Court in 11th Circuit Clarifies When a Remand to the Plan Fiduciary is Appropriate.

When a claimant brings a lawsuit seeking benefits under an employee benefit plan pursuant to ERISA § 502(a)(1)(B), one of the remedies available to the Court is a remand back to the plan fiduciary for further review.  But under what circumstances is a remand warranted?  Certainly, if the Court finds that the plan fiduciary abused its discretion or committed a procedural error, remand may be ordered if further investigation in necessary before an award can be evaluated.        

In any event, as explained by the Court in Hooks v. Hartford Life and Accident Ins. Co., 2012 U.S. Dist. LEXIS 150536 (M.D. Ala. October 18, 2012), a claimant is not entitled to a remand until the Court has reviewed the fiduciary’s determination in the first place.   In Hooks, the plaintiff submitted a claim for long-term disability benefits under her employer’s benefit plan. After her claim was denied by the claims administrator, the plaintiff requested an administrative appeal, and the claim administrator upheld its denial on appeal.  Subsequently, the Social Security Administration (“SSA”) approved plaintiff’s claim for Social Security disability benefits.  Plaintiff requested that the claims administrator re-open its review to consider this information, but the claims administrator declined.  The plaintiff filed suit pursuant to ERISA § 502(a)(1)(B), and in connection therewith, moved for a remand, for the purpose of having the SSA’s decision reviewed and considered by the claims administrator. 

The Court declined to order a remand, focusing on the limit of its scope of review:  The Court reviews the claims administrator’s decision based upon the information it had at the time.  Accordingly, the Court must review the fiduciary’s decision before making any decision to remand.  Implicit in the Court’s holding was the recognition that, if the claims administrator abused its discretion, a remand may be warranted, but if the claims administrator did not abuse its discretion, based upon the information it had at the time, its decision can be upheld, and a claimant cannot force the re-opening for further information to be considered. 

District Courts in the Fourth Circuit Run Full Speed Ahead with Equitable Estoppel Claims.

Prior to Cigna v. Amara, 131 S. Ct. 1866 (2011), the law was clearly established:  An employee benefit plan participant had no claim of equitable estoppel against a plan fiduciary stemming from an oral representation if the representation was contrary to the written terms of a plan.  See e.g., Coleman v. Nationwide Life Ins. Co., 969 F.2d 54 (4th Cir. Va. 1992).   No longer.  Following Amara and the Fourth Circuit decision in McCravy v. Metropolitan Life Ins. Co., 2012 U.S. App. Lexis 13683 (4^th Cir.  July 5, 2012), District Courts in the Fourth Circuit, in two recent decisions, permitted plan participant’s claims to move forward past summary judgment, premised upon oral representations made by plan fiduciaries that were inconsistent with the written plan terms.   

In Israel v. Prudential Ins. Co. , 2012 U.S. Dist. Lexis 106107 (D.S.C. July 31, 2012), Plaintiff enrolled in life insurance coverage for his wife under the employee benefit plan offered by his employer, Lockheed Martin (“Lockheed”).   Plaintiff and his wife subsequently divorced.  Under the terms of the plan, eligibility for coverage for a spouse ceased after divorce.  Plaintiff claimed that he called Lockheed’s benefits department, which allegedly told him that he could continue the life insurance coverage on his ex-wife.  Thereafter, Lockheed continued to deduct premiums from Plaintiff’s paychecks for the life insurance coverage.  A few months following the divorce, Plaintiff’s ex-spouse died.   Plaintiff filed a claim for the life insurance benefits, which was denied on the grounds that his ex-spouse was no longer eligible for coverage.  After Plaintiff brought suit, the District Court granted Defendant’s motion for summary judgment on Plaintiff’s benefit claim under ERISA sec. 502(a)(1)(B), finding that the plan’s terms unequivocally did not provide coverage.  Nevertheless, following Amara and McCravy, the District Court denied Defendant’s motion for summary judgment with respect to Plaintiff’s claim for equitable relief under ERISA sec. 502(a)(3), finding genuine issues of material fact, including whether Defendant did in fact misinform Plaintiff in a phone call. 

Similarly, in Strickland v. AT&T Umbrella Benefit Plan, 2012 U.S. Dist. LEXIS 14145 (W.D.N.C. Sept. 30, 2012), Plaintiff was a disabled participant of AT&T’s medical benefit plan.  After Plaintiff became eligible to receive Medicare benefits, he claimed that he spoke with someone at Blue Cross Blue Shield (“BCBS”), the third-party administrator, and asked whether he needed to purchase both Parts A and B of Medicare coverage.  He was allegedly told that he needed to purchase only Part A.  He subsequently had extensive knee and shoulder surgery.  BCBS initially processed and paid the medial expenses related to these surgeries, and according to its records, confirmed coverage in 23 phone calls from medical providers.  Subsequently, BCBS reversed its approval and collected the payments from the providers, who then billed Plaintiff.  

In the lawsuit, Plaintiff conceded that he did not have a claim for benefits under ERISA sec. 502(a)(1)(B); according to the clear terms of AT&T’s plan, Plaintiff was required to enroll in both Parts A and B when he became eligible for Medicare.  Nevertheless, Plaintiff brought a claim for equitable relief under ERISA sec. 502(a)(3).  Defendant moved for summary judgment, arguing that oral representations were unenforceable under ERISA to vary the written terms of the plan.  The Court rejected this argument, citing Amara and McCravy, and allowed the case to move forward on the factual issues of: (1) whether the alleged phone call took place and the contents of the conversation; and (2) whether BCBS’s payment of the claims in error affected the reasonableness of Plaintiff’s reliance on BCBS’s alleged representation.