Lucas v. Steel King Indus., Inc.

• Decision Date: 16 July 2014
• Docket Number: No. 13–cv–535–wmc.,13–cv–535–wmc.
• Citation: 32 F.Supp.3d 994
• Parties: Teresa A. LUCAS, Plaintiff, v. STEEL KING INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — Western District of Wisconsin

32 F.Supp.3d 994

Teresa A. LUCAS, Plaintiff
v.
STEEL KING INDUSTRIES, INC., Defendant.

No. 13–cv–535–wmc.

United States District Court, W.D. Wisconsin.

Signed July 16, 2014.

32 F.Supp.3d 995

Jenifer D. Binder, First Law Group, S.C., Stevens Point, WI, for Plaintiff.

Brent William Jacobson, Brian G. Formella, Anderson, O'Brien, Bertz, Skrenes & Golla, Stevens Point, WI, for Defendant.

OPINION & ORDER

WILLIAM M. CONLEY, District Judge.

In this civil action, plaintiff Teresa Lucas alleges that defendant Steel King Industries, Inc. (“Steel King”) violated the Employment Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., by failing to disclose information about the group life insurance policy it maintained. Specifically, Lucas contends that Steel King violated its statutory obligations under ERISA and breached its common law fiduciary duties by failing to disclose to its employees the termination of a group life insurance policy issued by Anthem Life

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Insurance Company (the “Anthem Policy”) and its replacement with a new group life insurance policy issued by Reliance Standard Life Insurance Company (the “Reliance Policy”). Among the consequences of this failure, Lucas alleges, was a missed opportunity to maintain a life insurance policy on the life of her now deceased husband after he fell gravely ill and was diagnosed with a likely-terminal form of cancer. Defendant has now moved for summary judgment. (Dkt. # 16.) Because the court finds that Steel King did not violate ERISA's disclosure provisions, and because any arguable breach of fiduciary duty could not have caused the harm plaintiff claims, that motion will be granted.

UNDISPUTED FACTS¹

Plaintiff Teresa Lucas's late husband, Robert Lucas, began employment with Steel King, a Wisconsin corporation, in 1974. Throughout his employment, he was a member of the Local 811 of the International Association of Bridge, Structural, Ornamental, and Reinforcing Iron Workers (“Local 811”). The Local 811 and Steel King had a collective bargaining agreement (“CBA”), which was in force between April 14, 2011 and April 12, 2015. In the CBA, Steel King agreed to provide and pay the full cost of group life insurance for its employees and qualifying spouses, in the amount of $25,000.² The CBA also states that the provisions of each insurance plan “shall not be changed or modified during the term of this Agreement, except by mutual agreement between the Company and the Union.” (See Jenifer D. Binder Aff. Ex. 2 (dkt. # 32–4) Steel King 00026.) Finally, it states that the insurance contracts “are the controlling documents for all questions concerning benefits and plan operations.” (Id. )

In August of 2011, Robert Lucas was diagnosed with cancer. Due to his illness, his last active day of work at Steel King was September 1, 2011. However, he remained an employee per the union contract for purposes of continuous service and seniority through the date of his death in 2012.

From January 1, 2011, through December 31, 2011, Steel King was the sponsor and administrator of the Steel King Industries Health & Life Plan (“Health & Life Plan”), which was insured by Anthem Life Insurance Company (“Anthem”) under the Anthem Policy. While the parties dispute when coverage under the Anthem Policy began, they agree that it was in force during the whole of 2011. There is also no dispute that at some point before January 1, 2012, Steel King provided Robert Lucas with the terms and conditions of the Anthem Policy, including those related to his right to convert.

The life insurance component of the Anthem Policy included the “Anthem Group Insurance Policy and the Basic & Optional Life Certificate.” Most importantly for the present case, the Anthem Policy gave insureds the right to convert to an individual life insurance plan without submitting

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proof of insurability in the event that the group policy was terminated for one of four enumerated reasons, provided they did so by written application to Anthem within 31 days of termination.

Steel King continued the Health & Life Plan for calendar year 2012, but it changed insurers from Anthem to Reliance Standard Life Insurance Company (“Reliance”). As of January 1, 2012, therefore, life insurance was provided under the Reliance Policy, group policy no. GL 149672. The Reliance Policy provides in part that “eligible classes” for benefits include “[e]ach active, Full-time Employee”; it goes on to define “actively at work” and “active work” as “actually performing on a Full-time basis each and every duty pertaining to your job in the place where and the manner in which the job is normally performed. This includes approved time off such as vacation, jury duty and funeral leave, but does not include time off as a result of injury or illness.” (Brent Jacobson Aff. Ex. 6 (dkt. # 19–6) 1.0–2.0.)

Because Robert Lucas was not an active Steel King employee on January 1, 2012 due to his chronic illness, he fell outside of the Reliance Policy's definition of “eligible classes,” although he would have remained eligible for benefits for a while longer under the terms of the Anthem Policy were it still in effect.³ Steel King did not inform Robert Lucas of the termination of the Anthem Policy at the time the change in insurers occurred, nor did it advise him as to the possible consequences of, or opportunities presented by, this change on Lucas's coverage.

Robert Lucas passed away on July 7, 2012. Less than two weeks later, on or about July 19, 2012, plaintiff completed a beneficiary claim form to Anthem. On or about July 27, 2012, she received a letter in reply from Anthem that read in part:

After review of the information received we must deny this claim for Group Term Life Insurance Benefits. [The Anthem Policy] issued to cover certain employees of Steel King Industries, Inc. terminated on December 31, 2011. Since Mr. Lucas died on July 7, 2012 [the Anthem Policy] was not in force at the time of his death.

In order for Mr. Lucas to continue coverage after the termination of [the Anthem Policy] he would have needed to convert his coverage to an individual policy. We have no record that Mr. Lucas ever converted his coverage.

(See Teresa Lucas Aff. Ex. 2 (dkt. # 31–2) 1.)

OPINION

I. Availability of Monetary Relief

Defendant first argues that it is entitled to summary judgment on the grounds that ERISA does not allow for the $25,000 in monetary relief that Teresa Lucas seeks. The parties appear to agree that plaintiff's suit arises under section (a)(3) of ERISA's civil enforcement provision, 29 U.S.C. § 1132 (also known as § 502).⁴ Section (a)(3) is a “catchall” provision

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that “act[s] as a safety net, offering appropriate equitable relief for injuries caused by violations that § 502 does not elsewhere adequately remedy.” Varity Corp. v. Howe, 516 U.S. 489, 512, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996). It provides that 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).

Under the terms of Section (a)(3), Lucas is explicitly limited to injunctive or “other appropriate equitable” relief. Defendant concedes that monetary relief may be equitable in some circumstances, as in the case of restitution, but argues that restitution is appropriate only when a defendant has been unjustly enriched or is withholding a benefit to which plaintiff is entitled. (See Def.'s Reply (dkt. # 35) 23.) Steel King itself is not currently withholding monies paid by Anthem and due to Robert Lucas. Indeed, payment on the life insurance policy would come directly from the insurer to Lucas, not from Steel King. Accordingly, Steel King argues that the relief plaintiff seeks is unavailable.

Case law indicates that the equitable relief available under ERISA is neither so limited nor so dependent on technicalities as defendant would now contend. In CIGNA Corp. v. Amara, ––– U.S. ––––, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011), the Supreme Court addressed the equitable remedies available to redress a violation of ERISA's statutory disclosure requirements (the same statutory provisions at issue in this case).⁵ The district court found that the employer had failed to provide a comprehensible, accurate summary plan description and summary of material modifications to the plan ad required by ERISA. As a remedy, the court reformed the pension plan to provide employees with additional benefits and required CIGNA to pay appropriate benefits to those class members who had already retired. See id. at 1875.

On review, the Supreme Court agreed that those money payments constituted a “surcharge” and, therefore, were appropriate equitable relief for an ERISA violation:

Equity courts

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