Wisconsin
Perhaps the title of this paper is misleading. When we think of employee
benefits insurance, we usually think in terms of group accident and health
insurance, group life insurance, disability benefits insurance, pension plans, and
all of the other insured employee benefits which are part of the largess
employees are receiving in increasing abundance from their employers under the
employer-employee relationship. This paper is not concerned with the insurance
for the payment of such employee benefits. It is concerned with a related
problem which has resulted from these employee benefits programs: The
potential liability of an employer because of errors, omissions or misrepresenta-
tions in the administration of employee benefits plans, or in advising employees
of their rights and of the benefits available to them under employee benefits
plans. More specifically, this paper deals with the insurance available to protect
the employer against such potential liability.
Until about six years ago, employers were not overly concerned with any
potential liability they might have as a result of errors or omissions in
administering their employee benefits programs. The idea of purchasing
insurance against any such potential liability was about as nonexistent as was the
available insurance. However, the case of Gediman v. Anheuser-Busch, Inc.,'
changed all of this. The Gediman case made employers and their insurance
buyers aware for the first time of a liability exposure in the area of the
administration of employee benefits programs, and it created a demand for
insurance protection against such liability. It is not my purpose to review in
depth the development of the law under which an employer may be held liable
for errors, mistakes, or misrepresentations in administering employee benefits
programs. Several excellent papers have been written on this subject, and I
commend them to you for perusal.2 It is necessary, however, to briefly review
the employee benefits liability exposure in order to have a better understanding
of the employee benefits liability insurance.
The Gediman case involved a dispute over the pension benefits of an employee
who retired early because of ill health. The facts of the case are somewhat
1 299 F. 2d 537 (Second Circuit, 1962).
2 Sharp, Employer Responsibility for Negligent Misrepresentations, 41 Temple L. Q.,
186; Davis, Liability to Employees for Gratuitous Advice or Service, 18 Bus. Law. 1063;
Maurer, Ethical and Legal Problems of the Corporate Counsel in the Rendering of Personal
Advice to Company Officers and Employees, 21 Bus. Law. 817; Anderson, Liability of
Employers and Insurers Arising From Benefit Plan Information, presented at the meeting of
the Legal Section of the American Life Convention, October 24, 1967.

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