Yet again, the Court has been called upon to negotiate the juxtaposition between Varity and Amara.According to the Complaint in Biller v. Prudential Ins. Co. and Six Continents Hotels, Inc., 2014 U.S. Dist. Lexis 118577, 2014 WL 4230119 (N.D. Ga. Aug. 26, 2014), Ms. Biller was enrolled for life insurance coverage through the employee benefit plan sponsored by Six Continents, her employer. The plan’s life insurance benefits were insured by Prudential. Ms. Biller ceased working on October 28, 2010 and called Prudential on November 3, seeking to convert her coverage to an individual policy, which was an option provided. After Prudential informed her that it required a written notice by her employer, Ms. Biller called her employer’s HR Department on November 9, and was told that a notice would be mailed to her. On November 11, she received a notice from her employer’s payroll administrator, informing her that she had 31 days from the date of termination to convert her policy, and to contact her employer for the application. She again contacted the HR department and was told that it would mail her the application. When it did not arrive, Ms. Biller called again, and she received it on December 10. When she then contacted Prudential, she was informed that the 31-day period had expired, and that her application would not be accepted.
Ms. Biller died in 2011. When her beneficiaries under the group life insurance policy submitted a claim, Prudential denied it on the grounds that Ms. Biller failed to timely convert to an individual policy.
The beneficiaries filed suit against both Prudential and the employer for breach of fiduciary duty, seeking equitable remedies under ERISA § 502(a)(3). The employer moved to dismiss, arguing, inter alia, that the plaintiffs had an adequate avenue of relief, (i.e., a benefit claim under ERISA § 502(a)(1)(B)), and therefore, their claim under ERISA § 502(a)(3) was not appropriate under the authority of Varity v. Howe, 116 S. C.t 1065 (1996) and its progeny. Sitting for the United States District Court for the Northern District of Georgia, the Honorable Richard W. Story denied the employer’s motion. The Court noted that the key to the Varity analysis was whether both theories of recovery were based upon the same alleged conduct; if so, the claim for equitable relief under ERISA § 502(a)(3) was not appropriate. But here, Judge Story found, the alleged wrongful conduct was not Prudential’s benefit determination, but rather the employer’s failure to provide the conversion application in a timely manner. In fact, as a direct result of the employer’s alleged breach, plaintiffs had no a claim for benefits pursuant to ERISA § 502(a)(1)(B) under the policy terms; they had a claim under ERISA § 502(a)(3) or nothing.
The employer then argued that the equitable remedy of “surcharge” limited recovery to the fiduciary’s unjust enrichment, which in this case was none. Judge Story rejected this argument as well, finding that the Supreme Court in Cigna v Amara, 131 S. C.t 1866 (2011) explicitly sanctioned monetary “make-whole” relief as an available remedy.