Court refuses to hear life insurance case

The Supreme Court on Friday refused to hear the case of a widow denied $426,000 in life insurance benefits on grounds that a federal retirement law does not entitle her to sue for compensation.

Lawyers for the Houston-area woman asked the court to intervene in the dispute, in which Melissa Amschwand accuses her late husband's employer of breach of fiduciary duty in connection with the life insurance policy.

Aetna denied benefits because Amschwand's ailing husband never returned to work for at least a day, a requirement for triggering the life insurance coverage.

Amschwand says her husband's employer never informed him of the requirement, refused to give him the life insurance plan documents that would have revealed it and assured him he was covered when the company switched to Aetna from another insurance company.

The case revolves around a section of the Employee Retirement Income Security Act of 1974 allowing beneficiaries to sue to obtain equitable relief. Equitable relief typically involves issuing a court injunction or ordering restitution. Legal relief, in contrast, typically involves money damages.

A federal judge in Houston and the 5th U.S. Circuit Court of Appeals in New Orleans refused to allow Amschwand's lawsuit to go forward, saying that ERISA does not allow Amschwand to sue Spherion Corp. for monetary relief equal to the insurance benefits. The company is a provider of temporary staffing services.

The case is Amschwand v. Spherion, 07-841.