Relying on previous Supreme Court decisions in Mertens v. Hewitt Assocs. and Great-West Life & Annuity Ins. Co. v. Knudson, the 4th Circuit concluded that section 502(a)(3) of the Employee Retirement Income Security Act (ERISA) does not allow the court to surcharge the Metropolitan Life Insurance Company (MetLife) for the life insurance proceeds that Debbie McCravy would have received but for its alleged fiduciary breaches (see “Solis Files Brief in Support of “Surcharge” for Fiduciary Breaches“).     

However, Solis’ brief noted that on the same day that the panel issued its decision, the Supreme Court decided CIGNA Corp. v. Amara, and ruled that surcharge is an available remedy under section 502(a)(3). The CIGNA opinion explains that surcharge, or monetary compensation by a fiduciary for loss resulting from the fiduciary’s breach of duty, was a “traditional equitable remed[y]” and thus falls within the “category of traditionally equitable relief” authorized by section 502(a)(3). The opinion further explains that Mertens and Great-West do not foreclose “make-whole” “monetary ‘compensation'” from qualifying as “appropriate equitable relief” under section 502(a)(3) when the relief is awarded for the breach of a duty by an ERISA fiduciary.  

(Cont...)

The case was filed by McCravy, who was employed with Bank of America, which offered a dependent life insurance and accidental death & dismemberment welfare benefit plan that was insured and administered by MetLife. McCravy was the named beneficiary under a policy that covered her now deceased daughter, Leslie. 

Although McCravy paid and MetLife accepted premiums for coverage for Leslie until the time of Leslie's death in July 2007, Leslie was not eligible to participate in the plan because she was over the age of 19 at the time of her death, although she was younger than 19 when plaintiff first elected coverage.     

After MetLife denied her claim for life insurance benefits, McCravy filed suit in district court alleging that MetLife breached its fiduciary duty in administering the plan, and seeking equitable relief pursuant to ERISA section 502(a)(3). She argued that under a provision of the policy, she was entitled to convert the coverage on her daughter from the group insurance which funded the ERISA plan to an individual policy, and that she would have done so if she had been told she needed to do so.    

Because it was a breach for MetLife to have failed to inform McCravy of this, especially considering it accepted premium payments from her for years and allegedly led her to believe that this coverage was in place, she argued both that she was entitled to the proceeds under either a waiver/equitable estoppel theory or under a make-whole theory of equitable relief.    

The district court held that McCravy was not entitled to the full amount of the life insurance benefits, but that her sole available remedy was a return of the premiums she had paid for coverage on the life of her daughter. The court rejected her estoppel claim, reasoning that it would conflict with 4th Circuit precedent holding that ERISA does not allow an oral modification to the clear written terms of a plan, as well as with 4th Circuit cases holding that principles of waiver and estoppel are not part of the common law of ERISA.   

Similarly, the court rejected McCravy's argument that it should surcharge MetLife for the amount of the life insurance benefits. The court reasoned that the gravamen of McCravy's complaint was that MetLife wrongfully denied her life insurance benefits under the plan and that the fact that she could not bring a claim for benefits under ERISA section 502(a)(1)(B) did not change the fact that she sought plan benefits.