Leuthner v. Blue Cross & Blue Shield , 454 F.3d 120 ( 2006 )

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
7-10-2006
Leuthner v. Blue Cross NE PA
Precedential or Non-Precedential: Precedential
Docket No. 04-4389
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
No. 04-4389
_______________
FRANK W. LEUTHNER;
WILLIAM REASNER,
AND ALL OTHERS SIMILARLY SITUATED
ELIZABETH MELLEY; JEAN MIKULIS,
Intervenor-Plaintiffs in District Court
v.
BLUE CROSS AND BLUE SHIELD OF
NORTHEASTERN PENNSYLVANIA
Elizabeth Melley and Jean Mikulis,
Appellants
_____________
Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Civil Action No. 02-cv-01709)
District Judge: Honorable John E. Jones, III
Argued on September 22, 2005
Before: MCKEE, FISHER and ROTH,* Circuit Judges
(Opinion filed July 10, 2006 )
Clifford A. Rieders, Esquire (ARGUED)
Rieders, Teavis, Humphrey, Harris
Wates & Waffenschmidt
161 West Third Street
P.O. Box 215
Williamsport, PA 17703
Counsel for Appellant.
John F. Schultz, Esquire (ARGUED)
Morgan, Lewis & Bockius
1701 Market Street
Philadelphia, PA 19103
Kristofor T. Henning, Esquire
Morgan, Lewis & Bockius
1701 Market Street
Philadelphia, PA 19103
Counsel for Appellees.
*
Judge Roth assumed senior status on May 31, 2006.
2
OPINION
ROTH, Circuit Judge.
If the beneficiary of an ERISA plan has lost her status as
a beneficiary, due to what she claims is the plan administrator’s
breach of fiduciary duty, does she then have standing to sue the
administrator under ERISA § 502(a), 29 U.S.C. § 1132(a)?
Appellant Jean Mikulis retired early from Blue Cross, relying on
what she claims was a promise from Blue Cross to provide her
with 100% lifetime health benefits. Appellant Elizabeth Melley
is the widow of a Blue Cross retiree. Both women lost their
lifetime health benefits when the Blue Cross Plan was
retroactively changed on January 1, 2001. After their benefits
had been terminated, they intervened in a class action that had
been brought by other Plan participants and beneficiaries to
challenge the retroactive changes. The District Court dismissed
Mikulis and Melley’s suits under F ED.R.C IV.P. 12(b)(6) for lack
of statutory standing. Although appellants may have made
retirement decisions based on a belief that their retirement
medical benefits would continue for their lifetimes, we agree
with the District Court’s determination that they do not have
statutory standing to bring this action. We will, therefore,
affirm.
3
I. Background
Blue Cross Blue Shield of Northeastern Pennsylvania
(Blue Cross) administers the Blue Cross of Northeastern
Pennsylvania Retiree Health Insurance Plan (the Plan), a welfare
benefits plan for Blue Cross retirees. The Plan is subject to the
Employee Retirement Income Security Act of 1974 (ERISA), 29
U.S.C. § 1001, et seq. Blue Cross is a Plan fiduciary under 29
U.S.C. § 1002(21)(A).1 Originally, the Plan provided Blue
Cross retirees with 100% lifetime health insurance coverage.
Blue Cross altered the Plan in 1993, and then again in 1999 and
2001. Starting in 1993, the Plan’s coverage changed to a
formula that provided a percentage of the cost of the health care
plan, based on the number of years of service that an employee
had on retirement. The formula required a minimum of 10 years
of service. The formula was changed in 1999 to require a
1
Congress defines a plan fiduciary as a person:
(i) [who] exercises any discretionary authority or
discretionary control respecting management of
such plan or exercises any authority or control
respecting management or disposition of its
assets, (ii) [who] renders investment advice for a
fee or other compensation, direct or indirect, with
respect to any moneys or other property of such
plan, or has any authority or responsibility to do
so, or (iii) [who] has any discretionary authority
or discretiona ry re sponsibility in the
administration of such plan.
29 U.S.C. § 1002(21)(A).
4
minimum of 15 years of service. The 1993 and 1999 changes
were applied prospectively to new retirees; the benefits of
former retirees were not changed. On January 1, 2001, Blue
Cross again amended the Plan (1) to provide for a graduated
dollar contribution toward health insurance coverage for retirees
with at least 15 years of service and (2) to eliminate coverage
for surviving spouses of retirees. Blue Cross applied the 2001
Plan Amendment retroactively to all retirees.
Retired Blue Cross employees have brought a class action
against Blue Cross for breach of fiduciary duty stemming from
various changes made in the Plan’s coverage.2 Elizabeth Melley
and Jean Mikulis are intervenors in the action. Mikulis was an
employee of Blue Cross for almost 13 years. She retired at age
62 on February 27, 1993, after being notified by Blue Cross that,
unless she retired by April 1, 1993, her future retirement health
benefits would no longer be guaranteed at 100% lifetime but
would be subject to a percentage formula based on years of
employment. As a result of early retirement, Mikulis received
a smaller pension from Blue Cross and reduced Social Security
benefits. Mikulis received 100% benefits under the Plan until
January 1, 2001, when she ceased to be eligible for any benefits
under the amended Plan. She claims to have relied on having
100% lifetime health coverage in her savings and spending
decisions.
Melley is the widow of a Blue Cross retiree. The record
does not indicate when Melley’s late husband retired from Blue
2
The District Court has denied class certification.
5
Cross, what his age was at retirement, or if he had other
employment thereafter. Melley received benefits under the Plan
until January 1, 2001, when she ceased to be eligible for any
benefits under the amended Plan.
Mikulis and Melley claim that Blue Cross knowingly
made various material misrepresentations and omissions about
Plan benefits and amendments. In particular, they maintain that
they had no notice before the 1993 Plan amendment that Blue
Cross could alter the Plan. They also allege that Blue Cross’s
pre-2001 practice of applying Plan changes only prospectively
led them to believe that any future changes would be
prospective. They further claim that they relied upon Blue
Cross’s misrepresentations and omissions to their detriment.
Mikulis contends that, but for Blue Cross’s misrepresentations
and omissions, she would not have taken early retirement.
Melley alleges that her late husband made retirement and
insurance decisions based upon the promise of continuing
lifetime health benefits for his spouse, even in the event of his
death.
Mikulis and Melley brought an action under ERISA
§ 502(a)(3), 29 U.S.C. § 1132(a)(3), in which they allege that
Blue Cross breached its fiduciary duties under ERISA § 404(a),
29 U.S.C. § 1104(a) by amending the plan in 2001 3 and by
failing to disseminate accurate information about the terms of
retiree medical benefits under the Plan. They are seeking either
3
Mikulis and Melley no longer contend that the
amendment of the plan constituted a breach of fiduciary duty.
6
reinstatement in the Plan as it existed prior to the 2001
amendments, comparable coverage, or its monetary equivalent.
Blue Cross moved to dismiss pursuant to F ED. R. C IV. P.
12(b)(1), 12(b)(6) and/or 56. The District Court construed the
motion as a motion to dismiss under Rule 12(b)(6) because the
parties’ submissions did not include matters outside of the
pleadings. The District Court found that Mikulis and Melley did
not have standing because they were neither Plan participants
nor beneficiaries at the time they commenced their suit.
Accordingly, the District Court dismissed both complaints for
lack of standing. The District Court certified its judgment as
final under F ED. R. C IV. P. 54(b). This appeal followed.
II. Jurisdiction and Standard of Review
We undertake a plenary review of the grant of a motion
to dismiss, Jordan v. Fox, Rothschild, O'Brien & Frankel, 20
F.3d 1250 (3d Cir. 1994), including questions of standing.
Miller v. Rite Aid Corp., 334 F.3d 335, 340 (3d Cir. 2003).
When considering an appeal from a dismissal pursuant to Rule
12(b)(6), we accept as true all well-pled factual allegations.
Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.
1997).
III. Discussion
ERISA’s statutory standing requirements provide in
§ 502(a)(1) and (3) that a civil action may only be brought:
7
(1) by a participant or beneficiary . . . (B) to
recover benefits due to him under the terms of his
plan, to enforce his rights under the terms of the
plan, or to clarify his rights to future benefits
under the terms of the plan. . . .
(3) by a participant, beneficiary, or fiduciary (A)
to enjoin any act or practice which violates any
provision of this subchapter or the terms of the
plan, or (B) to obtain other appropriate equitable
relief (i) to redress such violations or (ii) to
enforce any provisions of this subchapter or the
terms of the plan.
29 U.S.C. § 1132(a)(1), (a)(3).
The terms “participant” and “beneficiary” are defined in
ERISA § 3(7)-(8):
(7) The term “participant” means any employee or
former employee of an employer, or any member
or former member of an employee organization,
who is or may become eligible to receive a benefit
of any type from an employee benefit plan which
covers employees of such employer or members
of such organization, or whose beneficiaries may
be eligible to receive any such benefit.
(8) The term “beneficiary” means a person
designated by a participant, or by the terms of an
8
employee benefit plan, who is or may become
entitled to a benefit thereunder.
29 U.S.C. § 1002(7)-(8).
The Supreme Court has held that:
the term “participant” is naturally read to mean
either “employees in, or reasonably expected to be
in, currently covered employment,” or former
employees who “have . . . a reasonable
expectation of returning to covered employment”
or who have “a colorable claim” to vested
benefits. In order to establish that he or she “may
become eligible” for benefits, a claimant must
have a colorable claim that (1) he or she will
prevail in a suit for benefits, or that (2) eligibility
requirements will be fulfilled in the future. “This
view attributes conventional meanings to the
statutory language since all employees in covered
employment and former employees with a
colorable claim to vested benefits ‘may become
eligible.’”
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 118 (1989)
(internal citations omitted).
Thus, to bring a civil action under ERISA, Melley and
Mikulis must have a colorable claim to Plan benefits as the
result of their suit. We have interpreted the colorable claim
requirement as a lower burden of persuasion than showing
9
likelihood of success on the merits. Daniels v. Thomas & Betts
Corp., 263 F.3d 66, 78-79 (3d Cir. 2001).
Mikulis and Melley have raised four arguments as to why
they fall within the definition of participant or beneficiary and
have statutory standing. First, they maintain that they have
standing because they are within the zone of interest protected
by ERISA. Second, they claim that they have standing because
they have a colorable claim to receive Plan benefits in the future
as part of an equitable remedy. Third, they argue that they have
standing because they formerly received Plan benefits and they
detrimentally relied on Blue Cross’s misrepresentations.
Finally, Mikulis contends that she has standing because, but for
Blue Cross’s misrepresentations and omissions, she would not
have retired when she did.
For the reasons stated below, we reject these arguments.
1. Zone of Interest
To bring a civil action under ERISA, a plaintiff must
have constitutional, prudential, and statutory standing. There is
no question of Mikulis and Melley’s constitutional standing in
this case. They argue, however, that they have prudential
standing because they are within the “zone of interest” that
ERISA was created to protect and that prudential standing gives
them statutory standing.
Whether a party has prudential standing depends on
whether “a plaintiff’s grievance . . . arguably fall[s] within the
zone of interest protected or regulated by the statutory provision
10
or constitutional guarantee invoked in the suit.” Bennet v.
Spear, 520 U.S. 154, 162 (1997). As a general matter, we have
found that statutory standing requirements can eliminate
prudential standing restrictions but are presumed not to:
Because prudential standing doctrine is
judge-made and not the product of constitutional
restraints on the power of the federal courts to
hear claims, Congress can eliminate prudential
restrictions on standing if it so desires. As a
matter of statutory interpretation, however,
Congress is presumed to incorporate background
prudential standing principles, unless the statute
expressly negates them.
Conte Bros. Auto., Inc. v. Quaker State-Slick 50, Inc., 165 F.3d
221, 227 (3d Cir. 1998). “The first inquiry, then, is whether
Congress expressly negated [the] prudential standing doctrine in
passing the [statute at issue].” Id.
We extensively addressed the interplay of prudential and
statutory standing in ERISA cases in Rite Aid. We remarked
there that in past decisions we had stated that “[f]ar from
abrogating the prudential standing doctrine . . . ERISA
§ 502(a)(1) . . . restricts civil actions brought against a plan
administrator to actions brought by a ‘participant or
beneficiary.’” 334 F.3d at 340 (quoting Saporito v. Combustion
Eng’g Inc., 843 F.2d 666, 670-71 (3d Cir. 1988), vacated on
other grounds by Combustion Eng’g, Inc. v. Saporito, 489 U.S.
1949 (1989)). In other words, the language of § 502(a)(1) sets
11
forth the standing requirements to bring such an action – both
prudential and statutory standing:
In that sense, the “zone of interest” inquiry in the
prudential standing analysis for § 502(a)(1) claims
is inextricably tied to the question of whether a
plaintiff can meet the definitions of either a
“participant” or “beneficiary”.
Rite Aid, 334 F.3d at 341.
Rite Aid opened the door to some confusion, however, by
citing in support of the above quotation on “zone of interest” the
case of Vartanian v. Monsanto Co., 14 F.3d 697 (1st Cir. 1994).
In the citation, the Rite Aid Court quoted Vartanian
parenthetically:
“In determining who is a ‘participant,’ for
purposes of standing, the definition found in 29
U.S.C. § 1002(7) must be read in the context of
traditional concepts of standing. . . . The ultimate
question is whether the plaintiff is within the zone
of interest ERISA was intended to protect.”
334 F.3d at 341 (quoting Vartanian,14 F.3d at 701) (emphasis
original to Vartanian).
Mikulis and Melley have focused on this citation and
quotation of Vartanian to interpret Rite Aid to support the
proposition that the analysis for statutory standing under ERISA
is actually the prudential standing “zone of interest” analysis.
12
This interpretation is not correct. When we stated in Rite
Aid that “the ‘zone of interest’ inquiry in the prudential standing
analysis for § 502(a)(1) claims is inextricably tied to whether a
plaintiff can meet the definitions of either ‘participant’ or
‘beneficiary’,” 334 F.3d at 341, we meant that statutory standing
requirements in ERISA § 502(a)(1) were essentially a
codification of ERISA’s “zone of interest” – we did not mean
the inverse, i.e., that prudential standing suffices for statutory
standing. Indeed, it would make little sense for Congress to
have enacted ERISA § 502(a)(1) to define who may bring suit
against a plan administrator if standing to sue were to be
determined by the traditional “zone of interest” prudential
standing test.
Moreover, despite the citation to Vartanian, we did not
undertake a “zone of interest” analysis in Rite Aid. Instead, we
focused solely on whether the plaintiff met the ERISA § 3(7)
definition of “participant.” This focus is consistent with the
conclusion that ERISA’s statutory standing requirements are a
codification of the “zone of interest” analysis. Mukilis and
Melley’s “zone of interest” argument does not prevail.
2. Colorable Claim to a Remedy Under ERISA
ERISA §§ 3(7) and 3(8) define participants and
beneficiaries as those “who [are] or may become eligible to
receive a benefit of any type from an employee benefit
plan. . . .” Tracking this language, Mikulis and Melley’s second
argument is that they have standing because they are Plan
participants/beneficiaries and they qualify as
participants/beneficiaries because they have a colorable claim to
13
receive Plan benefits in the future via equitable relief ordering
the restoration of the Plan to its pre-January 1, 2001, status or
enjoining the retroactive application of the January 1, 2001,
Amendment.
Blue Cross contends that Mikulis and Melley waived this
issue by not raising it before the District Court. We do not
agree. We find sufficient reference before the District Court by
Mikulis and Melley to “a colorable claim to vested benefits” to
convince us that this argument was not waived.
Turning to the merits of the colorable claim to benefits
argument, Blue Cross made four objections to it. First, Blue
Cross contends that Mikulis and Melley have not asserted any
claim for reinstatement in the Plan under ERISA § 502(a)(1)(B)
but have merely requested monetary damages. Blue Cross is
incorrect. Mikulis and Melley’s joint Amended Class Action
Complaint specifically requested that the Court “order the
Defendant to reinstitute the Plan as it was in existence prior to
the change complained of, and/or” “enjoin Defendant from
implementing the revised Plan”, not to mention award “such
other legal and equitable relief as the Court may deem just and
necessary.” Mikulis’s Second Amended Complaint only
requests “Any other legal and equitable relief as the Court may
deem just and necessary.” Although this is boilerplate, it tracks
the language of ERISA § 502(a)(3)(B), 29 U.S.C.
§ 1132(a)(3)(B), which provides for participants and
beneficiaries to bring suit “to obtain other appropriate equitable
relief (i) to redress [ERISA violations] or (ii) to enforce any
provisions of this subchapter or the terms of the plan”.
14
Second, Blue Cross argues that under our decision in
Daniels, 263 F.3d at 78, equitable relief is not a plan benefit.
Thus, the right to equitable relief cannot give standing. This is
not a correct reading of Daniels. Daniels merely determined that
monetary damages are not plan benefits. It did not address the
question of whether equitable relief could constitute a benefit
under a plan. Here, Mikulis and Melley are requesting equitable
relief including reinstatement of the Plan “as it was in existence
prior to the changes complained of.” The sine qua non of
benefits of the Plan is to be covered by the Plan.
Third, Blue Cross remonstrates that Mikulis and Melley
cannot have standing as a result of possible equitable relief
because standing must exist at the time a suit is commenced, not
at the time of judgment. For constitutional and prudential
standing it is well established that standing must exist at the time
the suit is commenced and throughout the suit. See, e.g.,
Friends of the Earth v. Laidlaw Envtl. Servs., 528 U.S. 167, 189
(2000); Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 571
n.5 (1992); PIRG v. Magnesium Elektron, Inc., 123 F.3d 111,
117 (3d Cir. 1997). We have not addressed this issue in regard
to statutory standing; moreover, because a decision on this issue
is not necessary for the outcome of this case, we do not express
an opinion on it now.4
4
We note, however, that Blue Cross has wrongly
conflated the inquiry for standing with an inquiry on the merits.
The issue is not whether litigants are entitled to injunctive relief,
but merely whether they have a colorable claim to it. If they
have a colorable claim to receiving injunctive relief that would
15
Fourth, Blue Cross maintains that because the
amendment of ERISA plans is not a fiduciary act, equitable
relief is not available. ERISA § 502(a)(3), 29 U.S.C.
§ 1132(a)(3), authorizes equitable relief only for violations of
ERISA’s provisions. The amendment of an ERISA plan is not
a fiduciary act governed by ERISA. Lockheed Corp. v. Spink,
517 U.S. 882, 890 (1996); Walling v. Brady, 125 F.3d 114, 120
(3d Cir. 1997). Therefore, as the District Court correctly noted,
Blue Cross did not violate ERISA by amending the Plan.
Mikulis and Melley, however, alleged breaches of
fiduciary duty that included not only the amendment of the Plan,
but also misrepresentations about future plan benefits and
coverage. Unlike the amendment of the Plan, the provision of
information about Plan benefits and coverage is a fiduciary act.
Adams v. Freedom Forge Corp., 204 F.3d 475, 492 (3d Cir.
2000). Therefore, “[a]n employee may recover for a breach of
fiduciary duty if he or she proves that an employer, acting as a
fiduciary, made a misrepresentation that would confuse a
reasonable beneficiary about his or her benefits, and the
beneficiary acted thereupon to his or her detriment.” In re
Unisys Corp. Retiree Med. Benefit “ERISA” Litig., 242 F.3d
497, 505 (3d Cir. 2001). If Mikulis and Melley raised a
colorable claim of such a breach and detrimental reliance, then
make them Plan beneficiaries, then they fall within ERISA
§§ 3(7)-(8) definitions of participant and beneficiary, 29 U.S.C.
§ 1002(7)-(8), and have standing under ERISA § 502(a)(1), 29
U.S.C. § 1132(a)(1).
16
they would have standing because they would have a colorable
claim to be eligible for equitable relief under § 502(a)(3).
As the District Court noted, however, Blue Cross’ alleged
misrepresentations did not divest Melley of her status as a plan
beneficiary. It was the January 1, 2001, amendment of the Plan
that did so. Melley’s status was determined by her situation as
surviving spouse of a retired Blue Cross employee. The alleged
misrepresentations had no effect on that status nor was Melley
in a position to make any changes to her status based on them.
Her medical benefits were not a vested benefit, and the Plan
contained language, inserted in the 1993 amendment, that it
could be changed and that health benefits could be discontinued
at any time. Thus, we find no basis to conclude that Melley’s
status as a beneficiary was affected by the alleged
misrepresentations.
Mikulis is in the same situation as Melley in regard to the
alleged misrepresentations made since the time of her
retirement. Mikulis was not in a position to change her status of
retired employee. Mikulis has, however, raised a related
argument – “but for” Blue Cross’s misrepresentations she would
have retired later and would currently be a Plan participant.
In Saporito v. Combustion Engineering, Inc., we adopted
a “but for” theory of ERISA standing, holding that “but for the
selective divulgence of information [by the plan fiduciary],
[appellants] would have been members [of the plan], and, for the
purposes of standing to bring an action under ERISA, should be
considered as such.” 843 F.2d at 672. The Saporito plaintiffs,
however, were not and had not been members of the plan in
17
question. Their “but for” claim was one to make them members
of a plan concerning which they claimed not to have been
informed. Saporito, however, was decided before the Supreme
Court’s decision in Firestone. The Supreme Court vacated our
judgment in Saporito without comment and remanded it in light
of its decision earlier that week in Firestone. Combusition
Eng’g, Inc. v. Saporito, 489 U.S. 1049 (1989). Since the
Supreme Court’s ruling in Firestone, we have not had occasion
to rule on the issue of whether a claimant, who is a former plan
participant, has standing when it is the alleged breach of
fiduciary duty that has caused the claimant to lose status as a
plan participant.
ERISA’s legislative history indicates that Congress
intended the federal courts to construe the statutory standing
requirements broadly in order to facilitate enforcement of its
remedial provisions:
The enforcement provisions have been designed
specifically to provide both the Secretary [of
Labor] and participants and beneficiaries with
broad remedies for redressing or preventing
violations of the [Act]. . . . The intent of the
Committee is to provide the full range of legal
and equitable remedies available in both state and
federal courts and to remove jurisdictional and
procedural obstacles which in the past appear to
have hampered effective enforcement of fiduciary
responsibilities under state law or recovery of
benefits due to participants.
18
S. R EP. N O. 127, 93d Cong., 2d Sess., 3 (1974), reprinted in
1974 U.S.C.C.A.N. 4639, 4871. Refusing to allow for “but for”
standing would frustrate Congress's intention to remove
jurisdictional and procedural obstacles to ERISA claims.
The majority of circuits that have addressed whether
there is a “but for” exception for ERISA standing have adopted
it. In Christopher v. Mobil Oil Corp., 950 F.2d at 1221, the
Fifth Circuit concluded that “it would seem more logical to say
that but for the employer’s conduct alleged to be in violation of
ERISA, the employee would be a current employee with a
reasonable expectation of receiving benefits, and the employer
should not be able through its own malfeasance to defeat the
employee’s standing.” Similarly, in McBride v. PLM Int’l, Inc,
179 F.3d 737, 743 (9th Cir. 1999), the Ninth Circuit held that
“[i]f an employee is a participant at the time of the alleged
ERISA violation and alleges that he was discharged or
discriminated against because of the protected whistleblowing
activities, we hold that such an employee has standing to sue
under ERISA.” Accord, Swinney, 46 F.3d at 518-519; Mullins
v. Pfizer, 23 F.3d 663, 668 (2nd Cir. 1994); Vartanian, 14 F.3d
at 702. But see Raymond v. Mobil Oil Corp., 983 F.2d 1528,
1536 (10th Cir. 1993); Stanton v. Gulf Oil Corp., 792 F.2d 432
(4th Cir. 1986) (rejecting “but for” theory of ERISA standing).
A plan administrator’s alleged ERISA violation should
not be the means by which the plan is able to insulate itself from
suits arising from the alleged violation. We will not read
ERISA so myopically. As the Sixth Circuit observed, “ERISA
should not be construed to permit the fiduciary to circumvent his
ERISA-imposed fiduciary duty in this manner.” Swinney, 46
19
F.3d at 518-519. Therefore, in the proper case, we may find that
a plaintiff has statutory standing if the plaintiff can in good faith
plead that she was an ERISA plan participant or beneficiary and
that she still would be but for the alleged malfeasance of a plan
fiduciary.
Turning to the case before us, in reviewing Mikulis’s
allegation that she would not have retired when she did had Blue
Cross not made various misrepresentations and omissions, we
must keep in mind that Mikulis retired on February 27, 1993,
and any reliance on statements by Blue Cross that induced her
to retire must have occurred before that time. More importantly,
for Mikulis to prevail, her reliance must have been on “a
material misrepresentation that would confuse a reasonable
beneficiary about his or her benefits, and the beneficiary acted
thereupon to his or her detriment.” Unisys, 242 F.3d at 505.
Mikulis was instructed by the District Court in its
Memorandum and Order of May 7, 2004, that in her Second
Amended Complaint, she must set forth the specific actions she
took or refrained from taking in reliance on Blue Cross’s alleged
misrepresentations and identify how she was harmed by the
asserted action or forbearance. She has not done so except in
generalities, as she did in her earlier complaint. Nor has she
alleged how much longer she would have worked “but for” the
alleged misrepresentations. In 1993, the 15 year cut-off of
benefits, instituted in 2001, was not mentioned at all. There is
no basis to conclude from the allegations in the complaint that,
even if she had worked longer, she would still have qualified for
benefits after the 2001 amendment.
20
In addition, Mikulis has not alleged that the statements
made by Blue Cross prior to the 1993 amendment were false at
the time that they were made. Without such an allegation, there
is no ground to assert a breach of fiduciary duty. Id. A
representation is not a misrepresentation if it is an accurate
reflection of the plan administrator’s intent when the statement
was made.
We conclude therefore that Mikulis’s “but for” claim is
not a colorable claim for benefits and thus is insufficient to give
her standing under Firestone.
IV. Conclusion
For the reasons discussed above, we will affirm the
District Court’s dismissal of Melley and Mikulis’s claims.
21
Leuthner, et al. v. Blue Cross and Blue Shield of Northeastern
Pennsylvania
No. 04-4389
FISHER, Circuit Judge, concurring in part and dissenting in
part.
The majority concludes that neither of the two intervenor-
plaintiffs in this case has standing to pursue a claim for breach
of fiduciary duty under § 502(a) of the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. § 1132(a). While I
agree that Elizabeth Melley cannot maintain such a claim,
because she was never an employee of Blue Cross and could not
have relied on the company’s purported misrepresentations, I
believe that Jean Mikulis, as a former Blue Cross employee, has
demonstrated a potential right to relief and should be allowed to
proceed with her case. I respectfully dissent from the decision
to affirm the dismissal of her claim.
The majority acknowledges that, “in a proper case, we
may find that a plaintiff has statutory standing if the plaintiff can
in good faith plead that she was an ERISA plan participant or
beneficiary and that she still would be but for the alleged
malfeasance of a plan fiduciary.” Supra p. 20 (majority op.). I
submit that this is a “proper case.” According to the complaint,
Mikulis was urged by Blue Cross in 1992, after nearly thirteen
years of service, to accept early retirement. She acquiesced after
being assured by the company that she would receive full health
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insurance benefits upon retirement and that those benefits would
continue “without amendment” for her lifetime. (A. 144, 146,
158.) This promise, of guaranteed lifetime benefits without the
possibility of change, is plainly contrary to plan provisions
reserving the administrator’s right to amend. As a result of her
reliance on this misrepresentation, Mikulis was denied benefits
when the plan was amended in 2001 to limit coverage to only
those retirees who had worked at the company for more than
fifteen years. (A. 168, 173.) Had Mikulis known in 1992 that
her benefits were subject to change, she presumably would have
remained in the company’s employ, possibly exceeding the
fifteen-year threshold for coverage under the current plan. (A.
144-46, 158.) In other words, “but for” the alleged
misrepresentation by Blue Cross, Mikulis might still be a
participant in the plan. Cf. supra p. 6 (majority op.) (“Mikulis
contends that, but for Blue Cross’s misrepresentations and
omissions, she would not have taken early retirement.”). She
thus has standing to assert a claim for breach of fiduciary duty.
See, e.g., Daniels v. Thomas & Betts Corp., 263 F.3d 66, 73-76,
78-79 (3d Cir. 2001).
The deficiencies cited by my colleagues are not grounds
for dismissal. They complain that (1) Mikulis has set forth only
“generalities” regarding the factual predicate of her claim,
(2) she has not specified “how much longer she would have
worked ‘but for’ the alleged misrepresentations,” and (3) she
“has not alleged that the statements made by Blue Cross prior to
the 1993 amendment were false at the time that they were
made.” Supra pp. 20-21 (majority op.). The third point seems
to ignore Mikulis’s allegation that the company promised her in
1992 that the health insurance benefits offered under the then-
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existing plan would not be subject to change, a representation
that is clearly contrary to the plan’s terms. (A. 142-44, 168,
173.)
The other two points are similarly invalid, as they seem
to impose upon Mikulis a “heightened pleading standard,”
demanding that she set forth the facts underlying her claim with
particularity. This approach has been soundly rejected by the
Supreme Court as inconsistent with the liberal pleading system
embodied in the Federal Rules of Civil Procedure, which require
only that the complaint provide “fair notice” of the proposed
cause of action, allowing the court to assess whether relief is
potentially available and permitting the parties to engage in
meaningful discovery. Swierkiewicz v. Sorema N.A., 534 U.S.
506, 514 (2002); Leatherman v. Tarrant County Narcotics
Intelligence & Coordination Unit, 507 U.S. 163, 168 (1993); see
also 5 Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure §§ 1202, 1215 (3d ed. 2004). The
complaint in this case satisfies this minimal burden. Cf. Conley
v. Gibson, 355 U.S. 41, 45-46 (1957) (“[A] complaint should not
be dismissed for failure to state a claim unless it appears beyond
doubt that the plaintiff can prove no set of facts in support of his
claim which would entitle him to relief.”). The concerns raised
by my colleagues reflect possible deficiencies in the proof, not
defects in the pleadings, and they should be addressed through
discovery and summary judgment, not dismissal of the
complaint. See, e.g., Swierkiewicz, 534 U.S. at 514.
I would reverse the order of the District Court dismissing
the complaint as to Mikulis and remand for further proceedings.
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