Lanpher v. Metropolitan Life Insurance Company & Bank America
Filing
77
MEMORANDUM OPINION AND ORDER granting defendant Merrill Lynch/Bank of America's 36 Motion for Summary Judgment; denying defendant MetLife's 44 Motion for Summary Judgment; granting plaintiff's 48 Motion for Partial Summary Judgment against MetLife (Written Opinion). Signed by Judge John R. Tunheim on September 29, 2014. (DML)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
RICHARD K. LANPHER,
Civil No. 12-2561 (JRT/JSM)
Plaintiff,
v.
METROPOLITAN LIFE INSURANCE
COMPANY and BANK OF AMERICA,
successor to Merrill Lynch & Co., Inc., as
employer and plan administrator of The
Merrill Lynch & Co., Inc., Supplemental
Long Term Disability Plan,
MEMORANDUM OPINION AND
ORDER ON CROSS MOTIONS FOR
SUMMARY JUDGMENT
Defendants.
Katherine L. MacKinnon, KATHERINE L. MACKINNON,
ATTORNEY AT LAW, 3744 Huntington Avenue, St. Louis Park, MN
55416, for plaintiff.
William D. Hittler, NILAN JOHNSON LEWIS, PA, 120 South Sixth
Street, Suite 400, Minneapolis, MN 55402, for defendant Metropolitan
Life Insurance Company.
Wood W. Lay, WINSTON & STRAWN, LLP, 100 North Tryon Street,
Charlotte, NC 28202, and BLAKE J. LINDEVIG, Faegre Baker Daniels
LLP, 90 South Seventh Street, Suite 2200, Minneapolis, MN 55402, for
defendant Bank of America.
This case involves a dispute over a former employee’s access to benefits under a
supplemental long-term disability insurance plan.
Plaintiff Richard Lanpher was an
employee at Merrill Lynch (succeeded by Defendant Bank of America, referred to as
“Merrill Lynch” throughout), through which he was automatically enrolled in Basic Long
Term Disability Benefits plan (the “Basic” plan). Once his salary exceeded $60,000, he
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became eligible for enhanced benefits under the “Supplemental” long-term disability
benefits plan. He did not seek to enroll in the Supplemental plan right away, but did
several years later. To enroll in the Supplemental plan, he was required to fill out a
Statement of Health and obtain prior approval, based on his submission, from the plan’s
insurer, Defendant Metropolitan Life Insurance Company (“MetLife”).
Upon his
application with Merrill Lynch, he received preliminary approval pending MetLife’s
approval based on his Statement of Health. He then submitted the Statement of Health
and subsequently received a letter from MetLife stating that he had been approved and
that Merrill Lynch would make the appropriate changes to his coverage.
Six years later, he ended his employment with Merrill Lynch on account of
depression and sought disability benefits under both the Basic and Supplemental plans.
After several denials and appeals, he ultimately received notice from MetLife that he
would receive benefits under the Basic plan. That notice did not indicate that he had
been either approved or denied for Supplemental benefits. His attorney inquired further
specifically about the Supplemental, and ten months later received from MetLife a denial
notice for the Supplemental benefit, citing as grounds for denial the fact that he did not
have coverage under the Supplemental plan at the time his employment ended. On
appeal to Merrill Lynch, his claim was also denied for lack of coverage.
Discovery has since revealed that, although MetLife has in its records that it
approved Lanpher for the Supplemental benefits on the basis of his Statement of Health,
there is no evidence that it communicated this to Merrill Lynch (which would have
triggered the deduction of premiums from his paychecks). The parties reference three
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methods by which MetLife would have communicated this to Merrill Lynch at the time:
(a) sending a monthly spreadsheet with the list of employees approved and for which
insurance plan, (b) carbon copying Merrill Lynch on approval letters to participants after
reviewing their Statement of Health, and (c) weekly status reports indicating approval of
employees. With regard to (a), the record includes the spreadsheet for the relevant
period, which should have included Lanpher, but it does not. With regard to (b), the
approval letter Lanpher received from MetLife does not indicate that a copy was sent to
Merrill Lynch. With regard to (c), MetLife has not produced the weekly status reports,
claiming that it has discarded them as part of its document handling policies.
Lanpher brings this suit under the Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. §§ 1001, et seq., alleging first under 29 U.S.C. § 1132 that
MetLife improperly denied him benefits due under the Supplemental plan and seeking
reversal of that denial, and second, that MetLife and/or Merrill Lynch breached their
fiduciary duties under 29 U.S.C. § 1104(a)(1) by failing to enroll him properly and
subsequently denying benefits on that account. All parties have moved for summary
judgment, with Lanpher moving only against MetLife.
The Court concludes that it was an abuse of discretion and an unreasonable
interpretation of the policy documents for MetLife to conclude that, although Lanpher
had fulfilled all of the enrollment requirements, he was not entitled to benefits because of
a determination that he was not “covered” at the time of his disability because premiums
had not been paid, where the plan language did not expressly make coverage contingent
upon the employee’s payment of premiums. The Court will therefore grant Lanpher’s
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motion for summary judgment on his claim for benefits under 29 U.S.C. § 1132(a)(1)(B).
In the alternative, the Court concludes that Lanpher would alternatively be entitled to
equitable relief on account of MetLife’s breach of its fiduciary duty to Lanpher. Finding
insufficient evidence of any breach of fiduciary duty by Merrill Lynch, the Court will
grant Merrill Lynch’s motion for summary judgment.
BACKGROUND
I.
THE PLAN
There are two long-term disability plans involved in this case. First, the Basic
plan provides benefits of sixty percent of the first $5,000 of the employee’s pre-disability
monthly earnings to a disabled employee after six months of continuous disability. (Aff.
of William D. Hittler, Ex. A (“ML”) 22-23, Feb. 1, 2014, Docket No. 47.) The Basic
plan required no contribution from employees. (ML 56.)
Employees who made more than $60,000 per year could elect to enroll in the
second plan, the Supplemental long-term disability benefit plan (“the Supplemental Plan”
or “the Plan”). (ML 121.) Employees who enrolled in the Supplemental Plan could elect
to receive benefits of either forty percent or sixty percent of their predisability earnings
over $60,000 after an elimination period of twenty-six weeks. (ML 115, 121, 159.)
The Plan allowed employees to enroll in the Supplemental Plan without providing
evidence of insurability if they requested the insurance within forty-five days of
becoming eligible. (ML 121.) But if an employee requested the Supplemental insurance
more than 45 days after becoming eligible, the employee was required to give evidence
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of their insurability to MetLife by submitting a “Statement of Health” form, which was
subject to MetLife’s approval. (ML 121.) The Plan’s Certificate of Insurance provided
that in such a circumstance, “[i]f We determine that You are insurable, such insurance
will take effect on the date We state in Writing, if You are Actively at Work on that
date.” (ML 121.) The Certificate of Insurance describes the enrollment process as
follows:
If You are eligible for insurance, You may enroll for Disability Income
Insurance: Long Term Benefits by completing the required form. . . . If
You enroll for Contributory Insurance, You must also give the Employer
Written permission to deduct premiums from Your pay for such insurance.
You will be notified by the Employer how much You will be required to
contribute.
(ML 121.) MetLife is the insurer and claims fiduciary for the Plan, and Merrill Lynch is
the employer and plan administrator. (ML 147-49.)
II.
ENROLLMENT IN THE PLAN
Lanpher was automatically enrolled in the Basic plan as part of his benefit
package with Merrill Lynch. (Second Aff. of Katherine L. MacKinnon in Supp. of Mot.
for Summ. J. (“Second MacKinnon Aff.”), Ex. 2 (“Lanpher Statement”) ¶ 4, Feb. 1,
2014, Docket No. 52.)1 He explained in a written statement made in the course of this
dispute that in early 2001 he sought to enroll in the Supplemental Plan because he
“needed the added income protection from the [Supplemental] plan because my income
1
The Exhibits to the Second MacKinnon Affidavit are found at Docket Numbers 52, 53,
and 54. When citing to those exhibits, the Court will refer to the Second MacKinnon Affidavit
without distinguishing at which docket entry that particular exhibit is found.
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was far in excess of the $60,000 threshold at that time and I had a wife and three children
to support.” (Lanpher Statement ¶¶ 5, 7.) After seeking to enroll with his employer, he
received a letter dated April 4, 2001 from Merrill Lynch confirming his enrollment and
indicating that he would need to fill out, and MetLife would need to approve, a
“Statement of Health” form before coverage would take effect. (Aff. of William D.
Hittler in Supp. of Mot. for Summ. J. (“Hittler Aff.”), Ex. B at BA 26, Feb. 1, 2014,
Docket No. 47.) The letter stated:
You recently enrolled in the Supplemental Long-Term Disability (LTD)
Plan for the 2001 plan year, and made the following election:
Coverage Option
Annual Benefit
Monthly Premium
60%
$294,126.54
$330.89
For this coverage to take effect, the plan’s insurer, MetLife, must review
your statement of health and may also require you to undergo a physical
examination. Please complete the statement of health (if you have not done
so already) and return it in the business reply envelope. . . .
Your new coverage goes into effect once your application for coverage is
approved by MetLife. MetLife will notify you directly by letter of its
decision.
(Id.) When Lanpher received this letter on April 4, 2001, he had already submitted the
Statement of Health form to MetLife on March 20, 2001, which MetLife received on
March 22, 2001. (Hittler Aff., Ex. A at 1737-38.) Lanpher then received an approval
letter dated from MetLife April 16, 2001 stating:
Your request for the above listed benefit(s) was received and reviewed by
our Medical Department.
We are pleased to advise you that your request has been approved. . . .
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Your employer’s benefits department will make the appropriate changes to
your coverage.
(Hittler Aff., Ex. B at BA 27.) Lanpher stated that “[f]rom these two letters, I was under
the impression that I had properly enrolled in the SLTD plan and had been approved for
the coverage. I had no idea that there were any additional steps I needed to take to
[e]nsure that coverage was effective.” (Lanpher Statement ¶ 11.)
III.
DISABILITY AND REQUEST FOR BENEFITS
On December 17, 2007, after a visit to the Mayo Clinic, Lanpher stopped working
on account of severe depression. (ML 356-58; ML 310; ML 380-81, ¶¶ 13-14, 16-17, 2327.) He applied to receive long-term disability benefits on June 13, 2008. (ML 131420.) At some point in early 2008, he was contacted by a representative from Merrill
Lynch and told that he did not have SLTD coverage, with which he disagreed. (Lanpher
Statement ¶¶ 14-15.) On April 22, 2008, Lanpher submitted another application for
Supplemental benefits (a new Statement of Health). (ML 1778-81.) He explained that he
did this “as a precautionary measure to make sure that if I became disabled in the future
my family would still have income protection. But I was not in any way conceding that I
had not been properly enrolled in the SLTD plan before.” (Lanpher Statement ¶ 18.)
On August 25, 2008, Lanpher received a letter from MetLife denying his claim for
benefits. (ML 177.) The letter stated that “MetLife has completed its review of your
claim for Long Term Disability (LTD) benefits” and that the claim was “denied effective
June 17, 2008.” (Id.) The letter stated that the “medical evidence reviewed does not
demonstrate any functional impairment that would prevent you from working.” (ML
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178.) Lanpher appealed the decision on September 9, 2008 on the grounds that the
evaluation had excluded reports from several physicians who had treated his depression,
(ML 1295), but his claim was again denied: he received a second claim denial letter on
October 6, 2008. (ML 180.) Lanpher submitted a review of the appeal, but upon review
MetLife upheld its previous determination in a letter dated November 19, 2008.
(ML 183.)
Lanpher, this time represented by counsel, again appealed this denial of benefits
“under both the basic and the supplemental disability insurance policy with MetLife” on
May 14, 2009. (ML 187, 354.) On June 23, 2009, MetLife sent a notice that his previous
claims decision would be reversed. (ML 322.) On July 2, 2009, MetLife sent Lanpher a
letter stating that “Your claim for LTD benefits has been approved effective June 18,
2008.” (ML 190.) On November 10, 2009, Lanpher received a letter notifying him that
his claim for “LTD benefits” was approved effective June 18, 2008 and specifically
listing out the benefit payments he would receive. (ML 170-71.) The letter stated that
because his disability fell into the “mental or nervous disorders or diseases” category, his
benefits would be capped at 24 months, and would extend through June 17, 2010.
(ML 170.)
IV.
ONGOING ISSUES WITH SUPPLEMENTAL BENEFITS
After receiving the Basic benefits, Lanpher’s counsel sought to figure out what
had occurred with regard to his Supplemental benefits. The record indicates that this
inquiry set off months of communications between MetLife and Merrill Lynch in late
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2009 and through 2010, seeking to determine the status of Lanpher’s enrollment in the
Supplemental plan.
A.
Lanpher’s Inquiries
On August 7, 2009, Lanpher’s counsel sent a letter to MetLife to “clarify a few
matters concerning” his long-term benefits award. (ML 193.) One of the issues raised in
the letter was the “Award of Supplementary LTD Benefits” – Lanpher’s counsel sought
to understand why the benefit award included only benefits under the Basic rather than
also the Supplemental Plan. (ML 194.) The letter stated:
In his appeal, Mr. Lanpher explicitly requested an award of both the basic
LTD benefit and the supplementary benefit. Your letter of 7/2/09 does not
address his entitlement in benefits under the supplementary policy. Would
you kindly provide him with payment under that policy as well? Given that
the definitions of disability are virtually identical under the basic and the
supplementary policies, he should be entitled to benefits under both.
(ML 194.) MetLife responded to the letter on August 21, 2009, stating:
A review of the employment information received from Merrill Lynch . . .
confirmed that Mr. Lanpher, as of December 17, 2007 (last day he worked
prior to his disability), was eligible for the basic LTD benefit only. I sent a
request to Jarmaine Parker, Human Resources to confirm whether
Mr. Lanpher was covered for the supplemental LTD benefit. If we are
notified that he in fact did have supplemental [sic] LTD coverage
appropriate action will be taken.
(ML 195.)
On October 30, 2009, Lanpher’s counsel sent a letter to MetLife about his claim
for SLTD, observing that “we have received no explanation for not paying this claim,”
and “lay[ing] out our reasons for urging the insurer to either pay this claim or deny it in
accordance with the claims regulations so that a proper administrative appeal can be
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made.” (ML 175.) The letter explained that in all three claim denial letters, “there was
explicit reference made to denying claims under both policies,” and no indication that
there was a problem unique to SLTD. (ML 175.) The letter also explained that, after the
Basic benefits were awarded, his counsel sent a letter to MetLife regarding the SLTD
policy and received a response that was “not helpful” because it did “not indicate what
MetLife’s issue [wa]s with respect to Mr. Lanpher’s Supplemental LTD claim.” (ML
176.) The letter requested that if the insurer contended that he was not covered, “it must
communicate this to Mr. Lanpher . . . and permit him to challenge the lack of coverage on
an administrative appeal.” (ML 176.) A document attached to the letter calculated the
SLTD award to be $162,216.26, which is 60% of the portion of Lanpher’s annual
earnings of $330, 360.44 above $60,000. (ML 196.)
Merrill Lynch sent a letter to counsel for Lanpher on December 11, 2009, denying
his request for Supplemental LTD benefits. (Decl. of Wood W. Lay in Supp. of Mot. for
Summ. J. (“Lay Decl.”), Ex. 14, Jan. 31, 2014, Docket No. 40.) The letter stated:
A review of the employment information received from Merrill Lynch . . .
confirmed that Mr. Lanpher, as of December 17, 2007 . . . was eligible for
the basic LTD benefit only. I confirmed with Jermaine Parker, Human
Resources, Merrill Lynch on August 21, 2009 that Mr. Lanpher did not
have Supplemental LTD coverage. I received this confirmation in writing
from Mr. Parker.
Since Mr. Lanpher did not have Supplemental LTD coverage effective on
his last day worked . . . we have no alternative but to deny his request for
Supplemental LTD benefits.
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(Id.; ML 1753.)2 On December 29, 2009, Lanpher sent an email to Jermaine Parker at
Merrill Lynch stating that he was entitled to the sixty percent benefits under the
Supplemental plan and attaching the April 4, 2001 confirmation of enrollment from
Merrill Lynch and the April 16, 2001 approval his Statement of Health from MetLife,
along with a 2006 pay summary supporting the figures Lanpher requested. (Lay Decl.,
Ex. 18 at 36.) Parker responded, stating that he had “contacted MetLife requesting to
have the SLTD payment processed.” (Id., Ex. 18 at 37.)
B.
Communications Between MetLife and Merrill Lynch
On January 5, 2010, Parker sent an email to a MetLife specialist with the “original
approval letter for SLTD for Richard Lanpher.” (ML 1603.) It stated that “[h]e was
approved in April 2001 when we converted our systems in 2005 from peoplesoft to oracle
it was never converted to oracle so it did not show. Please process the SLTD payments
for Richard the annual sltd amount is 162,216.44. 330,360.44 - 60,000.00 = 270,360.44 x
60% = 162, 216.26.” (ML 1603.) A claim comment on January 6, 2010, reflected this
email, stating:
[R]eceived confirmation from HR (Jermaine Parker) that [employee] did
have supplemental coverage effective April 16, 2001. Had further [sic]
questions whether [employee] was still actively covered for supplemental
benefits at dlw (121707); did further investigation and found out that
[employee] applied for supplemental coverage through statement of health
unit in 2008 and was approved effective 4/22/2008 (which was after the
dlw). If [employee] was continuously approved for supplemental coverage
2
A note from this period indicates that Lanpher received his Basic LTD benefits:
($35,264.70 on November 16, 2009, and $3,000 on November 20 and December 22. (ML 1599.)
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from 4/16/01 – why did [employee] apply in 2008 – was there a drop in
coverage at some point?
(ML 1603-04 (abbreviations in original).)
MetLife sent an email to Merrill Lynch on January 14, 2010, seeking several
documents to “determine if Mr. Lanpher’s supplemental coverage was active on his date
last worked,” including “history of his pay since April 2001 through December 2007
showing payment of premium for his supplemental coverage; and enrollment
documentation for the years 2002 through December 2007 showing confirmation of
supplemental coverage.” (ML 1604-05.)
Additionally, Lanpher sent an email to MetLife on January 30, 2010 stating,
“Jermaine Parker requested MetLife to process my STLD on December 30, 2009. Please
advise when I will receive the SLTD payment” (and including email from Parker to
Lanpher). (ML 1617.) MetLife sent an email response to Lanpher on January 30, 2010
stating:
We were alerted that you have an approved “Evidence of Insurability”
application in 2001 and another in 2008. . . . Evidence of insurability is an
application of good health that an applicant makes when applying for
coverage, implying that they did not have the coverage in place before.
Because you have a disability date that commences on December 2007 and
an application that was approved in 2008, this implies that you would not
have had the coverage in place prior to that application. In this regard,
despite Jermaine [Parker]’s request to MetLife to process such a claim,
MetLife must first validate that you have in fact properly elected, have been
enrolled in, and covered for supplemental benefits[.] . . . Further, when
Penny asked you why you had made application for Evidence of
Insurability in 2008 it is my understanding that you did not answer the
question.
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(ML 1621-22; 1732.) On February 9, 2010, Merrill Lynch responded to MetLife’s
January 25, 2010 email, stating that it had the “spreadsheets from MetLife to [Merrill
Lynch] from 2001 forward,” and that Lanpher was on the 2008 list showing approval as
of May 19, 2008, but that that it did “not show on any spreadsheet from 2001 through
2007 that MetLife told ML of his approval of SLTD,” and asking whether MetLife had
proof that they informed Merrill Lynch. (ML 1690.)
On February 11, 2010, Merrill Lynch sent an email to Lanpher stating:
I have been working with MetLife on your issue,
Metlife provided the copy of the approval letters that show you were
approved Supplemental LTD coverage. We are in agreement with the
approval that occurred on 5/19/08 . . . .
What we do not have (and what MetLife is requesting proof from
Merrill Lynch of) is the approval from 2001. Merrill Lynch has not [sic]
record from MetLife that we were informed of this approval. Therefore the
system was not updated and you did not have deductions for Supplemental
LTD taken from any of your pays.
The reason why this is important is that MetLife is pushing back on
Merrill Lynch to show proof that you paid for the Supplemental LTD
Coverage. I cannot show that proof. Now [Merrill Lynch] has counter
argued that it is MetLife’s fault as they never followed proper procedures to
inform Merrill Lynch of your approval.
(Lay Decl., Ex. 15.) Lanpher responded that evening, requesting Merrill Lynch, as the
“only named plan fiduciary” to “instruct MetLife to process my SLTD payment based on
my 2006 compensation.” (Id., Ex. 18 at 38.)
As of February 19, 2010, MetLife was still trying to figure out from Merrill Lynch
whether Lanpher was covered for supplemental benefits on his last day worked and sent
an email to a different department within Merrill Lynch seeking help in getting the
information. (ML 1637.)
At this point, a MetLife Statement of Health Specialist
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confirmed internally in an email to a Client Services Analyst that Lanpher had been
approved for the benefits on April 16, 2001:
I was able to locate the 2001 request in our archived files. He was
approved for LTD on 4/16/01. Unfortunately, we cannot reproduce the
weekly status reports since they’re automated. However, we could have
either communicated this Approval via paper report or email. System
comments say that at the time, shjohnson@exchange.ml.com was receiving
the weekly status reports.
(ML 1686.) The MetLife Client Services Analyst responded seeking clarification:
Are they stating that Mr. Lanpher is confirmed as having the Supplemental
coverage as early as 4/16/2001 and continuous with no break in coverage
up to the last day of work? This is what we need to validate to process his
claim.
With a date last worked of 12/17/2007 he had many additional enrollment
years to turn down and re-elect coverage which is what prompted the
questions to begin with when the initial SOH application dated 2008
surfaced. We were always aware that he had been approved in 2001 but
questioned why he was again approved in 2008. Did he drop off of
coverage at any time. I do not see that this has been clearly addressed to
date . . . .
(ML 1684.)
An entry in MetLife’s communications log from March 4, 2011 states:
It appears that there is a discrepancy between the associates records of
when MetLife approved his Supp LTD coverage while an active employee
of MER. Mr. Lanpher claims that his Supp LTD coverage was approved
by MetLife 4/16/01 and he has provided a copy of a letter from MetLife’s
SOH Unit showing approval. MER record system does not have this
approval and they show approval as of 5/19/08 (which he admits he did a
second time when he found out MER did not have the 2001 approval).
Please research if MetLife has any record of the approval from 2001 for the
Supplemental LTD benefit?”
(ML 1665-66.) MetLife maintained in an interrogatory that between 2000 and 2007,
MetLife “did not receive information about enrollment in the SLTD Plan at the individual
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participant level” and that during that period Merrill Lynch provided information to
MetLife on a yearly basis as to the total number of participants enrolled in the Plan.
(Hittler Aff., Ex. C at 13.)3
On April 11, 2011, Karen McCrarey of Merrill Lynch’s benefits department
emailed another Merrill Lynch employee named Denise Cassidy stating:
I just got off the phone with MetLife and they maintain their position that
there is no evidence that he had Supplemental LTD coverage from 2001
through 2007 and therefore he is not entitled to a benefit under the plan.
They have no record of[] approval of this benefit and in addition premium
payments were not made during this time period . . . . I can confirm that
MER also does not have record of this approval of coverage – only that he
submitted an application to MetLife and that it was pending medical
review by the carrier . . . . At this time, since this is a fully insured benefit
and we do not have clear proof of administrative error I believe the answer
needs to be that he is not entitled to a benefit under the plan.
(Second MacKinnon Aff., Ex. 26.) On May 11, 2011, Cassidy emailed another Merrill
Lynch employee named Janice DeFazio, asking for Lanpher’s payroll information from
2001 to 2007 to determine if Lanpher had deductions taken during that time. (Lay Decl.,
Ex. 19 at 2.) DeFazio responded with a list:
From 10/31/2003 through 12/31/05 paid $238.75/month
From 1/31/2006 through 12/31/2007 paid $226.25/month
From 1/4/2008 through 6/20/2008 paid $175.96 bi weekly
(Id., Ex. 20 at 2.) Cassidy responded seeking to confirm that the Supplemental LTD was
deducted, as “in reviewing the info I do see the Contrib Life Ins Post Tax Vol Ded map to
supplemental life, but does that also map to the Supp LTD?” (Id.) DeFazio responded:
3
CMECF Pagination.
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OOHHHHH
Now THAT’S a horse of a different color….
Sorry MY BAD….I thought Supp Life
He never had deductions for SUPP LTD…(ML deduction code 071)
SORRY!!!!
(Id.)
C.
Denial and Appeal
On June 29, 2010, a MetLife claims specialist informed Lanpher’s counsel over
the phone that it did not approve the supplemental benefits claim and that it would send a
letter including the relevant ERISA rights. (ML 1656.) MetLife’s notes state that “[w]e
reviewed file with legal and determined we do not have information that shows clmt had
enforce coverage prior for SLTD prior to his DDC. We are denying any supplemental
coverage.” (ML 1660; ML 1658.)
On June 30, 2010, MetLife sent Lanpher a letter
denying the SLTD benefits claim:
We have examined the entire claim file, including any additional material
and information provided with your client’s request for review. For the
reasons detailed below, we must uphold the denial of your client’s claim for
additional benefits. . . . According to Merrill Lynch and MetLife’s records,
however, [your client] was not enrolled as of the date of his disability. On
December 11, 2009, we notified your client that he was eligible only for
Basic LTD, and that MetLife had confirmed with Jermaine Parker of
Merrill Lynch’s Human Resource Department that Mr. Lanpher did not
have Supplemental LTD coverage.
You then appealed on behalf of your client. We confirmed with Merrill
Lynch’s records that Mr. Lanpher did not pay for Supplemental LTD
coverage. If your client has proof of such coverage, including for example,
pay stubs showing that there were deductions, or confirmation letters from
MetLife or Merrill Lynch stating that he had Supplemental LTD coverage
for the year that he became disabled, please submit them to us and we will
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reconsider. . . . Since the option for Supplemental LTD had to be selected
annually, your client’s submission of an LTD Statement of Health
application from 2001 which was approved, and then another Statement of
Health application in April 2008, does not show there was coverage for
Supplemental LTD as of December 17, 2007, when he became disabled.
(ML 1675-76.) Also on June 30, 2010, MetLife sent a letter informing Lanpher that his
24-month limit for the Basic LTD benefits was reached on June 17, 2010, and that he
would not receive further payment as part of those benefits. (ML 1671.)
Lanpher pursued the appeal process with Merrill Lynch, sending a request
including factual background and legal analysis to the Bank of America [Merrill Lynch]
Escalation Team on February 11, 2011. (Hittler Aff., Ex. D.) Merrill Lynch responded
with a letter on June 1, 2011, stating:
We are in receipt of a letter written on your behalf by Atty Katherine L.
MacKinnon, dated February 11, 2011 regarding Supplemental Long Term
Disability Insurance. I apologize for the delay in responding to the
correspondence. . . . After thoroughly researching your case, I regret to
inform you that your claim that you were enrolled in Supplemental Long
Term Disability insurance is denied. We have found no evidence of
enrollment or that you paid any premiums for the cost of this benefit.
(Hittler Aff., Ex. E.) The letter stated that Lanpher may appeal the decision in writing
within 60 days. (Id.) Counsel for Lanpher appealed in writing on June 15, 2011,
asserting that the denial failed to comply with ERISA’s requirements that claim denials
include specific reasons and explanations and that Merrill Lynch “abdicated its fiduciary
duty to provide him with a reasoned explanation for its denial.” (Id., Ex. F.) Merrill
Lynch responded on October 7, 2011, again denying the appeal, explaining that
“[w]ithout further documentation demonstrating his entitlement to a Plan benefit, we are
limited to the Plan’s records, which indicate that no Plan benefit is due.” (Id. Ex. G.)
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V.
EVIDENCE OF WHAT HAPPENED TO THE 2001 ENROLLMENT
The record also contains evidence regarding what MetLife and Merrill Lynch’s
standard operating procedures were for handling Supplemental enrollments that required
approval of a Statement of Health.
MetLife stated in its responses to Lanpher’s interrogatories that its process to keep
Merrill Lynch informed of the status of an SLTD enrollee’s application after it was
submitted to MetLife for health status approval was through weekly status reports:
[MetLife’s] general practice as of April 2001 was to provide information
regarding the status of its statement of health review (approved or denied)
to Merrill Lynch via a weekly report or file feed with status. Due to time
elapsed and MetLife’s document retention policy, reports from that time
period are no longer available.
(Second MacKinnon Aff. Ex. 8, Interrogatory 8.) MetLife produced a “report showing
the result of its statement of health review for Merrill Lynch employees applying for
SLTD coverage for 2001” but that “due to the passage of time and its document retention
policy, it cannot confirm that these particular reports were provided to Merrill Lynch.”
(Id., Request 2.) The referenced report is a spreadsheet of MetLife’s receipt and approval
of Merrill Lynch employees’ Statement of Health forms and includes an entry for
“Richard Lanpher” listed as “approved” with an “SOH Status Date” of April 16, 2001.
(Id. at ML 1764.)
Merrill Lynch has a slightly different account of how MetLife notified Merrill
Lynch of Statement of Health approvals in 2001. McCrarey, who worked with the
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benefits department at Merrill Lynch from 2001 through 2010, described the procedure
between MetLife and Merrill Lynch for approving SLTD enrollment as follows:
[w]hen MetLife approved the Statement of Health Form for a Merrill
Lynch employee, it would notify Merrill Lynch by including the employee
in an excel spreadsheet. When Mr. Lanpher’s claim for SLTD benefits
came to my attention in February 2010, I located the spreadsheet covering
March and April of 2001. I searched the spreadsheet and Mr. Lanpher is
not referenced in it.
(Decl. of Karen M. McCrarey ¶ 4, Jan. 31, 2014, Docket No. 41.) The Court has
reviewed the referenced spreadsheet and confirmed that Lanpher is not listed there.
McCrarey explained that another process by which MetLife would inform Merrill Lynch
of approvals was to carbon copy Merrill Lynch on the Statement of Health approval
letters it sent to applicants, such as the April 16 letter Lanpher received. McCrarey stated
that “[i]n or about February 2010, MetLife or Mr. Lanpher also forwarded me a copy of
MetLife’s April 16, 2001 letter to him. Normally, Merrill Lynch would be copied on that
letter, and I immediately noticed that, in this instance, no one from Merrill Lynch
appeared as a cc.” (Id. ¶ 5.) She further states that she has reviewed the records and has
“not located any notification form MetLife to Merrill Lynch of Mr. Lanpher’s approval
for SLTD coverage,” and because Merrill Lynch was never notified of his approval, its
systems were not updated and he was “never enrolled in the SLTD plan and deductions
for premiums were never made from Mr. Lanpher’s pay.” (Id. ¶¶ 6, 7.)
VI.
THIS ACTION
Lanpher brings this action against both MetLife and Merrill Lynch (now Bank of
America after a January 1, 2009 acquisition, (see Answer of Bank of America ¶ 13,
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Jan. 28, 2013, Docket No. 8)), bringing a claim for denial of claim benefits under 29
U.S.C. § 1132(a)(1)(B) against MetLife (Count I) and a claim for breach of fiduciary
duty under 29 U.S.C. § 1104 against both MetLife and Merrill Lynch (Count II). In his
complaint he seeks, on account of Count I, that the Court order Metlife to “pay him
SLTD benefits due according to the policy pursuant to 29 U.S.C. § 1132(a)(1)(B),” and to
pay him interest on the delayed benefits and costs and attorney’s fees for this litigation.
(Compl. ¶ 72, Oct. 5, 2012, Docket No. 1.) On account of Count II, he asks that the
Court order MetLife to “provide him with appropriate equitable relief to redress the
possible loss of the SLTD policy coverage and interest pursuant to 29 U.S.C.
§ 1132(a)(3).” (Id. ¶ 85.)
Both MetLife and Merrill Lynch have moved for summary judgment on all claims,
and Lanpher has moved for summary judgment against MetLife. In support of his claims
against MetLife, Lanpher presents an expert report by Richard Fitzpatrick (see Aff. of
Richard Fitzpatrick, Feb. 1, 2014, Docket No. 51), which MetLife moves to exclude
under Federal Rule of Evidence 702. (See MetLife’s Mem. in Opp’n to Pl.’s Mot. for
Summ. J. at 24, Feb. 22, 2014, Docket No. 56.)
Lanpher conceded at oral argument that he has no evidence of breach by Merrill
Lynch, explaining that he included Merrill Lynch in this action because it was not clear at
the outset of the case what the evidence would indicate as to fault between MetLife and
Merrill Lynch but that “at this point, there is no evidence that we have developed or
found or put forward” with regard to Merrill Lynch. (Tr. 16:23-25, 17:13-15, May 9,
2014, Docket No. 76.) The Court has independently reviewed the record and has found
- 20 -
no evidence upon which a reasonable jury could conclude that Merrill Lynch breached
any fiduciary duty to Lanpher, and will thus grant Merrill Lynch’s motion for summary
judgment. The remainder of this Order will address Lanpher’s remaining claims against
only MetLife.
ANALYSIS
I.
STANDARD OF REVIEW
Summary judgment is appropriate where there are no genuine issues of material
fact and the moving party can demonstrate that it is entitled to judgment as a matter of
law. Fed. R. Civ. P. 56(a). A fact is material if it might affect the outcome of the suit,
and a dispute is genuine if the evidence is such that it could lead a reasonable jury to
return a verdict for either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A court considering a motion for summary judgment must view the facts in the
light most favorable to the non-moving party and give that party the benefit of all
reasonable inferences to be drawn from those facts. Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986).
II.
STATUTE OF LIMITATIONS
In its motion for summary judgment, MetLife argues that Lanpher’s fiduciary duty
claim is barred by the relevant statute of limitations in ERISA for such claims. Under 29
U.S.C. § 1113, claims for breach of fiduciary duty must be brought before the earlier of
either:
(1) six years after
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(A) the date of the last action which constituted a part of the breach
or violation, or
(B) in the case of an omission the latest date on which the fiduciary
could have cured the breach or violation, or
(2) three years after the earliest date on which the plaintiff had actual
knowledge of the breach or violation;
except that in the case of fraud or concealment, such action may be
commenced not later than six years after the date of discovery of such
breach or violation.
29 U.S.C. § 1113; see also Brown v. Am. Life Holdings, Inc., 190 F.3d 856, 858-59
(8th Cir. 1999) (“ERISA contains an express statute of limitations that bars breach of
fiduciary duty claims after the earlier of six years from the breach or three years from the
date that plaintiff acquires actual knowledge of the breach.”).
MetLife argues that Lanpher’s action here, which was filed on October 5, 2012, is
barred by the three-year statute of limitations based on the fact that Lanpher was told by a
Merrill Lynch representative at some point in early 2008 that he was not enrolled in the
Supplemental plan, meaning that he had “actual knowledge” of any breach at that point
and the limitations period expired in early 2011.
Lanpher argues that MetLife should be precluded from raising statute of
limitations as a defense because it failed to include the defense in its responsive pleadings
and was denied permission to amend its answer by the Magistrate Judge. Federal Rule of
Civil Procedure 8(c) requires a party responding to a pleading to “affirmatively state any
avoidance or affirmative defense,” including statute of limitations. Fed. R. Civ. P. 8(c);
see also Fed. R. Civ. P. 12(b) (“Every defense to a claim for relief in any pleading must
- 22 -
be asserted in the responsive pleading if one is required,” but certain defenses, not
including statute of limitations, may be raised by motion); United States v. Big D Enters.,
Inc., 184 F.3d 924, 935 (8th Cir. 1999) (“A defense based upon the statute of limitations is
generally waived if not raised in a responsive pleading.”). If a party fails to plead the
defense in its answer or responsive pleading, it waives the statute of limitations defense
unless it is permitted to amend its responsive pleading. See, e.g., Roe v. Sears, Roebuck
& Co., 132 F.2d 829, 832 (7th Cir. 1943) (“When defendant moved for summary
judgment it had filed an answer [which did not include a statute of limitations defense],
the legal effect of which was a waiver of its defense of the statute of limitations. It could
not, therefore, unless relieved from its default, revive the defense it had waived. We need
not consider when a defendant may be excused from its failure to plead the statute of
limitations, and be permitted to amend its answer, because the instant case presents no
such question. The defendant herein sought no such relief.”). Certainly, “there is no
waiver of the statute of limitations defense if the answer is properly amended to include
it.” Groninger v. Davison, 364 F.2d 638, 640 (8th Cir. 1966) (citing Sears, Roebuck &
Co., 132 F.2d at 832).
Here, MetLife sought to amend its answer to include a statute of limitations
defense, which would have required modifying the scheduling order’s deadline for
amended pleadings. (See Am. Mot. to Modify Pretrial Scheduling Order and for Leave
of Court to File Am. Answer, Mar. 10, 2014, Docket No. 66.) MetLife argued that it was
not aware that Lanpher had heard from a Merrill Lynch employee in 2008 that he was not
enrolled in the Supplemental plan, which would have triggered the three-year statute of
- 23 -
limitations under 29 U.S.C. § 1113(2), and that it did not discover this until after the
deadline for amending pleadings.
(Id. at 3.)
It argued that these circumstances
demonstrated good cause, which would warrant amending the scheduling order under
Federal Rule of Civil Procedure 16(b)(4). Fed. R. Civ. P. 16(b)(4) (“A schedule may be
modified only for good cause and with the judge’s consent.”).
In an order dated April 18, 2014, the Magistrate Judge denied MetLife’s motion.
(Order on Mot. to Modify Pretrial Scheduling Order, Apr. 18, 2014, Docket No. 73.) The
Magistrate Judge concluded that, although MetLife may not have learned of Lanpher’s
2008 conversation until after the deadline for amended pleadings, Merrill Lynch had
raised the defense in its answer and 26(f) report, both filed before the amended pleadings
deadline, and that MetLife “was neither diligent in exploring the factual basis for the
defense nor did it explain why it waited until now to bring its motion,” such that MetLife
did not demonstrate “good cause” as required under Rule 16(b)(4). (Order on Mot. to
Modify Pretrial Scheduling Order at 9.)
MetLife has not objected to this order of the Magistrate Judge and the time for any
such objections has passed. See Fed. R. Civ. P. 72(a) (fourteen-day deadline for filing
objections to nondispositive orders by a Magistrate Judge); see also D. Minn. LR
72.2(a)(1) (same). Thus, MetLife’s pleadings do not state statute of limitations as a
- 24 -
defense and MetLife has not received permission to amend its pleadings to include it, so
the defense is waived and the Court will not consider it further.4
III.
DENIAL OF BENEFITS UNDER § 1132(a)(1)(B)
Lanpher argues that MetLife erred in denying his claim for benefits due to him
under the Plan and seeks relief under § 1132(a)(1)(B).
Section 1132(a), entitled
“[p]ersons empowered to bring a civil action,” lists first that a civil action may be
brought:
(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.
29 U.S.C. § 1132(a)(1)(B).
A.
Standard for Reviewing MetLife’s Decision
The parties initially dispute the standard by which the Court should review
MetLife’s denial of Supplemental benefits. “[A] denial of benefits challenged under
§ 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives
the administrator or fiduciary discretionary authority to determine eligibility for benefits
or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
101, 115 (1989). MetLife argues that the relevant plan document affords it discretion to
administer the plan and make eligibility decisions such that an abuse of discretion
4
Nor did MetLife raise the defense in a motion to dismiss, which the Eighth Circuit has
held is proper “when it ‘appears from the face of the complaint itself that the limitation period
has run.’” Wycoff v. Menke, 773 F.2d 983, 984-85 (8th Cir. 1985) (quoting R.W. Murray Co. v.
Shatterproof Glass Corp., 697 F.2d 818, 821 (8th Cir. 1983)).
- 25 -
standard of review applies, whereas Lanpher points to a different document to conclude
that MetLife is not afforded such discretion and de novo review therefore applies. See
Tussey v. ABB, Inc., 746 F.3d 327, 333 (8th Cir. 2014) (“[A] broad grant of discretionary
authority entitles the Plan administrator to deference in exercising that discretion,” such
that district court should apply abuse of discretion standard of review (internal quotations
omitted)).
Lanpher does not dispute that the policy certificate in effect in 2007 contains
discretion-granting language, which it does.
(See ML 149 (“In carrying out their
respective responsibilities under the Plan, the Plan administrator and other Plan
fiduciaries shall have discretionary authority to interpret the terms of the Plan and to
determine eligibility for and entitlement to Plan benefits in accordance with the terms of
the Plan.”).)
Instead, Lanpher argues that the 2007 document is not the relevant
document and instead the 2001 policy certificate, which does not contain discretiongranting language, is the relevant document. Lanpher presents no case law or other
support for this argument, and given that “[i]t is well-established that ERISA does not
prevent employers from adopting, modifying or terminating welfare plans at any time and
for any reason,” Coffin v. Bowater Inc., 501 F.3d 80, 85 (1st Cir. 2007) (citing Curtiss–
Wright Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995)), the Court declines to apply the
2001 language because the 2007 document was the policy certificate in effect when
- 26 -
Lanpher applied for benefits.5 The Plan appears to afford MetLife discretion such that
the Court should review MetLife’s denial decision for an abuse of that discretion rather
than de novo.
However, this case presents an instance in which MetLife “had the responsibility
of both determining eligibility for benefits and also paying those benefits,” a “dual role
[that] creates a conflict of interest.” Silva v. Metro. Life Ins. Co., --- F.3d ---, slip. op. at 9
(8th Cir. Aug. 7, 2014). In such a case, the Eighth Circuit has recognized that such a
conflict “trigger[s] a less deferential standard of review.” Tillery v. Hoffman Enclosures,
Inc., 280 F.3d 1192, 1197 (8th Cir. 2002).
Although it is not clear what this less
deferential standard of review should be, the Court will “consider that conflict as a factor
in determining whether the plan administrator has abused its discretion in denying
benefits.” Manning v. Am. Republic Ins. Co., 604 F.3d 1030, 1038-39 (8th Cir. 2010); see
also Silva, slip. op. at 9-10 (considering conflict of administrator in reversing grant of
summary judgment for administrator).6
5
The 2007 Policy Certificate also states: “Your consent or the consent of your
beneficiary is not required to terminate, modify, amend, or change the Plan.” (ML 147.)
6
In considering the conflict of interest in Silva, the court did not require evidence that the
conflict influenced the administrator’s decision, as MetLife suggests Khoury v. Group Health
Plan, Inc., 615 F.3d 946, 953-54 (8th Cir. 2010), requires. The Court in Khoury, however,
weighed evidence of conflict of interest only to determine the amount of weight to give to the
conflict, not whether to consider it. Thus, the Court, in light of Silva, considers the conflict in
its review as one, not dispositive, factor.
- 27 -
B.
MetLife’s Denial of Lanpher’s Claim for Benefits
MetLife denied Lanpher’s claim for Supplemental benefits on the grounds that he
was not enrolled on the date of his disability, explaining that “the option for
Supplemental LTD had to be selected annually,” and his proof of the approval of the
Statement of Health form from 2001 “does not show there was coverage for the
Supplemental LTD as of December 17, 2007.” (ML 1675-76.) It also observed that
Merrill Lynch’s records indicated that Lanpher did not pay for coverage. (Id.)
In determining the reasonableness of MetLife’s interpretation of the Plan, the
Court considers five “Finley” factors: “(1) whether the administrator’s language is
contrary to the clear language of the plan; (2) whether the interpretation conflicts with the
substantive or procedural requirements of ERISA; (3) whether the interpretation renders
any language in the plan meaningless or internally inconsistent; (4) whether the
interpretation is consistent with the goals of the plan; and (5) whether the administrator
has consistently followed the interpretation.” Manning, 604 F.3d at 1041-42 (citing
Finley v. Special Agents Mut. Benefit Ass’n, 957 F.2d 617, 621 (8th Cir. 1992)). The
Court will apply these five factors, in addition to the “dispositive principle . . . that where
plan fiduciaries have offered a reasonable interpretation of disputed provisions, courts
may not replace it with an interpretation of their own,” id. at 1042, and “keep[ing] in
mind MetLife’s conflict and weigh[ing] that accordingly,” Silva, slip. op. at 10.
The Court first observes that there is no dispute that Lanpher was not factually
enrolled in the Plan – he was not on the lists or in Merrill Lynch’s or MetLife’s system as
having been enrolled.
But this is not necessarily dispositive, as the Eighth Circuit
- 28 -
recently denied summary judgment for a plan administrator where it had denied coverage
for an employee who had paid premiums but evidently never submitted a Statement of
Health and therefore had never been approved as being insurable. See Silva, slip. op. at
11-12 (concluding that more information was necessary to determine what “evidence of
insurability” meant under the Plan, where employee was denied coverage on the grounds
that the employee had failed to provide such evidence where the Plan plainly required it).
There, discovery revealed that there were over 200 employees who had been enrolled and
for whom premiums had been deducted who had not submitted a required Statement of
Health. Id. at 6. Silva teaches that an employer or administrator’s own records of
enrolled employees is not necessarily dispositive of whether an employee is “enrolled” or
not. The ongoing uncertainty of Lanpher’s enrollment status for both MetLife and
Merrill Lynch employees from late 2009 through mid-2010 further illustrates this point.
Thus, the question is not limited to whether Lanpher was on MetLife’s or Merrill
Lynch’s list of participants, but whether it was an abuse of discretion for MetLife to
conclude that, based on the terms of the Plan, Lanpher was not entitled to coverage at the
time of his disability. See Silva, slip op. at 11 (reversing grant of summary judgment and
remanding for district court to determine whether administrator should have concluded
that employee presented adequate evidence of insurability). MetLife’s conclusion that
Lanpher was not enrolled at the time of his disability was based in part on its observation
that Lanpher was required to re-enroll in Supplemental benefits annually, but had not
done so, such that even if he had been properly enrolled in 2001, that would not have
secured his enrollment in 2007. But the language of the Plan plainly does not support
- 29 -
such grounds for denial: MetLife has pointed to, and the Court has found, no Plan
language indicating that participants were required to re-apply or re-enroll annually.
Rather, as Lanpher points out, information about the Plan from 2001 states that “[o]nce
you are enrolled, your participation continues from year to year unless you make a
change or become ineligible,” indicating that if Lanpher had been properly enrolled,
under the Plan’s operation at that time he would not have been required to re-enroll
annually. (Second MacKinnon Aff., Ex. 32 at BA 1371.) Thus, with regard to this
explanation, the first Finley factor – whether the determination is contrary to the clear
language of the plan – is dispositive. MetLife’s determination that Lanpher was not
entitled to benefits because he failed to reenroll annually was not reasonable in light of
the Plan’s language.
MetLife’s denial letter also stated that it determined he was not covered because
he did not pay for coverage. The Court concludes that this determination was also
unreasonable in light of the Plan’s language.7 Lanpher argues that this was unreasonable
because payment of premiums by him was “not a requirement of the policy” and it is “not
7
It is not clear whether, in reviewing MetLife’s denial of Lanpher’s claim, the Court
should review only the rationale supplied by MetLife or should instead (or additionally) review
the rationale supplied by Merrill Lynch upon Lanpher’s further appeal to Merrill Lynch after
MetLife’s denial of his claim, but Lanpher’s denial of benefits claim is against only MetLife, not
Merrill Lynch. However, given the similarity of these respective bases for denial, the Court need
not sort out the extent to which it should explicitly review Merrill Lynch’s denial and instead
will review all possible interpretations of the Plan language that could support MetLife’s denial.
See Farley v. Benefit Trust Life Ins. Co., 979 F.2d 653, 660 (8th Cir. 1992) (concluding that “a
court reviewing a denial of coverage” is not limited to considering “only those policy provisions
specified by an insurer as the basis of denial of coverage when other policy provisions clearly
may also be a basis for such a denial” and instead the court may consider “all of the policy
provisions”).
- 30 -
how the plan operated.” (Mem. in Supp. of Pl.’s Mot. for Summ. J. at 27, Feb 1, 2014,
Docket No. 50.) MetLife counters that the Plan “undisputedly provides that a claimant
whose application for [Supplemental Plan] coverage is approved must pay premiums for
those benefits, and coverage terminates if and when such premiums are not paid.” (Def.
MetLife’s Mem. in Support of Mot. for Summ. J. at 19, Feb. 1, 2014, Docket No. 46.)
MetLife argues that the Supplemental Plan “requires that the Plaintiff pay the requisite
premiums,” and that “[i]t is undisputed that he did not do so at any time from April 2001
when he applied for coverage until December 17, 2007.” (Mem. in Supp. of Def.’s Mot.
for Summ. J. at 20, Feb. 1, 2014, Docket No. 46.)
Part of the challenge with the question of non-payment of premiums as a basis for
the denial of Lanpher’s claim is that there is no single provision addressing Lanpher’s
coverage or a requirement to pay premiums of which the parties dispute the meaning.
Rather, the parties each point to various portions of both the policy certificate and the
summary plan documents which they claim indicate that Lanpher either was or was not
required to pay premiums in order to be enrolled in the Plan. In support of the Plan
requiring Lanpher to pay premiums, MetLife points to the Plan’s language indicating that
the Plan is one for “Contributory Insurance,” meaning “insurance for which the Employer
requires You to pay any part of the premium.” (ML 117.) The Plan also states “[y]ou
must make a contribution to the cost of Disability Income Insurance: Long Term
Benefits.” (ML 147.) However, the Plan also includes language suggesting that the
participant is not required to pay premiums directly, but rather that they would be paid on
the participant’s behalf: it states that “[y]our insurance will end on the earliest of . . . the
- 31 -
end of the period for which the last premium has been paid for You . . . ,” (ML 122
(emphasis added)), and allows for the possibility of reinstatement of insurance in the
event that “[y]our insurance ends because the required premium for Your insurance has
ceased to be paid,” (ML 122). Further, in the section detailing the enrollment process, it
states that “You must also give the Employer Written permission to deduct premiums
from Your pay for such insurance. You will be notified by the Employer how much You
will be required to contribute.” (ML 121.) These portions of the Plan suggest that it is
not the employee who is required to make premium payments to MetLife, but rather the
employer.
Although this language suggests that the employee must make contributions to the
Plan in some way, nowhere does the Plan state directly that the employee’s payment of
premiums is required in order for an employee to be covered by the Plan: the language
suggesting that a “contribution to the cost” of the insurance does not mention premiums,
and the language indicating that insurance will end after the last premium payment
contemplates that premiums would be “paid for” the employee. Thus, to the extent the
Court must consider whether MetLife’s denial of benefits is contrary to the “clear
language” of the Plan under the first Finley factor, see Manning, 604 F.3d at 1041, the
Court concludes that there is no clear language indicating whether the employee’s
payment of premiums is required for coverage. Not only is the Plan language not clear
about whether the employee or the employer is responsible for making premium
- 32 -
payments,8 but MetLife’s interpretation of these provisions as making coverage
contingent upon the employee’s payment of premiums renders these provisions internally
inconsistent.
Thus, the third Finley factor – whether an interpretation renders any
language in the plan internally inconsistent, see Manning, 604 F.3d at 1041 – also weighs
against MetLife’s determination.9
Furthermore, nothing in the plan language indicates that the failure to pay
premiums, where those premiums were to be automatically deducted, is a basis for noncoverage, where the employee has met the eligibility requirements. Although not the
Plan language, Merrill Lynch’s internal Human Resources information stated that “You
pay the full cost of any Supplemental LTD coverage you elect. Your monthly premiums
are automatically deducted from your pay on an after-tax basis.” (ML 159.) It also stated
that “[e]ach time you make an election (e.g., to enroll or to make a change), you authorize
Merrill Lynch to initiate or make changes to your payroll deductions as if you had given
the company a signed authorization to do so.” (ML 159.)
Thus, nowhere in the Plan language is payment of premiums made explicitly a
requirement, or a prerequisite for receiving benefits under the Plan. Furthermore, the
8
Lanpher contends that the way the Plan actually functioned was that Merrill Lynch was
required to pay premiums on a group basis to MetLife, rather than employees paying individual
premiums directly. The Court need not reach a conclusion on this factual matter because it
concludes that this possibility, as contemplated by certain provisions of the Plan language,
contributes to the lack of clear direction in the Plan language that coverage is contingent upon
the employee’s payment of premiums.
9
The Court does not address the remaining Finley factors, as the parties make no
arguments about them and they are not directly applicable given the circumstances here.
- 33 -
references to payment of premiums are inconsistent as to whether the employee or the
employer is responsible for paying premiums. Without clarity from the Plan as to
whether the employer or the employee was responsible for paying premiums, the
determination that Lanpher was not covered because he had failed to pay premiums was
not reasonable under the language of the Plan.10
The cases MetLife cites in support of its position do not alter this conclusion. In
Jordan v. Tyson Foods, Inc., 257 F. App’x 972 (6th Cir. 2007), the plaintiff had been
properly enrolled in a short term disability plan, for which the required payments were
automatically deducted from his paychecks, and was permitted to continue that coverage
through leaves of absence under the Family and Medical Leave Act (“FMLA”) so long as
he continued to make the required premium payments. Id. at 973-74. He took unpaid
FMLA leave, but because he was not receiving paychecks no premium deductions were
made and the notice which would have informed him that he needed to affirmatively
make such payments was sent to the wrong address. Id. at 974. When his employer
discovered that premiums had not been paid, he was “disenrolled” from the plan. Id.
The plaintiff argued that this disenrollment was improper because he did not actually
10
An example further illustrates this point. One of the possibilities left open by the
unclear Plan language is that the employer collects premiums from the employee and passes
them along to the insurer. Assuming that this is the arrangement (which is a reasonable
interpretation of the Plan’s language, although it is not clear that it is the insurer’s intended
interpretation) in such a situation it would certainly not be reasonable for an employee to be
denied benefits if the employer deducted contributions for premiums from the employee’s
paycheck but failed to pass them along to the insurer. Although here it is not disputed that
contributions for premiums were not deducted from Lanpher’s paycheck, this illustrates how the
Plan’s language, with its lack of clarity as to who is responsible for paying premiums, does not
support basing the claim denial here on Lanpher’s non-payment of premiums.
- 34 -
receive the notice that he was required to continue making premium payments during
unpaid leave. Id. at 978. Observing that the relevant plans “stated that coverage will be
discontinued for employees who fail to pay their premiums,” id. at 979; see also id. (“An
employee’s duty to pay premiums was noted in the IBP Plan Summary Plan
Description”), the court concluded that the plaintiff’s nonpayment of premiums could not
be attributed to the employer for mailing the notice to the wrong address, instead
concluding that the plaintiff had constructive notice of his duty to pay premiums. Id.
Thus, the court concluded that the employer’s denial of benefits was not arbitrary or
capricious. Id. at 980.
MetLife also cites to Anderson v. Intermountain Power Serv. Corp., 198 F.3d 257
(10th Cir. 1999) (unpublished table opinion), in which the plaintiff stopped working
because of a disability but was permitted to continue his employer-provided medical
insurance so long as he paid the premiums. Id. at *1 (observing that the employer
notified him “that he was required to pay regular premiums if he wanted to keep his
health insurance in effect and that his insurance would be canceled if payments were not
made” and notified him again several times after he “failed to make timely premium
payments”).
After the plaintiff repeatedly failed to make premium payments, the
employer canceled his medical coverage, citing his nonpayment of premiums. Id. The
employer later amended its medical insurance plan language to include language under
the heading “Collection of Plan Participant Contributions,” which required that “[t]he
disabled employee shall submit the appropriate monthly contribution on a monthly basis
to the Company” and permitted a thirty-day grace period. Id. The plaintiff failed to
- 35 -
make a payment within the grace period, and the employer cancelled his benefits. Id. at
*2. The court rejected all of plaintiff’s arguments that the employer’s cancellation of his
insurance was improper and affirmed summary judgment for the employer. Id. at *2-5.
Neither Jordan nor Anderson supports MetLife’s argument here, because the plan
language regarding employee obligations to make premium payments was, in both cases,
much clearer than the Plan language here. In Jordan, the Summary Plan Description
“stated that coverage will be discontinued for employees who fail to pay their premiums,”
and noted the employee’s duty to pay premiums. Jordan, 257 F. App’x at 979. In
Anderson, the court quoted the plan language as expressly requiring that “[t]he disabled
employee shall submit the appropriate monthly contribution on a monthly basis to the
Company.” Anderson, 198 F.3d 257, at *1. Here, in contrast, the plan language includes
no express requirement that employees pay premiums, and instead includes conflicting
language about whether the employee or the employer was required to pay the premiums.
Finally, MetLife also cites to Byrd v. Canadian Imperial Bank of Commerce, 354
F. Supp. 2d 597, 602 (D.S.C. 2005), aff’d, 157 F. App’x 643 (4th Cir. 2005). There,
plaintiff-securities broker left his employment on account of a vision disability and,
although he properly received disability benefits from his employer, claimed that his
employer failed to properly enroll him in a supplemental long-term disability insurance
program with a third-party insurer. Id. at 602. Under this insurance, the employer did
not pay any of the premiums, but “supposedly made payroll deductions from the wages
of individuals who purchased this supplemental insurance” which it would then forward
- 36 -
to the insurer. Id. Employees were required to fill out and submit an application for this
insurance. Id. In granting summary judgment for the employer on this issue, the court
observed that the plaintiff “admit[ted] that he cannot find documentation to prove that he
filled out the application for supplemental benefits or that he paid for this insurance,” that
the employer had presented evidence that the insurer “ha[d] no records indicating that
Plaintiff applied for, or is entitled to, supplemental coverage” and “no information
indicating [it has] ever maintained a policy on this individual[.]” Id. at 605 (internal
quotations omitted) (alterations in original). The court also observed that the plaintiff’s
“payroll records plainly demonstrate that he did not pay for supplemental benefits.” Id.
Plaintiff’s only evidence that he had enrolled included “his conclusory allegations that he
knows he enrolled in supplemental insurance, and his assistant’s testimony that it was
Plaintiff’s pattern and practice to elect the maximum amount of benefits,” which the court
concluded could “[]not defeat Defendants’ well-supported argument, including
documentation, that Plaintiff did not elect or pay for supplemental coverage.” Id.
This case, too, is distinct from the circumstances here. The evidence in Byrd
indicated that the plaintiff had never even applied for the optional supplemental disability
insurance, which was the basis of the court’s conclusion that it was not the employer that
failed to enroll him. Id. In contrast, the parties here do not dispute that Lanpher properly
enrolled, submitted the Statement of Health form, and even received confirmation from
both MetLife and Merrill Lynch that his application and enrollment had been received
and accepted. MetLife has not presented a case in which a court found a claim denial to
be supported by substantial evidence on the basis that the employee failed to pay
- 37 -
premiums where the employee received confirmation of enrollment and approval in an
insurance plan and where the plan language did not clearly make coverage contingent
upon the employee’s payment of premiums.
The Court therefore concludes that
MetLife’s denial of benefits on the ground that Lanpher was not covered because he
failed to make required premium payments was not supported by the language of the Plan
or substantial evidence. The Court will therefore grant Lanpher’s motion for summary
judgment against MetLife on his claim for benefits under 29 U.S.C. § 1132(a)(1)(2).
IV.
FIDUCIARY DUTY AGAINST METLIFE
In the alternative, the Court concludes that Lanpher would be entitled to summary
judgment on his other claim against MetLife – that it breached its fiduciary duty under
ERISA by failing to take necessary action to enroll him in the Supplemental Plan upon
approving his Statement of Health. ERISA imposes a duty on fiduciaries to “discharge
his duties with respect to a plan solely in the interest of the participants and beneficiaries”
and “with the care, skill, prudence, and diligence under the circumstances then prevailing
that a prudent man acting in a like capacity and familiar with such matters would use in
the conduct of an enterprise of a like character and with like aims.”
29 U.S.C.
§ 1104(a)(1)(B). Lanpher claims that MetLife breached this duty and that he is therefore
entitled to “other appropriate equitable relief” under 29 U.S.C. § 1132(a)(3), in the form
of an order requiring, among other things, MetLife to reinstate him into the Supplemental
Plan such that he is entitled to benefits minus the cost of premiums that should have been
- 38 -
deducted from his paychecks. (See Mem. in Supp. of Pl.’s Mot. for Summ. J. at 46,
Feb. 1, 2014, Docket No. 50.)
MetLife makes several arguments against this claim. First, it argues that the relief
Lanpher seeks is not available because it is not truly equitable relief and Lanpher is
precluded from bringing a fiduciary duty claim for violation of § 1104 seeking “other
appropriate equitable relief” under 29 U.S.C. § 1132(a)(3) because Lanpher had the
ability to bring a cause of action under § 1132(a)(1)(B) (if not the ability to succeed on
such a claim). Second, it argues that its role in transmitting notice of approvals of
Statements of Health is not done in its fiduciary capacity, but rather in a ministerial
capacity. Finally, MetLife argues that Lanpher’s fiduciary duty claim is barred by the
statute of limitations. Besides seeking to exclude Lanpher’s expert, who opines that
MetLife breached its fiduciary duty to Lanpher, MetLife does not appear to contest that it
breached any fiduciary duty it may have had in handling its approval of Lanpher’s
Statement of Health, and the Court concludes that, even without considering the expert’s
opinion, Lanpher has demonstrated that MetLife breached this fiduciary duty.
A.
Availability of Equitable Relief
29 U.S.C. § 1132(a)(3) permits a plan participant or beneficiary to bring an action
“to obtain other appropriate equitable relief . . . to redress . . . violations [of this
subchapter or the terms of the plan] or to enforce any provisions of this subchapter or the
terms of the plan.” 29 U.S.C. § 1132(a)(3). There are two potential hurdles to awarding
Lanpher equitable relief for breach of fiduciary duty. First, the Supreme Court has made
- 39 -
clear that “other appropriate equitable relief” under 29 U.S.C. § 1132(a)(3) is limited to
those forms of relief that would have been within the power of courts of equity, rather
than legal relief such as compensatory or monetary damages. Second, MetLife argues
that the Eighth Circuit has made clear that fiduciary duty breach actions are not available
to plaintiffs who have other avenues for causes of action under ERISA. The Court
concludes that neither would preclude it from awarding Lanpher at least part of the relief
he seeks here (if relief under 29 U.S.C. § 1132 were not available) – an order requiring
MetLife to treat Lanpher as having been enrolled and covered by the Supplemental Plan
at the time of his disability and to accept, after the fact, his payment of premiums for that
coverage.
1.
Limitation on Monetary Relief as Equitable Relief
The term “other appropriate equitable relief” in 29 U.S.C. § 1132(a)(3) “is limited
to relief that was ‘typically available in equity (such as injunction, mandamus, and
restitution, but not compensatory damages).’” Pichoff v. QHG of Springdale, Inc., 556
F.3d 728, 731 (8th Cir. 2009); Mertens v. Hewitt Assocs., 508 U.S. 248, 256-57 (1993).
“Other appropriate equitable relief” does not include compensatory or money damages
that are due under a contract or insurance plan. Knieriem v. Grp. Health Plan, Inc., 434
F.3d 1058, 1061 (8th Cir. 2006) (“The Supreme Court and this circuit precedent precludes
an award of compensatory damages under section 1132(a)(3)(B).” (citing Mertens, 508
U.S. at 258-59)).
The Eighth Circuit has repeatedly applied this rule to preclude
plaintiffs from seeking monetary awards for losses suffered on account of fiduciary
- 40 -
decisionmaking. See, e.g., Kerr v. Charles F. Vatterott & Co., 184 F.3d 938, 945 (8th Cir.
1999) (“[M]onetary damages for the difference between what [plaintiff] says he could
have earned and what he in fact earned” under investment plan were not equitable
restitution and therefore not available under § 1132(a)(3)); Slice v. Sons of Norway, 34
F.3d 630, 632 (8th Cir. 1994) (money damages not available where plaintiff sought to
recover difference between the amount of monthly pension payments he first began
receiving and lower, deducted amount after company discovered computational error).
Although compensatory damages are not available via § 1132(a)(3), courts have
acknowledged that in some circumstances, classic equitable remedies will have the effect
of conferring a monetary benefit on a party. CIGNA Corp. v. Amara, 131 S. Ct. 1866,
1880 (2011) (where “the District Court injunctions require[d] the plan administrator to
pay to already retired beneficiaries money owed them under the plan as reformed[,] . . .
the fact that this relief takes the form of a money payment does not remove it from the
category of traditionally equitable relief”).
In Varity Corporation v. Howe, 516 U.S. 489 (1996), the Supreme Court affirmed
an award of individual equitable relief for former participants in a plan on account of
their employers’ breach of fiduciary duty in inducing the employees to switch from one
plan to another. 516 U.S. at 515. The equitable relief ordered by the district court, which
was ultimately affirmed by the Supreme Court, was “an order that, in essence, would
reinstate each of them as a participant in the employer’s ERISA plan.” Id. at 492, 495.
The Eighth Circuit has characterized the relief in that case as injunctive relief, see Wald
v. Sw. Bell Corp. Customcare Med. Plan, 83 F.3d 1002, 1006 (8th Cir. 1996) (“The Court
- 41 -
[in Varity Corporation v. Howe] held that the employees were entitled to injunctive relief
reinstating them to the former employer’s plan under section 502(a)(3)”), which is relief
that is permissible under 29 U.S.C. § 1132(a)(3), see Amara, 131 S. Ct. at 1879
(“affirmative and negative injunctions obviously fall within [the] category” of relief
permitted under 29 U.S.C. § 1132(a)(3)).
The Court concludes that at least part of the relief Lanpher seeks here as part of his
fiduciary claim is also, in essence, injunctive relief ordering, similar to that in Varity
Corporation, that he be reinstated as a covered participant in the Supplemental Plan and
correspondingly permitted to pay the premiums that were not deducted from his paycheck
from April 2001 through December 2007 on account of MetLife’s failure to notify
Merrill Lynch that it had approved his insurability. Although this remedy would likely
have the effect of resulting in monetary payments to Lanpher from MetLife for any
benefit payments to which he becomes entitled as a covered participant (and in his count
for relief under 29 U.S.C. § 1132(a)(1)(B) he asks for those payments as direct
compensatory relief), the remedy the Court concludes is appropriate is truly injunctive in
character, as it is “fitted to the nature of the primary right” ERISA’s fiduciary duties were
intended to protect. See Amara, 131 S. Ct. at 1879 (“[O]ther relief ordered by the District
Court resembles forms of traditional equitable relief. That is because equity chancellors
developed a host of other distinctively equitable remedies – remedies that were fitted to
the nature of the primary right they were intended to protect.” (internal quotations
omitted)). In his memorandum in support of his motion for summary judgment, Lanpher
rephrases the relief he seeks as “(1) grant him summary judgment against MetLife;
- 42 -
(2) order MetLife to reinstate him into the SLTD plan; (3) order MetLife to pay him two
years of SLTD benefits, less premiums . . . .” (Mem. in Supp. of Pl.’s Mot. for Summ. J.
at 46.) He stated in his Reply that he “has at all times acknowledged premium payments
should be deducted from his SLTD benefits due,” such that “MetLife will receive the
premiums it would have received all along.” (Reply Mem. at 3, Mar. 7, 2014, Docket
No. 65.) Although he phrases it as the Court ordering various amounts to be exchanged,
what Lanpher essentially seeks is to put both he and MetLife in the position in which they
would be had MetLife properly notified Merrill Lynch of its approval of Lanpher for
participation in April 2001.
This is similar to the relief awarded in Mathews v. Chevron Corp., 362 F.3d 1172,
1185-86 (9th Cir. 2004), where the Ninth Circuit addressed an appeal from a district
court’s order of “other appropriate equitable relief” which stated that “Chevron, as the
plan administrator and sponsor, is hereby ORDERED to take all steps within its authority
to modify the plan records to show that the foregoing six plaintiffs were involuntarily
discharged as of the date of their separations, and to ensure that said six plaintiffs are
provided the SITE benefit in accordance with said change.” Id. at 1185-86 (internal
citations omitted). Observing that this relief was similar to the reinstatement affirmed in
Varity Corporation, the court observed that, “[o]n its face, an order to modify plan
records is not an award of monetary damages.” Id. (also observing that “[i]f ‘reinstating’
employees into a plan [as the Supreme Court affirmed in Varity Corporation] constitutes
‘appropriate equitable relief,’ there is no reason to conclude that ‘instating’ them would
not”). The court further reasoned that:
- 43 -
More importantly, the relief granted by the district court here is also
equitable in substance. To instate the plaintiffs retroactively into [the
SITE benefits program] simply puts them in the position they would
have been had Chevron not breached its fiduciary duty: as employees
who “self-tapped” and indicated a willingness to be involuntarily
terminated to receive the SITE benefit. Although in this instance the
district court’s remedy will result in Chevron paying plaintiffs “sums of
money” equivalent to the SITE benefits they lost because of Chevron’s
breach, the mere payment of money does not necessarily render the award
compensatory “monetary damages.”
Id. at 1186 (emphasis added).
Similarly here, putting MetLife and Lanpher in the
position they would have been if MetLife had properly carried out its approval of
Lanpher’s coverage by ordering MetLife to treat him as being reinstated and Lanpher to
pay the premiums that were not deducted, is “equitable in substance.” Id.; see also
Atwood v. Swire Coca-Cola, USA, 482 F. Supp. 2d 1305, 1316 (D. Utah 2007) (“putting
the Plaintiff in the position that he would have been in had the Defendant properly
enrolled the Plaintiff in its Plan when he was first hired” was equitable relief and relying
on Varity Corporation and Mathews).11
11
This case is not like Pichoff v. QHG of Springdale, Inc., 556 F.3d 728 (8th Cir. 2009), a
case not cited by any of the parties, where the Eighth Circuit held that compensation for benefits
that were supposed to have been paid but were not because employer failed to inform insurer that
employee’s participation in plan should continue after employee took disability leave was not
equitable relief. Id. at 732. There, the plaintiff (on behalf of her husband, the former
employee’s, estate) sought merely the benefits, relief which did not require any injunctive or
unique equitable relief as is required here, given that Lanpher also seeks to be given the
opportunity to pay the premiums that were never deducted.
Rather, this conclusion is consistent with the Eighth Circuit’s recent opinion in Silva, in
which the Eighth Circuit observed that the Supreme Court’s decision in “Amara changed the
legal landscape by clearly spelling out the possibility of an equitable remedy under ERISA for
breaches of fiduciary obligations by plan administrators,” and ruled that the plaintiff could
amend his complaint to add “make-whole, monetary relief under § 1132(a)(3),” as the relief
sought for his fiduciary duty claim. Silva, slip op. at 17, 22-23. Silva suggests that Lanpher
(Footnote continued on next page.)
- 44 -
2.
In Conjunction With Claim Under § 1132(a)(1)(B)
MetLife points to another limitation on the availability of equitable relief to
Lanpher: the Supreme Court’s statement in Varity Corporation that the “catchall”
provision for “other appropriate equitable relief” in 29 U.S.C. § 1132(a)(3) is available to
remedy “violations that [§ 1132] does not elsewhere adequately remedy.” Varity Corp.,
516 U.S. at 512; see also id. at 515 (“[W]here Congress elsewhere provided adequate
relief for a beneficiary’s injury, there will likely be no need for further equitable relief, in
which case such relief normally would not be ‘appropriate.’”). The Eighth Circuit has
applied this language to mean that “where a plaintiff is provided adequate relief by the
right to bring a claim for benefits under . . . § 1132(a)(1)(B), the plaintiff does not have a
cause of action to seek the same remedy under § 1132(a)(3)(B).” Antolik v. Saks, Inc.,
463 F.3d 796, 803 (8th Cir. 2006) (declining to reinstate cause of action under
§ 1132(a)(3) upon reversal of district court’s award of benefits under § 1132(a)(1)(B));
see also Conley v. Pitney Bowes, 176 F.3d 1044, 1047 (8th Cir. 1999) (“[W]here a
plaintiff is provided adequate relief by the right to bring a claim for benefits under
§ 1132(a)(1)(B), the plaintiff does not have a cause of action to seek the same remedy
under § 1132(a)(3)(B)” (alterations and internal quotations omitted)).
____________________________________
(Footnote continued.)
could be entitled to compensatory-like relief for his fiduciary duty claim on the basis of a variety
of equitable theories – reformation, surcharge, or estoppel. Id. at 22-23. This further supports
the Court’s conclusion that, were he not entitled to benefits under 29 U.S.C. § 1132, Lanpher
would be entitled to the equitable relief of being treated as though he had been properly enrolled
from the start.
- 45 -
MetLife argues that this bars the availability of a claim for fiduciary duty because
Lanpher was able to bring a claim for denial of benefits under § 1132(a)(1)(B).
However, the Eighth Circuit recently clarified its interpretation of Varity Corporation and
its progeny:
We do not read Varity and Pilger to stand for the proposition that Silva may
only plead one cause of action to seek recovery of his son’s supplemental
life insurance benefits. Rather, we conclude those cases prohibit duplicate
recoveries when a more specific section of the statute, such as
§ 1132(a)(1)(B), provides a remedy similar to what the plaintiff seeks under
the equitable catchall provision, § 1132(a)(3).
Silva, slip op. at 24. Thus, were the Court to have concluded that Lanpher was not
entitled to relief under his claim for denial of benefits under 29 U.S.C. § 1132, relief for
his fiduciary duty claim would still be available to him.
B.
Fiduciary Duty Claim
A plaintiff must prove three elements to succeed on a claim for breach of fiduciary
duty under ERISA: (1) the defendant is a plan fiduciary, (2) the defendant breached its
fiduciary duty, and (3) that the breach resulted in harm to the plaintiff. In re Xcel Energy,
Inc., Sec., Derivative & “ERISA” Litig., 312 F. Supp. 2d 1165, 1175 (D. Minn. 2004)
(citing 29 U.S.C. § 1109); see also Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594
(8th Cir. 2009). MetLife does not contest that Lanpher has demonstrated the third element
– that he suffered harm as a result of the circumstances surrounding his enrollment in
2001 – so the Court will address only the first two elements.
- 46 -
1.
Fiduciary Capacity
MetLife acknowledges that it is a fiduciary of the Supplemental Plan, but contends
that it was not acting in a fiduciary capacity when it handled Lanpher’s enrollment in the
Plan as required by ERISA. See Kalda v. Sioux Valley Physician Partners, Inc., 481 F.3d
639, 645 (8th Cir. 2007) (ERISA “requires that an employer-fiduciary wear the fiduciary
hat when” the “acts in question took place” (internal quotations omitted)). ERISA sets
out a definition of fiduciary, which states:
[A] person is a fiduciary with respect to a plan to the extent (i) he 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) he 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) he has any discretionary authority or discretionary responsibility in the
administration of such plan.
29 U.S.C. § 1002(21)(A). The Supreme Court has observed that this “limit[s] the scope
of fiduciary activity to discretionary acts of plan ‘management’ and ‘administration.’”
Varity Corp., 516 U.S. at 502.
Although the parties do not dispute the facts in the record indicating what
MetLife’s role is with regard to the Supplemental Plan, they do dispute whether that role,
particularly the role MetLife had with regard to Lanpher’s application, falls within the
scope of a fiduciary responsibility under ERISA.
MetLife argues that its role in
communicating with Merrill Lynch is a “ministerial function,” and not one that is subject
to the fiduciary duties in § 1104. It points to Department of Labor guidance which states
that certain activities do not constitute fiduciary activities:
- 47 -
[P]ersons who have no power to make any decisions as to plan policy,
interpretations, practices or procedures, but who perform the following
administrative functions for an employee benefit plan, within a framework
of policies, interpretations, rules, practices and procedures made by other
persons, fiduciaries with respect to the plan:
...
(7) Orientation of new participants and advising participants of their rights
and options under the plan;
(8) Collection of contributions and application of contributions as provided
in the plan;
...
(10) Processing of claims; and
(11) Making recommendations to others for decisions with respect to plan
administration[.]
29 C.F.R. § 2509.75–8. Rather, the guidance indicates that:
Only persons who perform one or more of the functions described in
[§ 1002(21)(A)] with respect to an employee benefit plan are fiduciaries.
Therefore, a person who performs purely ministerial functions such as the
types described above for an employee benefit plan within a framework of
policies, interpretations, rules, practices and procedures made by other
persons is not a fiduciary because such person does not have discretionary
authority or discretionary control respecting management of the plan, does
not exercise any authority or control respecting management or disposition
of the assets of the plan, and does not render investment advice with respect
to any money or other property of the plan and has no authority or
responsibility to do so.
Id. MetLife acknowledges that it is the “claims fiduciary with respect to the adjudication
of claims for benefits under the terms of the Plans,” but that with regard to other
responsibilities, “such as processing Plaintiff’s Statement of Health,” it does not act in a
fiduciary capacity. (MetLife’s Mem. in Opp’n to Pl.’s Mot. for Summ. J. at 22.)
Lanpher acknowledges that ministerial functions are not within the scope of
fiduciary roles, but argues that MetLife performs a discretionary, fiduciary duty in
- 48 -
reviewing and deciding whether to insure potential participants based on the Statement of
Health and that communicating that discretionary decision to Merrill Lynch is properly
considered within the scope of MetLife’s fiduciary role.
Certainly, an insurance company is not “an ERISA fiduciary merely because it
handles claims under an employer’s group policy.” Kerns v. Benefit Trust Life Ins. Co.,
992 F.2d 214, 216 (8th Cir. 1993). However, insurance companies do perform certain
fiduciary responsibilities, such as deciding whether to award benefits on a claim. See id.
at 216-17 (acknowledging that insurance company would likely be fiduciary with regard
to claims handling). Here, MetLife not only made claims determinations, but also made
initial eligibility decisions when an employee was required to submit evidence of
insurability. The Certificate of Insurance states that, for employees like Lanpher who
requested the Supplemental insurance:
More than 45 days after the date You become eligible for such Insurance,
You must give evidence of Your insurability satisfactory to us . . . . If We
determine that You are insurable, such insurance will take effect on the date
We state in Writing . . . .
(ML 121 (emphasis omitted).) This language, particularly that it requires the evidence of
insurability to be “satisfactory” to MetLife, is sufficient to indicate that MetLife
exercised discretion with regard to the management of the Plan in determining whether
employees applying for coverage over forty-five days after the initial eligibility period
could enroll in the Plan. See Prezioso v. Prudential Ins. Co. of Am., 748 F.3d 797, 803
(8th Cir. 2014) (long-term disability plan language stating, among other things, that
insurance company “may request . . . proof of continuing disability, satisfactory to
- 49 -
Prudential,” indicated discretionary decisionmaking such that abuse of discretion
standard applied for review of claim decision and observing that in a prior case, “we held
that a plan requiring that the employee submit ‘written proof of continued total disability
. . . satisfactory to [the plan administrator]’ was sufficient to trigger abuse of discretion
review.” (quoting Ferrari v. Teachers Ins. & Annuity Ass’n, 278 F.3d 801, 806 (8th Cir.
2002))).
The specific act in question, though, was not merely MetLife’s decision that
Lanpher was eligible to participate in the Supplemental Plan based on his Statement of
Health, but instead its failure to communicate that approval to Merrill Lynch. MetLife
argues that this responsibility was merely processing or transmitting the application and
cites several cases which it argues indicate that such activities are ministerial rather than
fiduciary. See, e.g., Johnston v. Paul Revere Life Ins. Co., 241 F.3d 623, 633 (8th Cir.
2001) (insurance agent and company were not “ERISA fiduciaries in regard to the routine
processing of Johnston’s application, including participant and beneficiary notification”
where they exercised no discretionary decisionmaking and were responsible only for
transmitting policy applications); Kerns, 992 F.2d at 216-17 (“[A]n insurer that performs
[the] limited function” of “normal contractual claims handling function under a group
policy . . . is not a ‘fiduciary with respect to a plan’ under § 1002(21)(A).”).
But, unlike the insurers in these cases, MetLife did not merely process Lanpher’s
Statement of Health; it had to actually determine whether, “satisfactory” to MetLife, the
Statement of Health indicated that Lanpher was insurable.
Once it made this
determination, MetLife then was responsible for communicating the determination to
- 50 -
Merrill Lynch. This act of communicating the approval was the action that put into effect
its approval decision, and it too falls within the scope of discretionary, fiduciary
responsibilities under ERISA. As the Supreme Court recognized in Varity Corporation,
“[t]he law of trusts also understands a trust document to implicitly confer such powers as
are necessary or appropriate for the carrying out of the purposes of the trust” and that
fiduciary responsibilities “also include[] the activities that are ordinary and natural means
of achieving the objective of the plan.”
516 U.S. at 502, 504 (internal quotations
omitted).
Thus, “[f]ailing to notify [Merrill Lynch of its approval determination] falls
squarely under [the] fiduciary obligations set forth in 29 U.S.C. § 1002(21)(A).”
Womack v. Orchids Paper Prods. Co. 401(K) Sav. Plan, 769 F. Supp. 2d 1322, 1329
(N.D. Okla. 2011) (holding that employer was acting as a fiduciary when it failed to
notify plan trustee of plaintiff’s investment decisions, relying on LaRue v. DeWolff,
Boberg & Associates, Inc., 552 U.S. 248, 253 (2008) (where employee alleged that he
directed his employer “to make certain changes to the investments in his individual
[401(k)] account, but [the employer] never carried out the[] directions,” allegations fell
“squarely” within the category of fiduciary obligations under ERISA)).
2.
Fiduciary Breach and Lanpher’s Expert
The second element of a breach of fiduciary duty claim is that the fiduciary
breached that duty. In re Xcel Energy, 312 F. Supp. 2d at 1175. In its briefing, MetLife
does not substantively argue that, assuming that it acted in a fiduciary capacity, it was not
- 51 -
a breach of fiduciary duty to fail to inform Merrill Lynch that it had approved Lanpher’s
Statement of Health such that Merrill Lynch should treat him as being enrolled. Instead,
MetLife’s only argument is that the Court should strike Lanpher’s expert, Richard
Fitzpatrick, who opines that MetLife breached its fiduciary duty. The Court concludes,
without relying on Fitzpatrick’s opinion, that the evidence indicates that MetLife
breached its fiduciary duty to Lanpher by failing to properly inform Merrill Lynch of his
enrollment. The Court will thus deny MetLife’s motion to strike Fitzpatrick’s expert
opinion as moot.
“ERISA imposes upon fiduciaries twin duties of loyalty and prudence, requiring
them to act ‘solely in the interest of [plan] participants and beneficiaries’ and to carry out
their duties ‘with the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like aims.’”
Braden, 588 F.3d at 595 (quoting 29 U.S.C. § 1104(a)(1)). Courts have repeatedly found
failures in managing enrollment, such as the one Lanpher claims MetLife made here, to
amount to breaches of the duty of prudence. See, e.g., Fink v. Dakotacare, 324 F.3d 685,
691 (8th Cir. 2003) (failure to apply premium payment in a manner that preserved
employee’s continuation coverage was breach of fiduciary duty); Atwood, 482
F. Supp. 2d at 1315-16 (employer breached its fiduciary duty by failing to properly or
timely handle an employee’s confusing and incomplete enrollment form for participation
in long-term disability plan).
- 52 -
The evidence here indicates that it was MetLife’s responsibility to inform Merrill
Lynch when it approved an employee for Supplemental insurance, but that MetLife failed
to do so in Lanpher’s case. Lanpher was listed in MetLife’s internal records as having
been approved, but his name was not on the list that Merrill Lynch had of the participants
sent to it by MetLife. MetLife also did not carbon copy Merrill Lynch, as was apparently
its practice, on its approval letter to Lanpher. Although MetLife claims that its method
for notifying Merrill Lynch of individual approvals was through weekly status reports, it
has failed to produce the reports because it no longer has them. Based on this evidence,
the Court concludes that no reasonable jury could conclude that MetLife’s conduct with
regard to Lanpher was not a breach of its duty to handle his application with “care” and
“diligence.” 29 U.S.C. § 1104. The Court therefore concludes that, were Lanpher not
entitled to relief under 29 U.S.C. § 1132, summary judgment in his favor would be
appropriate on his claim against MetLife for breach of fiduciary duty.
V.
LANPHER’S OTHER ARGUMENTS
Lanpher presents several other theories upon which he argues he is entitled to
relief, including equitable estoppel, federal common law, and waiver. The Court declines
to address these arguments as it concludes that Lanpher is entitled to relief under his
challenge to MetLife’s denial of benefits under 29 U.S.C. § 1132 or, in the alternative, his
claim for breach of fiduciary duty against MetLife under 29 U.S.C. § 1104.
- 53 -
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1.
Defendant Merrill Lynch/Bank of America’s Motion for Summary
Judgment [Docket No. 36] is GRANTED.
2.
Defendant MetLife’s Motion for Summary Judgment [Docket No. 44] is
DENIED.
3.
Plaintiff’s Motion for Partial Summary Against MetLife [Docket No. 48] is
GRANTED.
IT IS FURTHER HEREBY ORDERED that:
4.
Within twenty-one (21) days of the entry of this Order, Plaintiff shall meet
and confer with Defendant MetLife to ascertain whether any disputes exist regarding
damages.
a.
If the parties agree on the amount of damages owed to Plaintiff, the
parties shall submit a stipulation to the Court regarding such damages.
b.
If the parties are unable to agree on the amount of damages, within
twenty-eight (28) days of the entry of this Order, Plaintiff shall submit to the
Court, and serve upon Defendant MetLife: (a) a letter brief not to exceed 3,000
words regarding its damages calculation; and (b) documentation supporting its
damages request.
c.
Within seven (7) days after service of Plaintiff's letter brief,
Defendant MetLife may submit to the Court, and serve upon Plaintiff: (a) a letter
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brief not to exceed 3,000 words raising any objections it may have to Plaintiff's
damages calculation; (b) a request for a hearing, status conference, or trial
regarding the issue of damages, if necessary; and (c) documentation supporting its
objections and request.
DATED: September 29, 2014
at Minneapolis, Minnesota.
____s/
____
JOHN R. TUNHEIM
United States District Judge
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