Coyne & Delany Co. v. Blue Cross & Blue Shield of Virginia, Inc.

• Decision Date: 16 December 1996
• Docket Number: No. 95-3180,95-3180
• Citation: 102 F.3d 712
• Parties: , 20 Employee Benefits Cas. 2225, Pens. Plan Guide P 23929Z COYNE & DELANY COMPANY, Plaintiff-Appellee, v. BLUE CROSS & BLUE SHIELD OF VIRGINIA, INCORPORATED, Defendant-Appellant, and Standard Security Life Insurance Company of New York, Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 712

102 F.3d 712

65 USLW 2440, 20 Employee Benefits Cas. 2225,

Pens. Plan Guide P 23929Z

COYNE & DELANY COMPANY, Plaintiff-Appellee, v. BLUE CROSS & BLUE SHIELD OF VIRGINIA, INCORPORATED Defendant-Appellant and Standard Security Life Insurance Company of New York, Defendant.

No. 95-3180.

United States Court of Appeals Fourth Circuit.

Argued Oct. 30, 1996.

Decided Dec. 16, 1996.

ARGUED: R. Gordon Smith, McGuire, Woods, Battle & Boothe, L.L.P., Richmond, Virginia, for Appellant. James Nichol Deinlein, Deinlein & Vaden, Charlottesville, Virginia Before WILKINSON, Chief Judge, and WILKINS and LUTTIG, Circuit Judges.

for Appellee. ON BRIEF: David F. Dabbs, McGuire, Woods, Battle & Boothe, L.L.P., Richmond, Virginia; Jeanette D. Rogers, Blue Cross and Blue Shield of Virginia, Richmond, Virginia, for Appellant. Peter B. Vaden, Deinlein & Vaden, Charlottesville, Virginia, for Appellee.

OPINION

WILKINSON, Chief Judge:

Coyne & Delany Company brought suit against Blue Cross and Blue Shield of Virginia under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., alleging that Blue Cross breached its fiduciary duty by refusing to pay for the medical expenses incurred by Herman Tyree, a Coyne employee. The magistrate judge granted Coyne summary judgment, instructing Blue Cross to pay all claims for medical services provided to Tyree.

We reverse. ERISA does not afford fiduciaries a cause of action for benefits. ERISA is a "comprehensive and reticulated statute" which does not provide remedies other than those expressly set forth by Congress. Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 146-47, 105 S.Ct. 3085, 3092-93, 87 L.Ed.2d 96 (1985). We therefore decline Coyne & Delany's invitation to read into the more general language of ERISA section 502(a)(3) an action for fiduciaries which Congress saw fit to deny them under the specific terms of section 502(a)(1)(B).

I.

Coyne maintained until 1991 a group health insurance plan under contract with Blue Cross. Seeking to reduce its premiums, Coyne cancelled the Blue Cross policy and replaced it with a self-insured plan. Coyne obtained a reinsurance policy for the new plan under which Standard Security Life Insurance Company would pay any benefit obligations incurred by Coyne in excess of $10,000.

The new plan became effective April 1, 1991. Prior to that date, Tyree had been hospitalized for a heart condition. He was on sick leave on April 1 and did not return to work before being readmitted to the hospital on April 20 for the same condition. Tyree's son was assured by Coyne that his father would be covered under the self-insured plan.

Coyne paid $160,000 to Tyree's health care providers for his medical expenses and sought reimbursement from Standard under the reinsurance policy. At this point Coyne learned that Tyree was not in fact covered under either the reinsurance contract or the self-funded plan. Both contain an "active service" requirement which Tyree failed to meet because he was not at work on the effective date of either document and never returned to work prior to his death.

Consequently, Coyne sought to recover its money from Blue Cross based on a provision of the Blue Cross plan which states:

If the Member received Major Medical Services for a condition before his coverage ends, the Benefits of this Contract for Major Medical Services that Member receives for that condition after his coverage ends will be provided:

* * *

d. until the Member becomes covered under any other group coverage.

Blue Cross declined payment on the ground that Tyree was "covered" by other insurance within the meaning of the Blue Cross policy.

Coyne then brought this action claiming that Blue Cross violated its fiduciary duties by unreasonably denying Tyree benefits. Appellee sought $160,000 in damages, contending that its mistaken payments were the result of this breach of fiduciary duty. Coyne also requested specific performance of the Blue Cross policy regarding Tyree's medical bills for the period after April 1, 1991.

The magistrate judge denied Coyne any monetary recovery, but held that Tyree was covered under the Blue Cross policy and directed Blue Cross to process and pay "all claims for medical services rendered to Herman Tyree between March 31, 1991 and the date of his death." The court also awarded Coyne attorneys' fees. Blue Cross appeals arguing that ERISA section 502(a) does not permit a fiduciary to recover benefits for a participant, that the one-year statute of limitations in the Blue Cross policy barred Coyne's suit, that Tyree was not covered under the Blue Cross plan after March 31, and that the award of attorneys' fees was improper. Finding the absence of standing on the part of Coyne to be dispositive, we do not consider Blue Cross' additional arguments.

II.

Section 502(a) provides the exclusive statement of civil actions available under ERISA to the Secretary of Labor, participants, beneficiaries, and fiduciaries. See Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, 52, 107 S.Ct. 1549, 1555-56, 95 L.Ed.2d 39 (1987). Federal jurisdiction is limited "to the suits by the entities specified in the statute." Provident Life & Accident Insurance Co. v. Waller, 906 F.2d 985, 987 (4th Cir.1990). Congress did not, however, simply make the actions enumerated in section 502(a) generally available to all these parties. Instead, "[s]ection 502(a) specifies which persons ... may bring actions for particular kinds of relief." Franchise Tax Board of California v. Construction Laborers Vacation Trust, 463 U.S. 1, 25, 103 S.Ct. 2841, 2854, 77 L.Ed.2d 420 (1983). In relevant portion, section 502(a) states:

A civil action may be brought--

(1) by a participant or beneficiary--

* * *

(B) to 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;

(2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title [Liability for breach of fiduciary duty];

(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter [Protection of Employee Benefit Rights, 29 U.S.C. §§ 1001-1169] 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).

A.

Although Coyne directs our attention to sections 502(a)(2) and (a)(3), the analysis of who may recover benefits under ERISA must begin with section 502(a)(1)(B), the section which specifically provides a cause of action for benefits. Coyne's description of its claim as one for breach of Blue Cross' fiduciary duty does not alter the fact that it is seeking medical benefits which it claims are owed to Tyree. To 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; indeed every wrongful denial of benefits could be characterized as a breach of fiduciary duty under Coyne's theory.

As Coyne appears to concede, fiduciaries have no cause of action under section 502(a)(1)(B). See Provident Life, 906 F.2d at 987-88. By its terms, this provision permits only "a participant or beneficiary" to sue for benefits. The omission of fiduciaries is striking. If Congress had wanted to enable fiduciaries to recover benefits on behalf of participants and beneficiaries, it could have done so easily by including them in section 502(a)(1)(B) as it did in other provisions of section 502(a). Despite this clear expression of congressional intent, Coyne nonetheless contends that a fiduciary may bring a suit for benefits under sections 502(a)(2) and (a)(3).

B.

Section 502(a)(2), however, also offers Coyne no assistance. The Supreme Court in Russell clearly held that any recovery under section 502(a)(2) must be for the plan as a whole rather than for individual beneficiaries. 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96. The Court rejected Russell's attempt to recover damages based on allegations that Massachusetts Mutual deliberately delayed processing her benefits claim. Examining the nature of the fiduciary duties and liability imposed by ERISA, the Court concluded that only relief "for the plan itself" was available under section 502(a)(2). See id. at 144, 105 S.Ct. at 3091.

Here the order granted individual benefits to a single participant, perhaps the quintessential example of relief that is not available under section 502(a)(2). Such an award is impermissible as it in no sense "inures to the benefit of the plan as a whole." Id. at 140, 105 S.Ct. at 3089.

C.

Examination of section 502(a)(3) reinforces the conviction that Congress did not intend to authorize fiduciaries to sue for benefits. To begin with, its very language suggests that Congress did not contemplate that section 502(a)(3) would be used by plaintiffs seeking individual relief. Section 502(a)(3) speaks broadly of "any act or practice" which violates "any provision of this subchapter" or "the terms of the plan." 29 U.S.C. § 1132(a)(3). Section 502(a)(1)(B), by contrast, is explicitly directed at wrongs suffered by individual beneficiaries, referring to "benefits due to him" and "his rights under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). This contrasting language indicates that section 502(a)(3) was primarily intended to address violations affecting a plan more generally, see Romney v. Lin, 94 F.3d 74, 81 (2d Cir.1996) (ERISA section 502(a)(3) permits recovery of delinquent plan contributions from an employer), while section 502(a)(1)(B) was to be the avenue for redressing a wrongful denial of benefits. As the Fifth Circuit put it, "Section 502(a)(3) provides for relief apart from an award of benefits due under the terms of a...