We join our sister circuits and hold that Â§ 1132(a)(1)(B) affords the plaintiff adequate relief for her benefits claim, and a cause of action under Â§ 1132(a)(3) is thus not appropriate. Plaintiff insists that Â§ 1132(a)(1)(B) is inadequate because, â€œ[u]nless MetLife is required to answer for its actions under [Â§ 1132(a)(3) ], its illegal practices will remain free from scrutiny.â€ But this is not the case. This court has held that review of a benefits determination under Â§ 1132(a)(1)(B) should consider, among other factors, â€œwhether the decisionmaking process was reasoned and principled,â€ â€œwhether the decision was consistent with the procedural and substantive requirements of ERISA,â€ and â€œthe fiduciary’s motives and any conflict of interest it may have.â€ Booth v. Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan, 201 F.3d 335, 342-43 (4th Cir.2000). These factors address exactly the kinds of procedural deficiencies alleged by the plaintiff, in the context of review of actual benefits claims under Â§ 1132(a)(1)(B). Korotynska v. Metropolitan Life Ins. Co.— F.3d —-, 2006 WL 3616275, C.A.4 (Md.) (December 13, 2006)
The recent case, Korotynska v. Metropolitan Life Ins. Co., highlights yet another split in the Circuits as to the proper interpretation of ERISA in the familiar battleground of ERISA Section 502(a)(3). Distilled to the core issue, the circuits disagree on whether Varity Corp. v. Howe, 516 U.S. 489, 514-15, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996), allows simultaneous claims under section (a)(1)(b) and section (a)(3).
In Korotynska, the plaintiff brought an action “on behalf of herself and others similarly situated” against defendant Metropolitan Life Insurance Company (â€œMetLifeâ€). Nonetheless, no class action had been certified, and Korotynska was at this stage of review the sole plaintiff.
Korotynska, through previous employment, was a participant in a disability plan for which MetLife acted as insurer and fiduciary. Her dispute with MetLife arose after it terminating disability benefits some two years after having initially approved benefits on the claim that Korotynska was no longer disabled.
Review of Benefits Denial Versus Claims Of Breach of Fiduciary Duty
Critical to the case was the plaintiff’s decision to pursue Section 502(a)(3) (29 U.S.C. Â§ 1132(a)(3)) claims against MetLife – not claims for review of the benefits determination under 29 U.S.C. Â§ 1132(a)(1)(B).
In this action, Korotynska maintains that she is not seeking individualized review of her adverse benefits determination under 29 U.S.C. Â§ 1132(a)(1)(B). Instead, Korotynska seeks equitable relief under 29 U.S.C. Â§ 1132(a)(3). Section 1132(a)(3) provides, â€œA civil action may be brought Â·Â·Â· by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.â€ 29 U.S.C. Â§ 1132(a)(3).
The plaintiff’s goal in so doing was to obtain judicial review of MetLife’s claims review practices. Thus, under Â§ 1132(a)(3), the plaintiff alleged â€œsystemic improper and illegal claims handling practices” which it used “to deny her and other ERISA beneficiaries a full and fair review of their claims for disability benefits and a full and fair review of claims.” To support this claim, the plaintiff alleged several examples, including:
a. Targeting types of claims that have self-reported symptoms, lack of objective medical findings supporting the claims, or an undefined diagnosis, without due regard for the actual impact of the claimants’ conditions on their ability to work;
b. Targeting low-benefit claimants for denial and/or termination with the expectation that such claimants will not have the wherewithal or financial incentive to engage counsel to pursue their rights, or have the physical or emotional fortitude to fight over these benefits;
c. Employing claim practices that ignore treating physician opinions, ignore subjective complaints of pain, and/or ignore the effects of medications upon claimants’ abilities to work;
d. Failing to consider in its handling of these claims, pursuant to 29 C.F.R. Â§ 2560.503-1(h)(2)(iv), all comments, documents, records and other information submitted by the claimant relating to the claim;
e. Requesting inappropriate, unnecessary and burdensome materials from claimants, all in furtherance of delaying claims determinations;
f. Designing a system in which claimants cannot receive a full and fair review of their claims, by virtue of its reliance upon Medical Examinations from Interested Physicians (called â€œIndependentâ€ Medical Examinations), Functional Capacity Evaluations (â€œFCE’sâ€) and/or peer reviews;
g. Utilizing the services of professional entities that perform medical and/or vocational reviews, including but not limited to National Medical Review, that are biased against claimants based upon financial incentives provided by Met Life;
h. Developing and utilizing claim management plans that are designed to terminate benefits not based upon the actual condition of claimants, but, rather, upon duration guidelines used to determine when to terminate claims;
i. Developing claim management plans to deny or terminate claims without due regard for the actual impact of the claimants’ conditions on their ability to work; and
j. By employing numerous other practices that pressure claims handling personnel into denying or terminating legitimate claims.
Application of Varity To Preclude Section 502(a)(3) Relief
The Fourth Circuit rejected the plaintiff’s contention that she could elect to make out a case for breach of fiduciary duty rather than state a claim for benefits. In the Fourth Circuit’s view, Section 502(a)(3) relief is limited under Varity to instances in which relief under other ERISA provisions is inadequate. The Court stated:
Assuming that Korotynska’s previous denial of benefits and alleged subjection to improper claims procedures qualify her to bring a claim under Â§ 1132(a)(3), that statutory provision is only available for claims of breach of fiduciary duty in the circumstances outlined by the Supreme Court in Varity. See 516 U.S. at 507-15. In Varity, the Supreme Court held that Â§ 1132(a)(3) authorizes some individualized claims for breach of fiduciary duty, but not where the plaintiff’s injury finds adequate relief in another part of ERISA’s statutory scheme. Id. at 512, 515.
In Varity, the plaintiffs’ employer consolidated unprofitable divisions into a new subsidiary and then persuaded employees to transfer their benefit plans to the new subsidiary through deceptive depictions of its financial outlook. The subsidiary subsequently failed and the employees lost their nonpension benefits. The issue was joined when the plaintiffs sued for reinstatement of the benefits they would have been owed under their previous plan.
The pertinent portion of Varity in the view of the Fourth Circuit appears in the following excerpt:
The plaintiffs in this case could not proceed under [Â§ 1132(a)(1) ] because they were no longer members of the [original] plan and, therefore, had no benefits due them under the terms of the plan. They could not proceed under [Â§ 1132(a)(2) ] because that provision, tied to [Â§ 1109], does not provide a remedy for individual beneficiaries. They must rely on [Â§ 1132(a)(3) ] or they have no remedy at all.
From this treatment of Section 502(a)(3), the Fourth Circuit concluded that claims under the provision must be limited to claims not “redressable elsewhere in ERISA’s scheme”. The analysis can be reduced to the following points:
1. As an initial matter, there is no question that what plaintiff is pressing is a claim for individual benefits.
2. The plaintiff’s injury is redressable elsewhere in ERISA’s scheme inasmuch as under Â§ 1132(a)(1)(B), a plan participant may bring a civil action â€œto 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.â€ 29 U.S.C. Â§ 1132(a)(1)(B).
3. Therefore, “[t]he fact that the plaintiff has not brought an Â§ 1132(a)(1)(B) claim does not change the fact that benefits are what she ultimately seeks, and that redress is available to her under Â§ 1132(a)(1)(B).”
Contrary View of the Second Circuit
The Fourth Circuit noted that the Second Circuit had taken a different view of Varity in Devlin v. Empire Blue Cross & Blue Shield, 274 F.3d 76, 89 (2d Cir.2001), cert. denied, 537 U.S. 1170, 123 S.Ct. 1015, 154 L.Ed.2d 911 (2003). The Court aligned itself, however, with “the great majority of circuit courts [that] have interpreted Varity to hold that a claimant whose injury creates a cause of action under Â§ 1132(a)(1)(B) may not proceed with a claim under Â§ 1132(a)(3)”, citing, Antolik v. Saks, Inc., 463 F.3d 796, 803 (8th Cir.2006); Ogden v. Blue Bell Creameries U.S.A., Inc., 348 F.3d 1284, 1287-88 (11th Cir.2003); Tolson v. Avondale Indus., Inc., 141 F.3d 604, 610-11 (5th Cir.1998); Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 615-16 (6th Cir.1998); Forsyth v. Humana, Inc., 114 F.3d 1467, 1474-75 (9th Cir.1997); Wald v. Sw. Bell Corp. Customcare Medical Plan, 83 F.3d 1002, 1006 (8th Cir.1996).
Note: This Fourth Circuit decision raises the bar even further for plaintiffs seeking remedies under Section 502(a)(3). None of the cases cited by the Fourth Circuit stated so clearly a distinction between challenging fiduciary duties of the plan administrator versus restating a claim for benefits in the guise of a fiduciary breach claim. In fact, the plaintiff in Korotynsky did not even allege a claim under 1132(a)(1)(B).
The stakes were significant in that the Fourth Circuit’s approach folds challenges to claims administration into simply a factor in evaluating the proper standard of review. This approach served the Court’s interests in limiting what it perceived as duplicative claims under two sections of ERISA. The Court stated:
Not only is relief available to the plaintiff under Â§ 1132(a)(1)(B), but the equitable relief she seeks under Â§ 1132(a)(3)-the revision of claims procedures-is pursued with the ultimate aim of securing the remedies afforded by Â§ 1132(a)(1)(B). The plaintiff admits that she reserves her Â§ 1132(a)(1)(B) claim so that she might bring it at a later date under reformed claims procedures achieved through the current litigation. It may be that plaintiff perceives in Â§ 1132(a)(3) a clearer path to Â§ 1132(a)(1)(B) relief while possibly circumventing Â§ 1132(a)(1)(B)’s standard of review of abuse of discretion. But Varity allows equitable relief when the available remedy is inadequate, not when the legal framework for obtaining that remedy is, to the plaintiff’s mind, undesirable. â€œTo permit the suit to proceed as a breach of fiduciary duty action would encourage parties to avoid the implications of section 502(a)(1)(B) by artful pleading.â€ Coyne & Delany Co. v. Blue Cross & Blue Shield of Va., Inc., 102 F.3d 712, 714 (4th Cir.1996).
Thus, the well-pleaded complaint rule has limited efficacy in the context of a Section 502(a)(3) claim in jurisdictions adhering to this view, and the relief granted the plaintiffs in Varity emerges as a further limitation on the reach of Section 502(a)(3) claims. Unless a claim cannot be redressed under any other provision of ERISA’s scheme, no claim will lie under Section 502(a)(3).