E-Alert Case Updates

Fourth Circuit Expands Remedies Available to ERISA Plaintiffs

McCravy v. Metro. Life Ins. Co. [McCravy II]
Nos. 10-1074 and 10-1131 (U.S. Court of Appeals for the Fourth Circuit, July 5, 2012)
by Colleen K. O’Brien, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Plaintiff was a participant in her employer’s Life Insurance and Accidental Death and Dismemberment Plan, which was issued and administered by Metropolitan Life Insurance Company (“MetLife”). Under the plan, she purchased accidental death and dismemberment coverage for “eligible dependent children.” She obtained such insurance coverage for her daughter and paid premiums which were accepted and retained by MetLife.

While named as a covered dependent on the insurance plan, Plaintiff’s daughter was murdered at the age of 25. Plaintiff filed a claim for benefits, which was denied by MetLife because the daughter did not qualify for coverage under the Plan’s “eligible dependent children” provision. The Plan defined eligible dependent children as unmarried dependents who are under the age of 24 if enrolled full-time in school. Because the daughter was 25 at the age of her death, she no longer satisfied the definition of eligible dependent children. Accordingly, MetLife denied Plaintiff’s claim and attempted to refund paid premiums.

Plaintiff refused the refund check and instead filed suit in federal court alleging that MetLife breached its fiduciary duties under the Employee Retirement Income Security Act (“ERISA”). Plaintiff sought payment for the coverage she argued she was entitled to under 29 U.S.C. § 1132(a)(3). The trial court ruled that Plaintiff was not entitled to recover the full benefits under this particular provision but that she could recover the premiums withheld by MetLife for coverage she never actually held on the life of her daughter.

Plaintiff appealed to the Fourth Circuit and argued that under Section 1132(a)(3), that she was entitled to “appropriate equitable relief” which was the payment of the full benefits under the Plan. In a decision dated May 15, 2011, the Fourth Circuit affirmed. The same day however, the Supreme Court of the United States decided CIGNA Corp. v. AMARA, 131 S. Ct. 1866 (2011), which stated in dictum that equitable remedies like surcharge, were available to plan participants in breach of fiduciary duty cases. Following AMARA, Plaintiff asked the Fourth Circuit to reconsider its ruling. The Fourth Circuit did permit a rehearing, and in a decision issued on July 5, 2012 (McCravy II), vacated its prior ruling, and concluded that Plaintiff was entitled to more than a mere premium refund. Overall, the Court endorsed the proposition that surcharges, resembling monetary/legal relief, are available to plan participants suing plan administrators for breach of fiduciary duty in ERISA cases.