Opinion
Civil Action No. 05-4834.
January 18, 2006
MEMORANDUM
Plaintiff Nathaniel Barnette brings this action against the defendants, Broadspire Services, Inc. ("Broadspire") and United Parcel Service of America, Inc. Claims Review Committee (the "Claims Review Committee") for breach of fiduciary duty under § 502(a)(3) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1132(a)(3). Before the court is the motion of the defendants to dismiss the amended complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted.
We accept all well-pleaded facts in the amended complaint as true for the purpose of this motion. Spruill v. Gillis, 372 F.3d 218, 223 (3d Cir. 2004). Plaintiff is a former employee of the United Parcel Service of America, Inc. ("UPS"). He is a participant in a Flexible Benefits Plan (the "Plan") sponsored by UPS that provides short-term and long-term disability benefits. On March 10, 2001, he ceased his employment as a result of a heart condition and from March 12, 2001 until March 11, 2002 received short-term disability benefits. On March 12, 2002, plaintiff began to receive long-term disability benefits. Thereafter, an Administrative Law Judge for the Social Security Administration, Office of Hearings and Appeals, awarded him full social security benefits on the ground that he was unable to engage in any substantial employment due to his medical condition. On February 9, 2004, defendant Broadspire, as administrator of the Plan, terminated his long-term disability benefits, effective March 11, 2004, on the basis that he was not disabled as defined by the Plan.
On July 22, 2004, plaintiff filed an administrative appeal with Broadspire, which was denied on August 25, 2004. He took a second appeal within 60 days as provided for by the Plan. Although his appeal was timely, Broadspire initially rejected it as out of time. However, upon protest of plaintiff's counsel, Broadspire considered the second appeal along with additional medical evidence. The Claims Review Committee advised counsel on August 8, 2005 that the second appeal was denied.
In his amended complaint, plaintiff alleges:
[Broadspire] breached its fiduciary duties under the terms of the Plan and the law, which breaches include: not providing plaintiff a copy of the plan upon request; [and] not allowing plaintiff 180 days to appeal its decision; [and both defendants breached their fiduciary duties by] not timely accepting plaintiff's appeal; not timely rendering a decision on plaintiff's appeal; not complying with notification requirements in extending time in which it was to render its decision; not giving appropriate weight to the decision of [the Administrative Law Judge]; not securing qualified and/or independent vocational assessment; not securing independent medical examination; giving deference to an initial adverse determination; failing to follow reasonable claims administration as provided by the Plan and the law; and not providing plaintiff with a reasonable opportunity for a full and fair review of plaintiff's claim and prior adverse determination.
(Pl.'s Am. Compl. ¶¶ 33, 39).
As noted above, plaintiff seeks relief pursuant to § 502(a)(3) of ERISA. That section provides:
A civil action may be brought — . . . (3) 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.29 U.S.C. § 1132(a)(3). In his prayer for relief plaintiff, a Plan participant, requests that this court "[e]njoin defendant[s] from terminating plaintiff's disability benefits retroactive to March 12, 2004," "[a]ward damages for the actions of defendant[s]," "[a]ward penalties," "[a]ward attorneys fees" and provide "other and further relief as the Court may deem just and proper." In their motion to dismiss, defendants maintain that none of the relief plaintiff seeks is available under § 502(a)(3).
The Supreme Court ruled on the contours of § 502(a)(3) inGreat-West Life Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002). There, Janette Knudson, a beneficiary under an ERISA Plan, was injured in a car accident. The Plan covered certain of her medical expenses, the majority of which was paid by Great-West Life Annuity Insurance Company ("Great-West"), the Plan's insurer. The terms of the Plan provided that it had the right to reimbursement from any recovery a beneficiary received from a third party. It assigned that right to Great-West. Mrs. Knudson subsequently received a monetary settlement in a tort action, but not all of the medical benefits paid by the Plan were reimbursed. The Plan and Great-West sought recovery from Mrs. Knudson under § 502(a)(3).
Great-West and the Plan asserted that relief was appropriate under § 502(a)(3)(A) because they sought to "enjoin" Mrs. Knudson's failure to reimburse the Plan. The Supreme Court explained that "§ 502(a)(3), by its terms only allows forequitable relief." Id. at 221 (emphasis in original). Equitable relief refers to "`those categories of relief that were typically available in equity. . . .'" Id. at 210 (emphasis in original) (citation omitted). The Court reasoned that an
injunction is inherently an equitable remedy . . . and statutory reference to that remedy must . . . be deemed to contain the limitations upon its availability that equity typically imposes. Without this rule of construction, a statutory limitation to injunctive relief would be meaningless, since any claim for legal relief can, with lawyerly inventiveness, be phrased in terms of an injunction.Id. at 211 n. 1. The Court concluded that the requested relief was not available under § 502(a)(3) because "[t]ypically . . . specific performance of a contract to pay money was not available in equity." Id. at 211.
We first consider the specific request for awards of "damages" and "penalties" included in plaintiff's prayer for relief. Clearly, such awards as set forth therein are not available under § 502(a)(3) because they are not forms of equitable relief.Mertens v. Hewitt Assocs., 508 U.S. 248, 255 (1993). Plaintiff, at this point, does not argue to the contrary.
Plaintiff also asks for an award of attorney's fees. Should he prevail under § 502(a)(3), he would be entitled to recover attorney's fees because Congress specifically provided for such relief. 29 U.S.C. § 1132(g)(1); Thomas v. Town of Hammonton, 351 F.3d 108, 115, 116 n. 5 (3d Cir. 2003).
We next turn to plaintiff's request for this court to "[e]njoin defendant[s] from terminating plaintiff's disability benefits retroactive to March 12, 2004." We must decide whether this type of relief is in reality a request to recover disability benefits, that is money damages, beyond the relief authorized under § 502(a)(3). Both parties acknowledge that plaintiff could have sought recovery of disability benefits under § 502(a)(1)(B) of ERISA, which authorizes a participant or beneficiary to bring a suit "to recover benefits due 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." 29 U.S.C. § 1132(a)(1)(B). Plaintiff asserts, however, that he does not seek monetary damages and is not seeking relief under that provision of ERISA. According to plaintiff, he desires to have "the court reinstate his status as a disabled person entitled to benefits under the Plan." (Pl.'s Resp. to Mot. to Dismiss 9). Like the plaintiffs in Great-West, plaintiff here contends that he is merely suing for equitable relief. Nonetheless, he concedes, as he must, that the result, if he is successful, will be the payment of money to him by the Plan.
This is not one of the narrow group of cases where a court of equity may order specific performance under a contract to pay money. For example, plaintiff does not pray for the transfer of funds to prevent "future losses that either [are] or would be greater than the sum awarded." Great-West, 534 U.S. at 211. He does not seek to obtain future payment of money because the obligor's refusal to make past payments concededly due threatens the plaintiff with "`the burden of bringing multiple damages actions.'" Id. at 212 (citation omitted). Nor is plaintiff here seeking equitable restitution where the money sought "could clearly be traced to particular funds or property in the defendant's possession." Id. at 213. In short, plaintiff's claim does not fit within one of the exceptions to the rule that equity does not compel a party to pay money. As delineated by the Supreme Court, "suits seeking (whether by a judgment, injunction, or declaration) to compel the defendant to pay a sum of money to the plaintiff are suits for 'money damages'. . . . And `[m]oney damages are, of course, the classic form of legal relief.'" Id. at 210 (brackets and parentheses in original) (citations omitted).
The Supreme Court in Great-West has warned against "lawyerly inventiveness" in attempting to avoid the limitations of § 502(a)(3). Our Court of Appeals has also cautioned against lawyers' "artfully pleading" in connection with ERISA. Harrow v. Prudential Ins. Co. of America, 279 F.3d 244, 253 (3d Cir. 2002). In Harrow, it rejected plaintiffs' attempt to recast a claim for benefits as one for breach of fiduciary duty in order to avoid the exhaustion requirement imposed upon ERISA benefits claims.
Plaintiff's request for an injunction to undo the termination of his disability benefits retroactive to March 12, 2004 is an "artful" but transparent attempt to obtain disability benefits under an ERISA Plan retroactive to March 12, 2004. Simply put, he seeks to compel defendants to pay him past and future monetary awards under a contract. If we accept plaintiff's argument, we would be vitiating the explicit language of § 502(a)(3) which allows a plaintiff only equitable relief. As the Supreme Court observed, "there is no way to render the unmistakable limitation of the statute a limitation at all — except by adverting to the differences between law and equity to which the statute refers."Great-West, 534 U.S. at 217 (emphasis in original).
To allow plaintiff to proceed under § 502(a)(3) would be contrary to the statutory scheme enacted by Congress. Since § 502(a)(3) of ERISA does not authorize the relief sought here, the motion of the defendants to dismiss will be granted.
ORDER
AND NOW, this 18th day of January, 2006, for the reasons set forth in the accompanying Memorandum, it is hereby ORDERED that the motion of defendants to dismiss the amended complaint is GRANTED.