Employers will be well-advised to  monitor the status of cases seeking equitable remedies available under ERISA as courts continue to grapple with and apply the U.S. Supreme Court’s decision in CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011).  Most recently in the Fourth Circuit, the Western District of Virginia decided a breach-of-contract case which was transformed into an ERISA case after removal from state court to federal court.  The decision in Moon v. BWX Technologies, Inc., was based on the Fourth Circuit’s ruling in McCravy v. Metropolitan Life Insurance Co., 690 F.3d 176 (4th Cir. 2012), which was decided after, and relied on Amara.

In Moon, the plaintiff commenced an action in state court to obtain payment of the proceeds of her deceased husband’s life insurance plan.  The decedent’s former employer had denied the claim, asserting that the decedent who had retired after receiving long-term disability, lost the life insurance benefit when he ceased working for the company.  Based on the facts surrounding the policy and the denial of the claim, the plaintiff’s state court action against the decedent’s former employer was based on breach of contract, estoppel, and breach of fiduciary duty.  Defendants then removed the case to federal court asserting federal question jurisdiction under ERISA.  Plaintiff’s motion to remand to state court was denied.

The Fourth Circuit affirmed the district court’s determination that the plaintiff’s claims were “essentially mislabeled federal claims that [fell] within the broad scope of ERISA’s civil enforcement provision,” and held that the motion to remand to state court was properly denied.  The Fourth Circuit found, however, that the district court had improperly dismissed Moon’s case for breach of fiduciary duty and estoppel based on its reliance on the first McCravy ruling (“McCravy I”) which held that a plaintiff could not recover plan benefits as “other appropriate equitable relief”

Before the Supreme Court decided Amara, which superseded McCravy I, Moon’s complaint had been dismissed.  Thereafter, the Fourth Circuit decided McCravy II, which held that based on section 502(a)(3) of ERISA, a plaintiff’s potential recovery was not limited to a premium refund.  The Fourth Circuit in Moon vacated the district court’s dismissal and remanded  the case for further proceedings consistent with the rulings in Amara and McCravy II. The Fourth Circuit referred to Amara for the proposition that the equitable remedies of surcharge and equitable estoppel should be addressed in the district court’s consideration of the case.

This case demonstrates a dramatic shift in courts’ treatment of Section 502(a)(3) claims, regardless of the label applied to the case.