The Fourth Circuit has reversed an earlier position and now recognizes a broader scope for equitable remedies available to ERISA plaintiffs following the U. S. Supreme Court’s decision in CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011). In McCravy v. Metropolitan Life Insurance Co., Nos. 10-1074 & 10-1131 (4th Cir. July 5, 2012), the Fourth Circuit held that Amara authorizes ERISA plaintiffs to pursue claims under ERISA’s “other appropriate equitable relief” provision for monetary recovery that the Fourth Circuit previously had not considered to be available.
As an employee of Bank of America, the plaintiff Debbie McCravy had a life insurance policy through an employee benefits plan for which Metropolitan Life Insurance Co. (“MetLife”) served as administrator. The policy allowed the insured to purchase coverage for “eligible dependent children,” a category which included “children of the insured who are unmarried, dependent upon the insured for financial support, and either under the age of 19 or under the age of 24 if enrolled full-time in school.”
McCravy elected to purchase life insurance for her daughter and paid premiums from prior to the daughter’s nineteenth birthday until the daughter was murdered at age 25. McCravy, as beneficiary, filed a claim for life insurance benefits. MetLife denied the claim on the basis that McCravy’s daughter was not an eligible dependent child, being older than 24 at the time of her death. MetLife attempted to tender a refund of premiums paid, but McCravy refused to accept the refund check and filed suit to assert claims under ERISA and various state laws.
The district court held that ERISA preempted McCravy’s state law claims and that she could not recover under her breach of fiduciary duty claim under ERISA Section 502(a)(2)(claims for fiduciary breach). The district court ruled that McCravy could recover under the “other appropriate equitable relief” provision of ERISA Section 502(a)(3), but held that her remedy was limited to a return of the premiums wrongfully withheld by MetLife with respect to coverage that McCravy’s daughter did not in fact have under the policy.
On the first appeal in this case, the Fourth Circuit affirmed the district court on May 16, 2011. The same day that opinion was filed, the U.S. Supreme Court decided Amara. McCravy filed a petition for the appellate panel to rehear her appeal in light of Amara, which the Fourth Circuit granted. On rehearing, the Fourth Circuit held that under Amara, the scope of relief available to McCravy under ERISA Section 502(a)(3) was wider than the Fourth Circuit had previously surmised.
Amara, which the McCravy decision called “[a] striking development,” held that the equitable remedies available to an ERISA plaintiff under Section 502(a)(3) include “make-whole relief” in the form of common law remedies available in the law of trusts, such as a surcharge. Such relief is intended to “make the plaintiff whole” for losses wrongly caused by the defendant. McCravy acknowledged that the expansive discussion of ERISA’s equitable remedies in Amara is controlling in the Fourth Circuit, and remanded McCravy to the district court for further consideration of the appropriate remedy in light of that determination. In particular, the district court was deemed the proper venue to determine, in the first instance, whether McCravy was entitled to estoppel and surcharge remedies under Section 502(a)(3).
McCravy is of concrete importance to ERISA litigants in the Fourth Circuit, making clear that ERISA plaintiffs can now ask for such traditional equitable remedies as estoppel or a money surcharge. Its greatest impact may ultimately come from its suggestion that, to the fullest extent permitted by Amara, ERISA plaintiffs may ask for equitable monetary relief for losses sustained as the result of fiduciary breach, as part of the “other appropriate equitable relief” afforded by Section 502(a)(3). The practical effect of that suggestion will be played out in the facts and circumstances of cases contested in the district courts, beginning perhaps with the remanded review of McCravy itself.