Raniero Gimeno v. NCHMD, Inc.

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[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 21-11833
____________________
RANIERO GIMENO,
Plaintiff-Appellant,
versus
NCHMD, INC.,
NCH HEALTHCARE SYSTEM, INC.,
Defendants-Appellees.
____________________
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 1:20-cv-24870-BB
____________________
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2 Opinion of the Court 21-11833
Before WILLIAM PRYOR, Chief Judge, ROSENBAUM, and BRASHER,
Circuit Judges.
BRASHER, Circuit Judge:
This appeal presents a question of first impression about the
Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq.
Section 1132(a)(3) of ERISA authorizes a beneficiary of an ERISA
plan to sue for “appropriate equitable relief” to redress violations
of the plan or statute. 29 U.S.C. § 1132(a)(3). The question for us is:
Does Section 1132(a)(3) create a cause of action for an ERISA ben-
eficiary to recover monetary benefits lost due to a fiduciary’s
breach of fiduciary duty in the plan enrollment process?
Our answer is “yes.” Under our precedents, a court may or-
der typical forms of equitable relief under Section 1132(a)(3). As the
Supreme Court and many of our sister circuits have recognized,
courts in equity could traditionally order “equitable surcharge”—
that a fiduciary pay a beneficiary for losses caused by the fiduciary’s
breach of a fiduciary duty. Accordingly, we hold that a beneficiary
of an ERISA plan can bring a lawsuit under Section 1132(a)(3)
against a fiduciary to recover benefits that were lost due to the fi-
duciary’s breach of its duties. Because the district court held that
such a claim would be futile and because there is no other basis to
affirm, we reverse the district court.
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21-11833 Opinion of the Court 3
I. Background
Raniero Gimeno’s spouse, Justin Polga, was a medical doc-
tor employed by NCHMD, Inc., which is a subsidiary of NCH
Healthcare System, Inc. As part of the initial hiring process,
NCHMD’s human resources staff helped Polga complete enroll-
ment paperwork for life insurance benefits through an ERISA plan.
Gimeno was the primary beneficiary under the plan, and NCH
Healthcare was the named plan administrator.
Polga elected to pay for $350,000 in supplemental life insur-
ance coverage on top of $150,000 in employer-paid coverage. To
receive supplemental coverage, Polga needed to submit an evi-
dence of insurability form. But Polga did not receive the form with
his enrollment paperwork, and the human resources staff did not
notify him that the form was necessary or missing. As a result,
Polga never submitted the form to the insurance company. None-
theless, for three years, NCHMD deducted premiums correspond-
ing to $500,000 in life insurance coverage from Polga’s paychecks.
It also provided him with a benefits summary stating that he had
$500,000 in coverage.
Polga died, and Gimeno filed a claim for benefits with the
plan’s insurance company. The insurance company partially de-
nied the claim. It refused to pay any supplemental benefits because
it had never received the form.
Gimeno sued NCHMD and NCH Healthcare, asserting a
claim under ERISA, 29 U.S.C. § 1132(a)(1)(B), which empowers a
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4 Opinion of the Court 21-11833
beneficiary to bring a civil action “to recover benefits due to him
under the terms of his plan.” Gimeno argued that, by failing to no-
tify Polga of the need for the form and misleading him about the
nature of his coverage, the defendants breached their fiduciary du-
ties to administer the plan fairly and properly, to inform Polga of
his rights and benefits, and to ensure that all application forms were
correctly completed and submitted. He sought an order requiring
that NCHMD and NCH Healthcare pay him the plan benefits that
he would have received but for their alleged breach—the unpaid
$350,000.
NCHMD and NCH Healthcare moved to dismiss for failure
to state a claim. They argued that they were improper defendants
for the Section 1132(a)(1)(B) claim because, unlike the insurer, they
had no obligation to award the benefits at issue. In response,
Gimeno conceded that Section 1132(a)(1)(B) provided no remedy.
But he argued that he had a cause of action under 29 U.S.C. §
1132(a)(3) for “appropriate equitable relief.” He asked the district
court to allow him to amend his complaint to “assert his claims
under [Section 1132(a)(3)] and delete reference to [Section
1132(a)(1)(B)].”
The district court granted the motion to dismiss and denied
Gimeno leave to amend. It concluded that amending the complaint
would be futile because compensatory relief, such as an award of
lost insurance benefits, is not equitable and is thus unavailable un-
der Section 1132(a)(3). Gimeno appealed.
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21-11833 Opinion of the Court 5
II. Standard of Review
“We review de novo the dismissal of a complaint for failure
to state a claim.” Rosenberg v. Gould, 554 F.3d 962, 965 (11th Cir.
2009). We also “review de novo an order denying leave to amend
on the grounds of futility, because it is a conclusion of law that an
amended complaint would necessarily fail.” Boyd v. Warden, Hol-
man Corr. Facility, 856 F.3d 853, 864 (11th Cir. 2017).
III. Discussion
Gimeno argues the district court erred in concluding that his
proposed amendment would be futile because Section 1132(a)(3)
allows the relief he seeks. The defendants dispute that argument,
and they also contend that the district court’s order should be af-
firmed because Gimeno improperly raised alternative claims under
Section 1132(a)(1)(B) and Section 1132(a)(3). We address each of
these issues in turn.
A.
Gimeno first argues that Section 1132(a)(3) permits him to
file a cause of action to recover money equal to the insurance ben-
efits lost due to the defendants’ alleged breach of fiduciary duty.
We agree.
Section 1132(a)(3) authorizes a beneficiary of an employ-
ment benefit plan to sue for “appropriate equitable relief” for vio-
lations of the statute or the terms of the plan. 29 U.S.C. § 1132(a)(3).
“Equitable relief” refers to “those categories of relief that
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6 Opinion of the Court 21-11833
were typically available in equity” before the fusion of courts of eq-
uity and courts of law. Mertens v. Hewitt Assocs., 508 U.S. 248, 256
(1993). Compensatory damages were not typically available in eq-
uity. Id. at 255–59. Accordingly, the Supreme Court has held that
Section 1132(a)(3) does not usually permit a plaintiff to recover
money damages. Id.; see also Great-West Life & Annuity Ins. Co.
v. Knudson, 534 U.S. 204, 214 (2002); Sereboff v. Mid Atl. Med.
Servs., Inc., 547 U.S. 356, 362–63 (2006).
That said, certain kinds of monetary relief were typically
available in equity, and this history must inform our interpretation
of ERISA. See LaRue v. DeWolff, Boberg & Assocs., Inc., 552 U.S.
248, 253 n.4 (2008). Courts in equity could order restitution of “par-
ticular funds or property in the defendant’s possession.” Knudson,
534 U.S. at 214. They could also impose equitable surcharge—an
order that a trustee compensate a trust beneficiary for a loss due to
a breach of fiduciary duty. See Samuel L. Bray, Fiduciary Remedies,
in The Oxford Handbook of Fiduciary Law 449, 456–58 (Evan J.
Criddle et al. eds., 2019); Restatement (Third) of Trusts § 95 cmt.
b. “The trustee’s personal liability to make compensation for the
loss occasioned by a breach of trust is a simple contract equitable
debt” and “may be enforced by a suit in equity against the trustee
himself.” 4 John N. Pomeroy, Equity Jurisprudence § 1080, p. 229
(5th ed. 1941). This remedy—as between a trust beneficiary and a
trust fiduciary—is “equitable in character and enforceable against
[a] trustee[] in a court exercising equity powers.” Restatement
(Third) of Trusts § 95 (Am. L. Inst. 2012).
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21-11833 Opinion of the Court 7
Because equitable surcharge is a typical equitable remedy as
between beneficiaries and fiduciaries, the Supreme Court has rec-
ognized that Section 1132(a)(3) allows an ERISA beneficiary to sue
an ERISA fiduciary for this kind of relief. See CIGNA Corp. v.
Amara, 563 U.S. 421, 441–42 (2011). In Amara, a district court had
ordered a plan administrator to pay higher benefits to beneficiaries
because it had given them an incomplete and misleading notice of
a change to their pension plan. Id. at 426–34. The Supreme Court
vacated that decision, concluding that the remedy was not availa-
ble under Section 1132(a)(1)(B). Id. at 435–438, 445. But, to guide
the lower courts on remand, it explained that the district court’s
remedy closely resembled equitable surcharge and thus fell within
the scope of the term “appropriate equitable relief” in Section
1132(a)(3). Id. at 440–42. The Court reasoned that surcharge histor-
ically took “the form of monetary ‘compensation’ for a loss result-
ing from a trustee’s breach of duty.” Id. at 441–42. And it explained
that the defendant’s status as a fiduciary made a “critical difference”
in differentiating a surcharge from the kind of compensatory dam-
ages that were not typically available in courts of equity. Id. at 442.
Since Amara, every circuit court to address the issue has rec-
ognized that Section 1132(a)(3) creates a cause of action for mone-
tary relief for breaches of fiduciary duty. See Sullivan-Mestecky v.
Verizon Commc’ns Inc., 961 F.3d 91, 102–03 (2d Cir. 2020); Moyle
v. Liberty Mut. Ret. Benefit Plan, 823 F.3d 948, 960 (9th Cir. 2016);
Silva v. Metro. Life Ins. Co., 762 F.3d 711, 720–22, 724–25 (8th Cir.
2014); Gearlds v. Entergy Servs., Inc., 709 F.3d 448, 450–52 (5th Cir.
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8 Opinion of the Court 21-11833
2013); Kenseth v. Dean Health Plan, Inc., 722 F.3d 869, 880–82 (7th
Cir. 2013); McCravy v. Metro. Life Ins. Co., 690 F.3d 176, 180–83
(4th Cir. 2012). We reach the same conclusion here. To be sure, the
Supreme Court’s discussion of equitable surcharge in Amara is
likely dicta. But unlike our own dicta, the “thoroughly reasoned”
dicta of the Supreme Court “is of considerable persuasive value”
and “is not something to be lightly cast aside.” Schwab v. Crosby,
451 F.3d 1308, 1325–26 (11th Cir. 2006) (quotation marks omitted).
Moreover, the Supreme Court’s discussion in Amara is correct: eq-
uitable surcharge is a typical equitable remedy that may be im-
posed on a fiduciary for a breach of fiduciary duty.
In light of Amara and the established law of equitable sur-
charge, we are unpersuaded by the defendants’ arguments that Sec-
tion 1132(a)(3) provides no comparable remedy here. They cite the
Supreme Court’s decisions in Knudson and Mertens to assert that
the recovery of money is not an equitable remedy. But neither de-
cision concerned claims against a fiduciary. E.g., Mertens, 508 U.S.
at 251 (stating the question as “whether ERISA authorizes suits for
money damages against nonfiduciaries”). And the Supreme Court
in Amara explained that a defendant’s status as a fiduciary makes a
“critical difference” in the availability of monetary equitable relief.
563 U.S. at 442.
For his part, Gimeno has adequately alleged that both
NCHMD and NCH Healthcare are fiduciaries. An entity is a fidu-
ciary under ERISA if it “exercises any discretionary authority or dis-
cretionary control respecting management” or “administration” of
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21-11833 Opinion of the Court 9
the plan. 29 U.S.C. § 1002(21)(A). Proof of fiduciary status “may
come from the plan document, but can also come from the factual
circumstances surrounding the administration of the plan, even if
these factual circumstances contradict the designation in the plan
document.” Hamilton v. Allen-Bradley Co., 244 F.3d 819, 824 (11th
Cir. 2001). For example, in Hamilton, an employer fulfilled a fidu-
ciary function as plan administrator by requiring employees to go
through its human resources department to apply for insurance
benefits, holding itself out as providing administrative services re-
lated to the plan, distributing claim forms, and fielding questions
about the plan. Id.NCHMD disputes that it is a fiduciary. It points out that only
NCH Healthcare was named as the plan administrator in plan doc-
uments. But Gimeno alleges that NCHMD’s human resources staff
provided Polga with plan enrollment paperwork, guided him
through completing it, and notified him when important compo-
nents—such as proof of dependent eligibility—were missing. It also
provided him with a benefits summary stating that he had $500,000
in life insurance coverage, and it deducted corresponding premi-
ums from his paycheck. These functions are analogous to the em-
ployer’s actions in Hamilton, which we found sufficient to render
the employer a fiduciary under ERISA. See 244 F.3d at 824, 826.
In short, the district court erred in concluding that it was fu-
tile for Gimeno to amend the complaint to include a claim under
Section 1132(a)(3). Gimeno asserts that the defendants breached
their fiduciary duties by failing to adequately notify his spouse
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10 Opinion of the Court 21-11833
about the form and providing misinformation about his benefits.
See 29 U.S.C. § 1104(a)(1)(B) (enumerating fiduciary duties of care,
skill, prudence, and diligence); Jones v. Am. Gen. Life & Acc. Ins.
Co., 370 F.3d 1065, 1072 (11th Cir. 2004) (citing Ervast v. Flexible
Prods. Co., 346 F.3d 1007, 1016 n.10 (11th Cir. 2003)) (“[A]n ERISA
participant has a right to accurate information, and . . . an ERISA
plan administrator’s withholding of information may give rise to a
cause of action for breach of fiduciary duty.”). Gimeno argues that
he lost life insurance benefits because of those breaches and seeks
monetary relief equivalent to those lost benefits. Because he has
sufficiently alleged that the defendants are fiduciaries, Gimeno can
sue for lost benefits under Section 1132(a)(3).
B.
As an additional ground for affirmance, the defendants argue
that Gimeno improperly pleaded alternative claims under Section
1132(a)(1)(B) and (a)(3). We have held that “an ERISA plaintiff who
has an adequate remedy under [Section 1132(a)(1)(B)] cannot alter-
natively plead and proceed under [Section 1132(a)(3)]” because Sec-
tion 1132(a)(3) is an equitable “‘catchall’ provision that provides re-
lief only for injuries that are not otherwise adequately provided for
by ERISA.” Ogden v. Blue Bell Creameries U.S.A., Inc., 348 F.3d
1284, 1287–88 (11th Cir. 2003) (quoting Varity Corp. v. Howe, 516
U.S. 489, 512 (1996)). The defendants point out that Gimeno’s op-
erative complaint relied on Section 1132(a)(1)(B) and that his pro-
posed amendment relied on Section 1132(a)(3). They argue that,
by asking the district court to both deny the motion to dismiss and
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21-11833 Opinion of the Court 11
grant him leave to amend, Gimeno was improperly attempting to
plead claims under both subsections.
The defendants misunderstand our holding in Ogden. A
plaintiff can plead as many alternative claims as he wants, “regard-
less of consistency.” Fed. R. Civ. P. 8(d)(3). But, as with any equita-
ble claim, a plaintiff cannot succeed on a Section 1132(a)(3) claim if
he “has an adequate remedy” at law, such as a remedy under Sec-
tion 1132(a)(1)(B). Ogden, 348 F.3d at 1287. Section 1132(a)(1)(B)
allows a beneficiary “to recover benefits due to him under the
terms of his plan.” 29 U.S.C. § 1132(a)(1)(B). Accordingly, a plaintiff
like Gimeno has “an adequate remedy” at law if the “allegations
supporting the [Section 1132(a)(3)] claim [a]re also sufficient to
state a cause of action” for benefits under Section 1132(a)(1)(B).
Jones, 370 F.3d at 1073. In such a case, the plaintiff must proceed
under Section 1132(a)(1)(B) instead of Section 1132(a)(3).
Here, however, Gimeno does not have an adequate remedy
at law because he cannot sue for benefits under Section
1132(a)(1)(B). In fact, Gimeno “concede[s] . . . that [he is] not enti-
tled to the . . . benefit[s] under the terms of [his] plan.” Jones, 370
F.3d at 1074. In his request to amend his complaint, Gimeno ex-
plained that he is not entitled to recover the remaining $350,000 in
supplemental benefits under the terms of the plan because, despite
paying the higher premiums, his spouse never filed the required
form. He argues instead that he is due compensation because the
defendants’ breach of fiduciary duty prevented his spouse from be-
coming eligible for the supplemental benefits. These allegations do
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12 Opinion of the Court 21-11833
not state a claim for plan benefits under Section 1132(a)(1)(B); they
state a claim for equitable relief under Section 1132(a)(3). See Jones,
370 F.3d at 1074. Because Gimeno “must rely on” Section
1132(a)(3) or he would “have no remedy at all,” id. (quoting Varity,
516 U.S. at 515), his claim may proceed under Section 1132(a)(3).
IV. Conclusion
We REVERSE and REMAND to allow Gimeno to bring a
claim for breach of fiduciary duty under Section 1132(a)(3).