Korotynska v. Metropolitan Life Ins. Co.

• Decision Date: 13 December 2006
• Docket Number: No. 05-1613.,05-1613.
• Citation: 474 F.3d 101
• Parties: Marta KOROTYNSKA, Individually and on behalf of all others similarly situated, Plaintiff-Appellant, and Cheray Bryant, Individually and on behalf of all others similarly situated, Plaintiff, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 101

474 F.3d 101

Marta KOROTYNSKA, Individually and on behalf of all others similarly situated, Plaintiff-Appellant, and Cheray Bryant, Individually and on behalf of all others similarly situated, Plaintiff, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant-Appellee.

No. 05-1613.

United States Court of Appeals, Fourth Circuit.

Argued October 26, 2006.

Decided December 13, 2006.

ARGUED:

John Bucher Isbister, Tydings & Rosenberg, Baltimore, Maryland, for Appellant. Kathleen Mary McKenna, Proskauer & Rose, L.L.P., New York, New York, for Appellee.

ON BRIEF:

Jason Newfield, Justin Frankel, Frankel & Newfield, P.C., Garden City, New York; Edward O. Comitz, Andrew S. Friedman, Bonnett, Fairbourn, Friedman & Balint, P.C., Phoenix, Arizona; Lawrence J. Quinn, Tydings & Rosenberg, Baltimore, Maryland, for Appellant. Stephanie L. Marn, Proskauer & Rose, L.L.P., Washington, D.C.; Tracey Rogers, Proskauer & Rose, L.L.P., New York, New York, for Appellee.

Before WILKINSON, NIEMEYER, and WILLIAMS, Circuit Judges.

Affirmed by published opinion. Judge WILKINSON wrote the opinion, in which Judge NIEMEYER and Judge WILLIAMS joined.

WILKINSON, Circuit Judge.

The plaintiff in this case alleges that defendant fiduciary breached its duties to her and other benefits plan participants by engaging in improper claims procedures designed to deny valid claims for longterm disability benefits. She seeks equitable relief under Section 502(a)(3) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132(a)(3). The district court found that the form of relief requested was not available under ERISA and thus granted the defendant's motion for judgment on the pleadings.

We affirm. Individualized equitable relief under § 1132(a)(3) is normally appropriate only for injuries that do not find adequate redress in ERISA's other provisions. Varity Corp. v. Howe, 516 U.S. 489, 515, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996). Because adequate relief is available for the plaintiff's injury through review of her individual benefits claim under § 1132(a)(1)(B), relief under § 1132(a)(3) will not lie.

I.

Plaintiff Marta Korotynska brings this action on behalf of herself and others similarly situated against defendant Metropolitan Life Insurance Company ("MetLife") under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq. (2000). The action was originally brought in the United States District Court for the Southern District of New York but was transferred to the United States District Court for the District of Maryland pursuant to 28 U.S.C. § 1404. No class has been certified, and Korotynska is currently the sole plaintiff.

MetLife issues group insurance policies which fund employee benefit plans sponsored by employers, including disability plans. For some plans, MetLife acts as plan fiduciary, managing the operation and administration of the benefit plan. Plaintiff Korotynska, through her previous employment as an audio-visual librarian at Montgomery Community College in Maryland, was a participant in a disability plan for which MetLife acted as insurer and fiduciary. Korotynska is no longer employed by Montgomery Community College or otherwise covered by a MetLife disability insurance plan.

Around August 2000, Korotynska filed a claim for, and received, short-term disability benefits due to "severe and disabling chronic pain, degenerative disc problems in her back, and fibromyalgia." After these short-term disability benefits expired, Korotynska filed a claim for long-term disability benefits. MetLife determined that Korotynska was eligible for such benefits and paid her for two years beginning in August 2001. In August 2003, however, MetLife conducted a review of Korotynska's claim and terminated her benefits. Korotynska appealed the adverse benefit determination, and on June 3, 2004, MetLife affirmed its decision to terminate.

In this action, Korotynska maintains that she is not seeking individualized review of her adverse benefits determination under 29 U.S.C. § 1132(a)(1)(B). Instead, Korotynska seeks equitable relief under 29 U.S.C. § 1132(a)(3). Section 1132(a)(3) provides, "A civil action may be brought . . . 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).

Korotynska seeks equitable relief under § 1132(a)(3) for MetLife's alleged violations of 29 U.S.C. § 1104, another provision of the same subchapter which outlines fiduciary duties under ERISA. Specifically, Korotynska alleges that MetLife has breached its fiduciary duties by engaging in systematically flawed and abusive claims administration procedures, including, inter alia,

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. § 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 "Independent" Medical Examinations), Functional Capacity Evaluations ("FCE's") 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.

Under § 1132(a)(3), Korotynska seeks reform of "the systemic improper and illegal claims handling practices that [MetLife] uses 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 (including Ms. Korotynska's) that have been denied or terminated," as well as other appropriate equitable relief.

MetLife filed a Rule 12(c) motion for judgment on the pleadings, arguing that Korotynska lacked standing to bring the action and that Korotynska was not entitled to bring a claim for equitable relief under § 1132(a)(3), because adequate relief was available to her through § 1132(a)(1)(B). The district court held that, although Korotynska had standing, under Varity Corp. v. Howe, 516 U.S. 489, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996), equitable relief was only available for injuries not adequately redressed elsewhere in ERISA's statutory scheme. Because Korotynska "ha[d] available to her the alternative remedy of bringing an action under [§ 1132(a)(1)(B)]," her action under § 1132(a)(3) was dismissed. Korotynska v. Metro. Life Ins. Co., 2005 WL 991003 (D.Md. Apr.28, 2005). Korotynska appealed, and MetLife contests the district court's standing determination.

We review de novo a district court's decision to grant judgment on the pleadings. See Burbach Broad. Co. of Del. v. Elkins Radio Corp., 278 F.3d 401, 405-06 (4th Cir.2002).

II.

Assuming that Korotynska's previous denial of benefits and alleged subjection to improper claims procedures qualify her to bring a claim under § 1132(a)(3),¹ 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, 116 S.Ct. 1065. In Varity, the Supreme Court held that § 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, 116 S.Ct. 1065. The Court, taking both parts of § 1132(a)(3) as one whole, concluded that the provision creates a "catchall" which "act[s] as a safety net, offering appropriate equitable relief for injuries caused by violations that [§ 1132] does not elsewhere adequately remedy." Id. at 512, 116 S.Ct. 1065. But "where Congress elsewhere provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief, in which case such relief normally would not be `appropriate.'" Id. at 515, 116 S.Ct. 1065.

Varity itself provides an example of an injury that did not find adequate relief in other provisions of ERISA. The Varity plaintiffs suffered an injury when their employer consolidated many of its 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. Id. at 493-94, 116 S.Ct. 1065...