Michael Manuel v. Turner Industries Group, LLC, et

Case: 17-30835 Document: 00514663195 Page: 1 Date Filed: 10/01/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 17-30835 October 1, 2018
Lyle W. Cayce
MICHAEL N. MANUEL, Clerk
Plaintiff - Appellant
v.
TURNER INDUSTRIES GROUP, L.L.C.; THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA,
Defendants - Appellees
Appeal from the United States District Court
for the Middle District of Louisiana
Before SMITH, CLEMENT, and COSTA, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:
Today we must delve into “the labyrinthine complexities of ERISA law
and practice.” Foltz v. U.S. News & World Report, 760 F.2d 1300, 1308 (D.C.
Cir. 1985). The district court struggled with several important provisions. For
the following reasons we REVERSE and REMAND in part, AFFIRM in part,
and VACATE in part.
FACTS AND PROCEEDINGS
Michael N. Manuel is a former employee of Turner Industries Group LLC
(“Turner”). During his employment, Manuel participated in a group employee
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short term and long term disability plan (the “plan”) sponsored by Turner and
insured by Prudential Insurance Company of America (“Prudential”).
The plan provides that benefits are payable when “Prudential
determines that” a participant is unable to work. The plan also provides that
participants must submit proof of disability “satisfactory to Prudential.” The
summary plan description (“SPD”) adds that Prudential “has the sole
discretion to interpret” the plan.
The plan “does not cover a disability which . . . is due to a pre-existing
condition.” As to short term disability (“STD”) benefits, “Prudential has the
right to recover any overpayments due to . . . any error Prudential makes in
processing a claim.”
Manuel alleges he became unable to work and claimed STD benefits
under the plan. His STD claim was approved and paid.
Once he exhausted these benefits, he applied for long term disability
(“LTD”). His LTD claim was denied at every level of internal adjudication
because Prudential concluded that Manuel’s claim was subject to the pre-
existing condition exclusion. Related to the denial, but before any suit was
filed, Prudential determined that it had paid STD benefits in error and
demanded repayment.
Naturally, to better understand his rights, Manuel requested plan
documents from Turner—his employer and the plan administrator. Turner
responded by providing an SPD and a Group Insurance Certificate. Manuel
followed up by requesting additional documents, and Turner provided the
Group Insurance Contract.
Following the administrative denial of his claims, Manuel sued Turner
and Prudential for a myriad of alleged violations of the Employee Retirement
Income Security Act of 1974 (“ERISA”) and state law. Prudential
counterclaimed, seeking repayment of the STD benefits it allegedly paid in
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error. The district court rejected all of Manuel’s claims upon motion to dismiss
or for summary judgment. It granted summary judgment to Prudential on its
repayment counterclaim. 1 Manuel appeals some but not all of the district
court’s rulings.
STANDARD OF REVIEW
This court “review[s] a district court’s decision to grant summary
judgment de novo.” Ramsey v. Henderson, 286 F.3d 264, 267 (5th Cir. 2002).
And it “review[s] de novo dismissals under Rule 12(b)(6).” Causey v. Sewell
Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004).
DISCUSSION
I. Fiduciary Breach
Manuel argues that (1) Prudential and Turner breached their fiduciary
duties to him because they maintained a deficient document—the SPD—and
(2) Prudential violated ERISA’s claims administration requirements by (a)
asserting new grounds for denial of his LTD benefits at the last level of appeal
and (b) failing to identify the independent medical reviewer who recommended
denying Manuel’s claims on appeal. The district court dismissed these claims
because it concluded that Manuel had raised his complaints under the wrong
provision of ERISA—for breach of fiduciary duty under ERISA § 502(a)(3)
rather than for plan benefits under ERISA § 502(a)(1)(B). The district court
concluded that the document deficiency claim could have been brought only
against Turner.
Manuel argues that all of these claims were brought under the correct
provision of ERISA and that both defendants were properly subject to suit. It
is easiest to analyze each of the alleged breaches in turn (i.e., consider Manuel’s
claim for document failures as to both defendants and then consider his
1 It also granted Prudential’s request for prejudgment interest.
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contentions about Prudential’s claims administration procedures). But first it
is helpful to lay out ERISA’s principles and the district court’s general
misconstruction of them.
A. ERISA and the District Court’s Error
The district court dismissed Manuel’s claims for breach of fiduciary duty
against Prudential for two reasons. First, it concluded that circumstances in
which an ERISA § 502(a)(3) and an ERISA § 502(a)(1)(B) action may be
maintained simultaneously represent a “rare exception.” Applying its “rare
exception” gloss on Fifth Circuit and Supreme Court precedent, it dismissed at
least some of Manuel’s claims under ERISA § 502(a)(3) because they were
duplicative of claims available under ERISA § 502(a)(1)(B). Second, the district
court concluded that Turner, as Manuel’s employer, was the plan
administrator and was solely “responsible for any defects in the plan.” For this
reason, it concluded that Prudential was not responsible for at least some of
the alleged ERISA § 502(a)(3) violations because “Prudential could not have
breached any fiduciary duty pursuant to ERISA § 502(a)(3) when no fiduciary
duty was owed.”
The relationship between these two grounds for dismissal is unclear, as
the district court seems to suggest that the first ground applies to one set of
Manuel’s ERISA § 502(a)(3) claims and the second ground applies to his
“remaining [ERISA] § 502(a)(3) claim.” But the discussion of each ground for
dismissal identifies the same set of claims—the document deficiency issues.
The district court’s opinion does not address Manuel’s other ERISA § 502(a)(3)
claims against Prudential, which include allegations of procedural irregularity
at the claims administrative level. Complicating matters even further, in
disposing of the claims against Turner, the district court merely adopted the
“reasons set forth in the Court’s Ruling on Prudential’s Motion to Dismiss.”
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As Manuel correctly points out, if some or all of his ERISA § 502(a)(3)
claims can be dismissed only with respect to Prudential because Turner and
not Prudential is the plan administrator, the same justification cannot be used
to dispose of those same claims as they were made against Turner. The district
court tacitly acknowledged this in response to Manuel’s motion for
reconsideration/new trial, noting that it “dismissed all of [Manuel’s ERISA §]
502(a)(3) claims against Prudential” because they were duplicative of his
ERISA § 502(a)(1)(B) claim for plan benefits.
But the Supreme Court has construed ERISA § 502(a)(1)(B) narrowly,
pointing out that its plain language focuses on the ERISA “plan” itself. See,
e.g., CIGNA Corp. v. Amara, 563 U.S. 421, 435–36 (2011). An ERISA plan is
best thought of as a “written instrument” which includes the “basic terms and
conditions” governing a set of benefits offered by an employer. Id. at 437.
Claims under ERISA § 502(a)(1)(B) are generally limited to actions
“respect[ing] . . . the interpretation of plan documents and the payment of
claims.” Varity Corp. v. Howe, 516 U.S. 489, 512 (1996).
But ERISA includes numerous requirements beyond the mere payment
of benefits in accord with a plan’s written terms. See e.g., Shaw v. Delta Air
Lines, Inc., 463 U.S. 85, 91 (1983) (noting that, among other things, ERISA
“sets various uniform standards, including rules concerning reporting,
disclosure, and fiduciary responsibility”). ERISA § 502(a)(3), which sounds in
equity, creates a broad cause of action for certain injuries that result from some
of these other ERISA violations. Varity, 516 U.S. at 512 (describing ERISA
§ 502(a)(3) as a “catchall”). Generally, an ERISA § 502(a)(3) claim for equitable
relief may not be maintained when ERISA § 502(a)(1)(B) “affords an adequate
remedy.” Estate of Bratton v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 215
F.3d 516, 526 (5th Cir. 2000); see also Varity 516 U.S. at 512 (noting that
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ERISA § 502(a)(3) offers “appropriate equitable relief for injuries caused by
violations that [ERISA] § 502 does not elsewhere adequately remedy”).
“[A] claimant whose injury creates a cause of action under [ERISA
§ 502(a)(1)(B)] may not proceed with a claim under [ERISA § 502(a)(3)].”
Innova Hosp. San Antonio, Ltd. P’ship v. Blue Cross & Blue Shield of Ga., Inc.,
892 F.3d 719, 733 (5th Cir. 2018) (emphasis added) (citation omitted). By
looking at the underlying alleged injury, it is possible to determine whether a
given claim is duplicative of a claim that could have been brought under ERISA
§ 502(a)(1)(B). So, for example, in Innova this court held, while dismissing a
claim under ERISA § 502(a)(3), that the plaintiff had “an adequate mechanism
for redress under” ERISA § 502(a)(1)(B) for “fail[ure] to reimburse [the
plaintiff] under the terms of [the] plan[].” Id. at 733–34.
B. Document Deficiency Issues
Manuel claims that Prudential and Turner violated ERISA by deficiently
maintaining a document called an SPD—which must be provided to a
participant “within 90 days” of participation. ERISA § 104(b)(1)(A). An SPD is
designed to “reasonably apprise . . . participants and beneficiaries of their
rights and obligations under the plan.” ERISA § 102(a). To this end, ERISA
mandates the inclusion of certain specific disclosures, including
“circumstances which may result in disqualification, ineligibility, or denial or
loss of benefits.” ERISA § 102(b).
An SPD need not be a plan document. In other words, an SPD may not
contain the contractual terms of a plan, and where an SPD conflicts with the
terms of the plan document, the terms of the plan document control for
purposes of ERISA § 502(a)(1)(B). See CIGNA, 563 U.S. at 436–37. This makes
sense because ERISA § 502(a)(1)(B) provides only for the recovery of benefits
due “under the terms of a plan.” But SPDs are still important because they are
often the primary source of information for participants trying to understand
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their benefits. And when SPDs contain misrepresentations or material
omissions, participants like Manuel can end up relying on the existence of
benefits that the plan itself does not provide.
Manuel claims, and Prudential apparently admits, that an SPD was not
provided to him “within 90 days after” he became a plan participant. Manuel
further claims that the SPD did not comply with the requirements of ERISA
§ 102 because it did not include the plan’s preexisting condition exclusion,
reimbursement provision, delegation of interpretive discretion to Prudential,
or the plan administrator’s name. Manuel claims that these alleged
deficiencies constitute a breach of fiduciary duty under ERISA § 502(a)(3) and
that, accordingly, the enforcement of these plan terms would be inequitable.
Manuel cannot maintain an action for fiduciary breach under ERISA
§ 502(a)(3) where the alleged “injury creates a cause of action under [ERISA
§ 502(a)(1)(B)].” Innova, 892 F.3d at 733 (quotation omitted). But claims for
injuries relating to SPD deficiencies are cognizable under ERISA § 502(a)(3)
and not ERISA § 502(a)(1)(B).
In CIGNA, the Supreme Court found that an employee injured by a
deficient SPD could seek equitable relief under ERISA § 502(a)(3). CIGNA, 563
U.S. at 443–44. Indeed, this court has recognized such a claim in circumstances
like those at issue here. In Singletary v. United Parcel Service, Inc. an insurer
denied a claim because of an exclusion contained only in the plan documents.
828 F.3d 342, 348–49 (5th Cir. 2016). Suing for benefits under ERISA
§ 502(a)(1)(B), Singletary argued that she had no notice of the exclusion
because it was not contained in the SPD. Id. at 347. This court held that no
claim for benefits would lie under ERISA § 502(a)(1)(B) as the insurer was
simply enforcing the terms of the plan itself. Id. at 348. But relying on CIGNA,
this court recognized that Singletary might have obtained relief under ERISA
§ 502(a)(3). Id. at 348–49.
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While the district court concluded that Manuel’s alleged injuries were
remediable under ERISA § 502(a)(1)(B), under this court’s binding precedent,
they are cognizable only under ERISA § 502(a)(3).
On appeal, neither Turner nor Prudential offers contradictory authority.
Instead, they argue that Manuel did not prove additional facts necessary to
support the kind of equitable relief requested (e.g., detrimental reliance) and
that none of ERISA’s documentary requirements were actually violated. While
these arguments may prove correct, we take no position on them. Because the
district court concluded that, as a threshold matter, SPD claims could not be
maintained under ERISA § 502(a)(3) and dismissed all related discovery
requests as moot, the district court deprived Manuel of the opportunity to
establish the elements of a valid ERISA § 502(a)(3) claim. Because it is too
early to tell if Manuel would have been successful in so doing, we reverse the
district court’s decision with respect to Turner and remand these claims to the
district court for further consideration of each party’s contentions.
The district court provided another justification for dismissing Manuel’s
SPD claims against Prudential. The district court declared that “it is not
Prudential, but Turner, that is responsible for any alleged deficiencies . . . .
Because Prudential is not the plan administrator.”
ERISA § 101(a) notes that “[t]the administrator . . . shall cause to be
furnished . . . a summary plan description described in [ERISA § 102(a)(1)]”
(emphasis added). The district court correctly concluded that a non-
administrator has no duty to provide an SPD and is generally not liable for
deficiencies. See e.g., Singletary, 828 F.3d at 348–49 (noting that “it violates an
ERISA provision for a Plan Administrator not to provide a valid SPD”
(emphasis added)). Because the district court concluded, and no party
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apparently disputes, that Turner is the plan administrator, 2 we affirm the
district court’s dismissal of Manuel’s SPD claims against Prudential.
C. Claims Administration Issues
Manuel also raises other ERISA § 502(a)(3) claims against Prudential
that the district court dismissed after ultimately concluding that they were
duplicative of his ERISA § 502(a)(1)(B) claims.
Manuel claims that Prudential is liable under ERISA § 502(a)(3) because
it (1) asserted new grounds for denial of his LTD benefits at the last level of
appeal and (2) failed to identify the independent medical reviewer who
recommended denying Manuel’s claim on appeal. Manuel contends that these
actions constitute a violation of ERISA’s claims procedures, which require that
plan participants be provided with “adequate notice in writing” of “the specific
reasons” for an adverse benefit determination and an “opportunity” for “full
and fair review” of such decision upon appeal. ERISA § 503.
The district court should have considered whether Manuel’s alleged
“injury creates a cause of action under [ERISA § 502(a)(1)(B)].” Innova, 892
F.3d at 733 (quotation omitted).
“[I]n an ERISA action under [ERISA § 502(a)(1)(B)], a claimant may
question the completeness of the administrative record; whether the plan
administrator complied with ERISA’s procedural regulations; and the
existence and extent of a conflict of interest created by a plan administrator’s
2 In a separate part of his brief, Manuel contends that Prudential should be treated
as “a de facto administrator” for purposes of ERISA § 502(c). But since Manuel has not argued
that Prudential was acting as de facto administrator for purposes of his ERISA § 502(a)(3)
claims, we need not address this argument here. See United States v. Thibodeaux, 211 F.3d
910, 912 (5th Cir. 2000) (reciting the longstanding “rule in this circuit that any issues not
briefed on appeal are waived”).
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dual role in making benefits determinations and funding the plan.” Crosby v.
La. Health Serv. & Indem. Co., 647 F.3d 258, 263 (5th Cir. 2011) (footnotes
omitted). 3 And in an unbroken line, even after Singletary, this court has
allowed claims administration issues to be raised in ERISA § 502(a)(1)(B)
causes of action. See, e.g., White v. Life Ins. Co. of N. Am., 892 F.3d 762, 769–
70 (5th Cir. 2018). 4
Since, under existing law, plaintiffs may attack problematic
administrative claims procedures under ERISA § 502(a)(1)(B), we affirm the
district court’s decision to dismiss these claims under ERISA § 502(a)(3). 5
3 See also White v. Life Ins. Co. of N. Am., 892 F.3d 762, 769–70 n.2 (5th Cir. 2018);
Burell v. Prudential Ins. Co. of Am., 820 F.3d 132, 139 (5th Cir. 2016); Shedrick v. Marriott
Int’l, Inc., 500 F. App’x 331, 337 n. 5, 338–39 (5th Cir. 2012); Lafleur v. La. Health Serv. &
Indem. Co., 563 F.3d 148, 150, 153–57 (5th Cir. 2009).
4 Like his claim for alleged deficiencies in the SPD, Manuel seeks redress for an
injury—failing to comply with the procedural requirements of ERISA § 503—that appears
unrelated to the terms of the plan. While the plan itself might permit the assertion of new
grounds for denial of claims at the last level of appeal or the nondisclosure of medical experts,
ERISA might require different, more participant friendly, procedures. In such a case, a claims
administrator might, under the logic in Singletary, skirt liability under ERISA § 502(a)(1)(B)
by hewing to the terms of the plan. 828 F.3d at 348. Then, in the absence of a cause of action
under ERISA § 502(a)(3), the underlying injury, caused by a violation of ERISA § 503, could
go unremedied. However, this tension between remedying claims administration defects
under one cause of action and summary plan description defects under another has not been
raised or explored in the briefing. Further, since both Singletary and this court’s claims
administration jurisprudence represent binding precedent, correcting this inconsistency of
approach would require en banc review.
5 Manuel also claims that “Prudential should be estopped either to assert a
recoupment claim or to invoke the pre-existing condition limitation” because “Prudential
further breached fiduciary duties owed to Manuel under [ERISA § 502(a)(3)] by
[inconsistently] construing plan terms.” But ERISA § 502(a)(3) does not create fiduciary
duties, it creates a cause of action for fiduciary breach. In his complaint, Manuel seems, in
the alternative, to associate these alleged fiduciary breaches with a “fail[ure] to comply with
ERISA procedures under [ERISA § 503].” Because Manuel has either not tied this allegation
of injury to a particular violation of ERISA or has tied it to a violation of ERISA for which
there is a remedy under ERISA § 502(a)(1)(B) (namely the claims procedure requirements in
ERISA § 503), the district court correctly dismissed these claims.
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II. Plan Benefits
A. The District Court’s Standard of Review
Manuel claims that the pre-existing condition exclusion in the plan
documents should not be enforced to bar his recovery of disability benefits
under ERISA § 502(a)(1)(B). To support this contention, Manuel claims that
the district court applied the wrong standard of review to Prudential’s
administrative decision. The district court applied an “abuse of discretion”
standard. Manuel contends that de novo review is appropriate. Prudential
maintains that this argument has been waived on appeal and, in the
alternative, that it is misplaced.
Manuel clearly requested de novo review in the district court, so the issue
has not been waived. For example, one status order notes, “Plaintiff asserts
that the de novo standard of review applies as to Prudential’s decision to deny
Plaintiffs claim for benefits.” Further Manuel re-raised this issue in his motion
for reconsideration/new trial. Preserving an argument on appeal requires only
that the argument “be raised to such a degree that the district court has an
opportunity to rule on it.” Rosedale Missionary Baptist Church v. New Orleans
City, 641 F.3d 86, 89 (5th Cir. 2011) (quotation omitted). The district court
implicitly ruled on this claim when it applied the abuse of discretion standard.
We must address the merits of Manuel’s claim.
“Generally, in suits brought under [ERISA § 502(a)(1)(B)], district courts
review the denial of . . . benefits . . . de novo. But, if the benefits plan the suit
is brought under ‘gives the administrator . . . authority to determine eligibility
for benefits or to construe the [plan] terms’ . . . the denial . . . is reviewed for
an abuse of discretion.” Burell v. Prudential Ins. Co. of Am., 820 F.3d 132, 137
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(5th Cir. 2016) (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,
115 (1989)) (citations omitted). 6
While the district court’s reasoning is somewhat unclear, 7 what is clear
is that it applied the abuse of discretion standard. Manuel contends that while
the SPD includes a delegation of discretion to Prudential, this delegation is not
included in the plan documents themselves. And he claims, under CIGNA, such
delegations included only in an SPD may not be enforced.
Prudential points to terms in the plan documents that it claims confer
discretion. First, the plan indicates that a participant is “disabled when
Prudential [so] determines.” Second, the plan requires participants receiving
benefits to “submit proof of continuing disability satisfactory to Prudential.”
A split exists as to whether plan language requiring a claimant to submit
proof of loss “satisfactory to [a claims administrator]” confers discretion. See
Green v. Life Ins. Co. of N. Am., 754 F.3d 324, 330 (5th Cir. 2014) (identifying
but not wading into the split); Gross v. Sun Life Assur. Co. of Can., 734 F.3d 1,
12–16 (1st Cir. 2013) (describing the split and concluding that such language
does not trigger discretion). 8
6 “‘Whether the district court employed the appropriate standard in reviewing an
eligibility determination made by an ERISA plan administrator is a question of law’ that we
review de novo.” Green v. Life Ins. Co. of N. Am., 754 F.3d 324, 329 (5th Cir. 2014) (quoting
Ellis v. Liberty Life Assurance Co. of Bos., 394 F.3d 262, 269 (5th Cir. 2004)); see also Burell
v. Prudential Ins. Co. of Am., 820 F.3d 132, 136–37 (5th Cir. 2016).
7 The district court does not definitively state that it determined “after reviewing the
Plan Documents, that Prudential had discretion to determine Plaintiff’s STD benefits” until
Manuel’s motion for reconsideration/new trial.]
8 Compare Viera v. Life Ins. Co. of N. Am., 642 F.3d 407, 417 (3d Cir. 2011) (no
discretion); Feibusch v. Integrated Device Tech., Inc. Employee Ben. Plan, 463 F.3d 880, 884–
85 (9th Cir. 2006) (no discretion); Diaz v. Prudential Ins. Co. of Am., 424 F.3d 635, 640 (7th
Cir. 2005) (no discretion); Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 251–
52 (2d Cir. 1999) (no discretion); with Tippitt v. Reliance Standard Life Ins. Co., 457 F.3d
1227, 1234 (11th Cir. 2006) (discretion); Nance v. Sun Life Assur. Co. of Can., 294 F.3d 1263,
1269 (10th Cir. 2002) (discretion); Ferrari v. Teachers Ins. & Annuity Ass’n, 278 F.3d 801,
807 (8th Cir. 2002) (discretion); Perez v. Aetna Life Ins. Co., 150 F.3d 550, 557 (6th Cir. 1998)
(discretion).
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Rather than jumping headlong into the fray, we elect a more restrained
approach. This court has recognized that “ambiguous plan language [must] be
given a meaning as close as possible to what is said in the plan summary.”
Koehler v. Aetna Health Inc., 683 F.3d 182, 189 (5th Cir. 2012); see also
Humana Health Plan, Inc. v. Nguyen, 785 F.3d 1023, 1037 n. 28 (5th Cir. 2015).
Here the SPD is clear. It says that the “Claims Administrator has the sole
discretion to interpret the terms of the Group Contract, to make factual
findings, and to determine eligibility for benefits.” The deep circuit split as to
whether the plan language constitutes an express delegation of discretion
strongly suggests that the plan language is at least ambiguous. Since we must
look to the SPD in cases where the plan language is ambiguous, we conclude
that discretion has been delegated to the claims administrator under the plan.
For this reason, we affirm the district court’s application of abuse of discretion.
B. Conflict of Interest
Manuel also contends that Prudential had a legally relevant conflict of
interest that the district court wrongfully declined to consider when it reviewed
Prudential’s claim denial for an abuse of discretion. Granting Prudential’s
request for summary judgment on Manuel’s ERISA § 502(a)(1)(B) claim, the
district court wholly ignored Prudential’s supposed conflict.
On appeal, the parties do not dispute that, under Metropolitan Life v.
Glenn, Prudential has a structural conflict—it has a fiduciary obligation to
participants as claims administrator but also suffers a direct financial loss
whenever claims are paid. 554 U.S. 105, 108 (2008).
In Glenn, the Supreme Court concluded that “a reviewing court should
consider [a structural] conflict as a factor in determining whether the plan
administrator has abused its discretion in denying benefits; and that the
significance of the factor will depend upon the circumstances of the particular
case.” 554 U.S. at 108. But the district court, without considering the impact
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of Prudential’s conflict on its claims decision, concluded that Prudential did not
abuse its discretion in determining that Manuel had a pre-existing condition
under the terms of the plan—a conclusion Manuel disputes.
The district court should have considered this factor and given the
conflict appropriate weight. Had the district court considered the conflict, it
might have permitted limited conflict discovery, and the court ultimately
might have concluded that Prudential abused its discretion when it concluded
that Manuel had a preexisting condition. Crosby, 647 F.3d at 263 n.6. We
reverse the district court and remand Manuel’s ERISA § 502(a)(1)(B) claim for
further consideration in light of Prudential’s apparent conflict.
III. Interference with Protected Rights
Manuel appeals the district court’s dismissal of his ERISA § 510 claims
against Prudential. ERISA § 510 prohibits “any person” from interfering, in
various ways, with protected rights under ERISA. The district court concluded
that “controlling jurisprudence from the Fifth Circuit clearly states that a valid
[ERISA] § 510 claim requires an employment relationship, and [because] there
was no such relationship between Prudential and the Plaintiff, Plaintiff’s
[ERISA] § 510 claim against Prudential fails.” The district court asserted that
“[t]he [Fifth Circuit] clarified the meaning of ‘person’ in relation to an ERISA
plan to mean ‘employer’”—even though “employer” and “person” are each
defined terms under ERISA.
None of the cases cited by the district court support this reading of the
statute. Indeed, Heimann v. National Elevator Industry Pension Fund states
that “[t]he term ‘employer’ means any person acting directly as an employer,
or indirectly in the interest of an employer, in relation to an employee benefit
plan; and includes a group or association of employers acting for an employer
in such capacity” while “[t]he term ‘person’ means an individual, partnership,
joint venture, corporation, mutual company, joint-stock company, trust, estate,
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unincorporated organization, association, or employee organization.” 187 F.3d
493, 503–04 (5th Cir. 1999) (quoting ERISA § 3), overruled on other grounds by
Arana v. Ochsner Health Plan, 338 F.3d 433 (5th Cir. 2003).
The district court seems to rely on the language in Bodine v. Employers
Casualty Company, which states, “[t]o sustain a valid [ERISA] § 510 claim, an
employee must show: (1) prohibited (adverse) employer action (2) taken for the
purpose of interfering with the attainment of (3) any right to which the
employee is entitled.” 352 F.3d 245, 250 (5th Cir. 2003) (emphasis added). And
Prudential offers up a string of citations 9 in which this court has similarly
described the issues under ERISA § 510 in terms of “employees” and
“employers.” But all of these cases involve employees suing their employers.
And none of them state that a non-employer is insulated from suit under
ERISA § 510.
While most circuits have concluded that an action can be maintained
against a non-employer, a split exists. 10 We agree with the persuasive
reasoning offered by Judge Niemeyer in Custer v. Pan Am. Life Ins. Co. 12 F.3d
410, 421 (4th Cir. 1993) (explaining that “Since both terms, ‘employer’ and
‘person,’ are defined by ERISA we must assume that Congress used the term
9 See Parker v. Cooper Tire & Rubber Co., 546 F. App’x 522, 524 (5th Cir. 2014);
Armando v. AT & T Mobility, 487 F. App’x 877, 878 (5th Cir. 2012); Custer v. Murphy Oil
USA, Inc., 503 F.3d 415, 417 (5th Cir. 2007); Hinojosa v. Jostens Inc., 128 F. App’x 364, 368–
69 (5th Cir. 2005).
10 Compare Teamsters Local Union No. 705 v. Burlington N. Santa Fe, LLC, 741 F.3d
819, 827 (7th Cir. 2014) (non-employers may be subject to suit); Mattei v. Mattei, 126 F.3d
794, 801 (6th Cir. 1997) (“[I]t is . . . appropriate to view ‘employment relationship’ as an
illustrative but non-exclusive description of a set of rights that are protected by [ERISA] §
510 . . . .”); Maez v. Mountain States Tel. & Tel., Inc., 54 F.3d 1488, 1501 n. 8 (10th Cir. 1995)
(non-employers may be subject to suit); Custer v. Pan Am. Life Ins. Co., 12 F.3d 410, 421 (4th
Cir. 1993) (non-employers may be subject to suit); Tingey v. Pixley-Richards W., Inc., 953 F.2d
1124, 1132 n. 4 (9th Cir. 1992) (sustaining an action against “an insurer who coerces an
employer to fire an employee”); with Byrd v. MacPapers, Inc., 961 F.2d 157, 161 (11th Cir.
1992) (holding that a “retaliatory discharge claim under § 510 of ERISA lies only against . . .
[an] employer”).
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‘person’ deliberately” and concluding that the definition of “person” under
ERISA § 510 includes some non-employers (citation omitted)).
Indeed, in Heimann this court considered a closely related question and
came to a similar conclusion. Holding that ERISA § 510 protects retiree
participants in an employee benefits plan, this court rejected the “conclusion
that [ERISA] § 510 makes discrimination against those who exercise ERISA
rights unlawful only when it affects an ongoing employment relationship [as]
without support in the text or legislative history of ERISA.” 187 F.3d at 508.
Accordingly, we conclude that ERISA § 510 claims may be maintained
against non-employers. Since the district court dismissed Manuel’s
ERISA § 510 claims against Prudential solely because Manuel was not an
employee of Prudential, we reverse and remand for appropriate discovery and
consideration of Manuel’s contentions.
IV. Civil Penalties
ERISA entitles participants, upon request, to information related to
their benefit plans. ERISA § 104. In his complaint, Manuel sought penalties
against Turner under ERISA § 502(c) because “Turner[] fail[ed] to deliver to
him [upon request] the appropriate formal written and signed plan document.”
The district court pointed out that ERISA does not require that a plan
document be signed and concluded that “because Turner provided the
requested plan documents within the 30 day time period required by ERISA
§ 502(c) . . . Turner’s Motion for Summary Judgment . . . is granted.” It
concluded that, as a matter of law, Manuel had received all the documents to
which he was entitled.
But the district court ignored one of Manuel’s arguments. Manuel’s
“allegations are not just limited to the fact that the documents are undated and
unsigned.” Instead he focuses on the fact that the documents produced by
Turner are somewhat different from the copies provided, in the administrative
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record, by Prudential. The fact that some documents contained in the
administrative record were not produced by Turner might suggest that Turner
did not produce all of the documents that it was required to produce under
ERISA. Most importantly, Manuel alleges that the plan documents in the
administrative record contain a plan amendment not included in the Turner
production. Record evidence supports this contention.
Turner responds by arguing that it produced a complete SPD that
included “all of the information required under ERISA and its regulations.” 11
But ERISA mandates more than the production of a valid SPD upon request
for plan documents. The administrator must provide documents which include
the “instruments under which the plan is established or operated.” ERISA
§ 104(b)(4) (emphasis added). This court has held that “ERISA requires a plan
administrator to produce plan documents upon written request from a
participant or beneficiary.” Babin v. Quality Energy Servs., Inc., 877 F.3d 621,
624 (5th Cir. 2017) (citing ERISA § 104(b)(4)); see also Murphy v. Verizon
Commc’ns, Inc., 587 F. App’x 140, 144 (5th Cir. 2014) (construing ERISA
§ 104(b)(4) as referencing “formal legal documents that govern a plan”).
Whether the amendment contained in the Prudential administrative
record constitutes a formal legal document governing the plan is unclear.
“[O]nly an amendment executed in accordance with the Plan’s own procedures
and properly noticed could change the Plan.” Williams v. Plumbers &
Steamfitters Local 60 Pension Plan, 48 F.3d 923, 926 (5th Cir. 1995); see also
Evans v. Sterling Chemicals, Inc., 660 F.3d 862, 871 (5th Cir. 2011);
11 Turner also argues that penalties under ERISA § 502(c) may not be assessed where
there is “no evidence that [the] alleged violation[] resulted in the termination of . . . benefits.”]
But Turner cites inapposite caselaw from other jurisdictions describing the injury
requirements of other provisions of ERISA. These analogies are unhelpful where, as in ERISA
§ 502(c), a statutory penalty exists for a specific failure—not providing certain documents
upon request.
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Halliburton Co. Benefits Comm. v. Graves, 463 F.3d 360, 372 (5th Cir. 2006);
cf. Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 85 (1995) (“[W]hatever
level of specificity a company ultimately chooses, in an amendment procedure
or elsewhere, it is bound to that level.”).
The existence of the amendment in the Prudential administrative record
creates a material question of fact as to whether that amendment has been
properly executed and has, accordingly, become a component of the plan. If the
amendment is valid, it is part of the plan, and should have been produced by
Turner. If Turner did not produce the entire plan document, the district court
has “discretion” to assess a penalty. ERISA § 502(c)(1). See Abraham v. Exxon
Corp., 85 F.3d 1126, 1132 (5th Cir. 1996) (noting that the award is
discretionary).
So, while the district court may ultimately exercise discretion as to
whether and to what extent a penalty should be assessed, that inquiry is
distinct from the question of whether Turner violated a term of ERISA for
which a penalty could be assessed. The district court wrongly concluded, as a
matter of law, that Manuel did not have a claim under which a penalty could
be assessed. Because Manuel has identified record evidence supporting his
contention that a penalty could be assessed, we reverse and remand the district
court’s resolution of Manuel’s ERISA § 502(c) claim at the summary judgment
stage. 12 If Manuel ultimately proves that a penalty could be assessed, the
district court must freshly consider whether any such penalty is appropriate.
12 Manuel also contends that he has an ERISA § 502(c) claim against Prudential
because it was acting as de facto administrator. Manuel claims that “[t]here has been no
definitive ruling in the Fifth Circuit prohibiting liability of an insurer as a de facto
administrator under [ERISA § 502(c)].” But this is a misstatement of this court’s binding
jurisprudence. See N. Cypress Med. Ctr. Operating Co., Ltd. v. Aetna Life Ins. Co., 898 F.3d
461, 483 (5th Cir. 2018) (stating that “the Fifth Circuit does not recognize a de facto
administrator doctrine in the context of an insurance company involved in claims handling”);
see also Conn. Gen. Life Ins. Co. v. Humble Surgical Hosp., L.L.C., 878 F.3d 478, 486–87 (5th
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V. Discovery
Manuel sought discovery related to his claims for breach of fiduciary
duty, for plan benefits, for retaliation, and for failure to provide documents.
After hastily disposing of all of his claims, the district court simply denied
Manuel’s requests “as moot.”
“The control of discovery ‘is committed to the sound discretion of the trial
court . . . .’” Smith v. Potter, 400 F. App’x 806, 813 (5th Cir. 2010) (quoting Mayo
v. Tri-Bell Indus., Inc. 787 F.2d 1007, 1012 (5th Cir. 1986)). Where this court
reverses the district court, the district court is ordered to consider appropriate
and related discovery requests anew. Conversely, where the district court’s
resolution of an issue is affirmed, the dismissal of Manuel’s related discovery
requests are affirmed.
VI. Overpayment Counterclaim
Prudential maintains that it payed STD benefits to Manuel in error and
the district court held that Prudential was entitled, under ERISA § 502(a)(3),
to repayment. Remedies under ERISA § 502(a)(3) are limited to injunctive and
“other appropriate equitable relief.”
At summary judgment, the district court relied entirely on Sereboff v.
Mid Atlantic Medical Services, 547 U.S. 356 (2006). It ignored the more recent
Montanile v. Board of Trustees, 136 S. Ct. 651, 659 (2016) until Manuel’s
motion for reconsideration/new trial but distinguished the facts and continued
to rely on Sereboff. Manuel contends that Montanile bars fiduciaries from
recovering “against the general assets of a beneficiary.”
Montanile deals with a plaintiff, Robert Montanile, who was a
participant in an ERISA-covered benefit plan that paid for medical expenses.
Cir. 2017). We affirm the district court’s decision to dismiss Manuel’s 502(c) claims against
Prudential.
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When Montanile was injured by a drunk driver, his medical treatment was
covered. Montanile successfully sued and settled with the drunk driver. Under
the plan’s subrogation clause, the plan administrator sought reimbursement
from the settlement for the medical expenses it had covered. When Montanile
refused, the plan administrator, like Prudential, filed suit for equitable relief
under ERISA § 502(a)(3).
The Court noted that “at equity, a plaintiff ordinarily could not enforce
any type of equitable lien if the defendant once possessed a separate,
identifiable fund to which the lien attached, but then dissipated it all. The
plaintiff could not attach the defendant’s general assets instead because those
assets were not part of the specific thing to which the lien attached.” Montanile,
136 S. Ct. at 659. An equitable lien may be enforced “only against specifically
identified funds that remain in the defendant’s possession or against traceable
items that the defendant purchased with the funds (e.g., identifiable property
like a car). A defendant’s expenditure of the entire identifiable fund on
nontraceable items (like food or travel) destroys an equitable lien.” Id. at 658.
In response to the claim that Sereboff blessed the enforcement of
equitable liens “against a defendant’s general assets[,]” the Court noted that
Sereboff “left untouched the rule that all types of equitable liens must be
enforced against a specifically identified fund in the defendant’s possession.”
Id. So the Court stated that “the lower courts erroneously held that the plan
could recover out of Montanile’s general assets.” Id. at 662; see also Great-W.
Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210 (2002) (explaining that
ERISA § 502(a)(3) refers to relief that was “typically available in equity” and
that money damages are “the classic form of legal relief” (quotations omitted)).
The district court concluded that Montanile’s limitation of equitable
recovery from a defendant’s general assets applies only to defendants who
received funds from third parties (e.g., in settlement of claims) and not to
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defendants who received overpayments directly from the party seeking
repayment. The district court offers no explanation for this distinction, and
Prudential does not defend it on appeal—acknowledging that the receipt of
payments from a third party is just “one example of an overpayment[,]”
logically indistinguishable from “the receipt of benefits that are mistakenly
paid by an administrator.”
The Supreme Court’s conclusion that “all types of equitable liens must
be enforced against a specifically identified fund in the defendant’s possession”
applies to the “equitable lien” on the mistakenly paid STD benefits Prudential
claims to maintain. Montanile, 136 S. Ct. at 659 (2016). For this reason, we
reverse the district court’s decision to grant summary judgment to Prudential
and remand the case to “determine whether [Manuel] kept his [STD benefits]
separate from his general assets or dissipated the entire [amount] on
nontraceable assets.” Montanile, 136 S. Ct. at 662. 13
CONCLUSION
For the foregoing reasons, we REVERSE and REMAND the district
court’s dismissal of Manuel’s claims for fiduciary breach and failure to provide
documents as to Turner and his claim for plan benefits and discrimination as
to Prudential. Further, we REVERSE and REMAND the district court’s grant
of summary judgment to Prudential on its claim for reimbursement. We
AFFIRM the dismissal of Manuel’s fiduciary breach and failure to provide
document claims against Prudential and AFFIRM the application of the abuse
of discretion standard to Manuel’s claims for plan benefits. We INSTRUCT the
district court to consider anew any discovery requests related to Manuel’s
13 Relatedly the district court awarded prejudgment interest to Prudential on this
claim. Because summary judgment was improper, we vacate the award of prejudgment
interest.
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surviving claims. We VACATE the award of prejudgment interest to
Prudential.
22