ERISA-Fifth Circuit Rules That Plaintiff Alleging Breach Of Fiduciary Duty Under ERISA Could Be Entitled To Monetary Damages Under Amara

In Gearlds, Jr. v. Entergy Services, Inc., No. 12-60461 (5th Cir. 2013), the plaintiff (“Gearlds”) was appealing from the district court’s dismissal of his suit against defendant Entergy Services, Inc. (“Entergy”), in which he alleged claims of equitable estoppel and breach of fiduciary duties under ERISA.

In this case, Gearlds took early retirement from Entergy in 2005, at the age of 55, and received a reduced pension and full medical, dental, and vision benefits from Entergy’s employee benefit plans. Gearlds alleged in his complaint that he agreed to retire early because Entergy told him orally and in writing that he was covered by Entergy’s Medical Benefits Plus Plan and would continue to receive medical benefits. At some point, Gearlds waived medical benefits available under his wife’s retirement plan when she retired from her employment because of the assurances he had received from Entergy.

In 2010, however, Entergy notified Gearlds that it was discontinuing his medical benefits. Apparently, when Entergy determined the benefits to whichGearlds was entitled upon retirement in 2005, it believed that Gearlds was still receiving long term disability benefits from one of Entergy’s plans, even though those benefits had actually ended three years earlier, and it therefore included the time from 2002 to 2005 when computing Gearlds’s service time for purposes of determining his benefits. This error caused Entergy to determine that Gearlds was eligible for medical coverage, when he was not. Gearlds filed this suit, alleging that Entergy negligently induced him to take early retirement insofar as it promised him health care benefits, and asserting claims under for breach of fiduciary duty under ERISA § 502(a)(3) and equitable estoppel.

In analyzing the case, the Fifth Circuit Court of Appeals (the “Court”) noted that ERISA § 502(a)(3) permits a plan beneficiary to bring a civil action to obtain “other appropriate equitable relief” for ERISA violations. In CIGNA Corp. v. Amara, the Supreme Court recently expanded the kind of relief available under § 502(a)(3), when the plaintiff is suing a plan fiduciary and the relief sought makes the plaintiff whole for losses caused by the defendant’s breach of a fiduciary duty. The Supreme Court concluded that-in such a case- monetary damages could be allowed under that section, in the form of “surcharge”. In this case, Gearlds’s complaint under § 502(a)(3) for breach of fiduciary duty -which could lead to monetary damages in the form of surcharge, even though he did not specifically request it- is viable in light of Amara. As such, the Court overturned the district court’s dismissal of the case, and remanded the case back to the district court.

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