ERISA-Fourth Circuit Rules That Surcharge And Estoppel Remedies-Providing Monetary Relief- Are Available To A Plaintiff Under ERISA

In McCravy v. Metropolitan Life Insurance Company, Nos.10-1074, 10-1131(4th Cir. 2012), the plaintiff, Debbie McCravy (“McCravy”), had participated in her employer’s life insurance and accidental death and dismemberment plan (the “Plan”). The Plan was issued and administered by the defendant, Metropolitan Insurance Company (“MetLife”). Under the Plan, an insured could purchase coverage for “eligible dependent children.”

McCravy elected to buy coverage for her daughter, Leslie McCravy, and paid premiums, which MetLife accepted, from before Leslie’s nineteenth birthday until she was murdered in 2007 at the age of 25. Following Leslie’s death, McCravy, the beneficiary of the policy insuring her daughter, filed a claim for benefits. MetLife denied McCravy’s claim, contending that Leslie did not qualify for coverage under the plan’s “eligible dependent children” provision. Per the summary plan description, “eligible dependent children” are children of the insured who are unmarried, dependent upon the insured for financial support, and either under the age of 19 or under the age of 24 if enrolled full-time in school. According to MetLife, because Leslie was 25 at the time of her death, she no longer qualified as an “eligible dependent child.” MetLife therefore denied McCravy’s claim for benefits and attempted to refund the multiple years’ worth of premiums MetLife had accepted to provide coverage for Leslie.

McCravy, however, refused to accept the refund check. Instead, she filed this suit. In her complaint, McCravy alleged, among other things, that it was represented to her by MetLife that Leslie had dependent life and accidental death and dismemberment insurance coverage under the Plan up to the time of her tragic death, and MetLife had accepted premiums for this coverage up until such time. To have done so, when Leslie in fact had no such coverage, according to the complaint, is a breach of fiduciary duty under section 404 of ERISA. The question for the Fourth Circuit Court of Appeals (the “Court”): is McCravy is entitled to recover for this breach under section 502(a)(3) of ERISA? The district court had ruled that McCravy could so recover, but that her recovery was limited, as a matter of law, to the premiums wrongfully collected and withheld by MetLife.

In analyzing the case, the Court noted that section 502(a)(3) of ERISA empowers plan participants “to obtain other appropriate equitable relief” to redress violations of ERISA or ERISA plans. In CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), the United States Supreme Court recently made clear that section 502(a)(3) allows for remedies traditionally available at equity and that those remedies include surcharge and equitable estoppel-the remedies at the heart of McCravy’s appeal-which could result in monetary relief. In light of Amara, Court concluded that such remedies are indeed available to McCravy in her suit against MetLife, and these remedies go beyond a mere return of the premiums that McCravy paid for the dependent coverage . Accordingly, the Court reversed the district court’s decision holding otherwise and remanded the case back to the district court for further proceedings.

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