Manuel v. Turner Indus. Grp., L.L.C., 17-30835

• Decision Date: 01 October 2018
• Docket Number: No. 17-30835,17-30835
• Citation: 905 F.3d 859
• Parties: Michael N. MANUEL, Plaintiff-Appellant v. TURNER INDUSTRIES GROUP, L.L.C.; The Prudential Insurance Company of America, Defendants-Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

905 F.3d 859

Michael N. MANUEL, Plaintiff-Appellant

v.TURNER INDUSTRIES GROUP, L.L.C.; The Prudential Insurance Company of America, Defendants-Appellees

No. 17-30835

United States Court of Appeals, Fifth Circuit.

FILED October 1, 2018

Perry R. Staub, Jr., Taggart Morton, L.L.C., New Orleans, LA, for Plaintiff-Appellant Michael N. Manuel.

Christopher G. Morris, Phyllis Guin Cancienne, Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., Baton Rouge, LA, for Defendant-Appellee Turner Industries Group, L.L.C.

Amanda A. Sonneborn, Esq., James Charles Goodfellow, Jr., Ian Hugh Morrison, I, Esq., Seyfarth Shaw, L.L.P., Chicago, IL, for Defendant-Appellee Prudential Insurance Company of America

Before SMITH, CLEMENT, and COSTA, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge:

Today we must delve into "the labyrinthine complexities of ERISA law and practice." Foltz v. U.S. News & World Report , 760 F.2d 1300, 1308 (D.C. Cir. 1985). The district court struggled with several important provisions. For the following reasons we REVERSE and REMAND in part, AFFIRM in part, and VACATE in part.

FACTS AND PROCEEDINGS

Michael N. Manuel is a former employee of Turner Industries Group LLC ("Turner"). During his employment, Manuel participated in a group employee short term and long term disability plan (the "plan") sponsored by Turner and insured by Prudential Insurance Company of America ("Prudential").

The plan provides that benefits are payable when "Prudential determines that" a participant is unable to work. The plan also provides that participants must submit proof of disability "satisfactory to Prudential." The summary plan description ("SPD") adds that Prudential "has the sole discretion to interpret" the plan.

The plan "does not cover a disability which ... is due to a pre-existing condition." As to short term disability ("STD") benefits, "Prudential has the right to recover any overpayments due to ... any error Prudential makes in processing a claim."

Manuel alleges he became unable to work and claimed STD benefits under the plan. His STD claim was approved and paid.

Once he exhausted these benefits, he applied for long term disability ("LTD"). His LTD claim was denied at every level of internal adjudication because Prudential concluded that Manuel’s claim was subject to the preexisting condition exclusion. Related to the denial, but before any suit was filed, Prudential determined that it had paid STD benefits in error and demanded repayment.

Naturally, to better understand his rights, Manuel requested plan documents from Turner—his employer and the plan administrator. Turner responded by providing an SPD and a Group Insurance Certificate. Manuel followed up by requesting additional documents, and Turner provided the Group Insurance Contract.

Following the administrative denial of his claims, Manuel sued Turner and Prudential for a myriad of alleged violations of the Employee Retirement Income Security Act of 1974 ("ERISA") and state law. Prudential counterclaimed, seeking repayment of the STD benefits it allegedly paid in error. The district court rejected all of Manuel’s claims upon motion to dismiss or for summary judgment. It granted summary judgment to Prudential on its repayment counterclaim.¹ Manuel appeals some but not all of the district court’s rulings.

STANDARD OF REVIEW

This court "review[s] a district court’s decision to grant summary judgment de novo ." Ramsey v. Henderson , 286 F.3d 264, 267 (5th Cir. 2002). And it "review[s] de novo dismissals under Rule 12(b)(6)." Causey v. Sewell Cadillac-Chevrolet, Inc ., 394 F.3d 285, 288 (5th Cir. 2004).

DISCUSSION

I. Fiduciary Breach

Manuel argues that (1) Prudential and Turner breached their fiduciary duties to him because they maintained a deficient document—the SPD—and (2) Prudential violated ERISA’s claims administration requirements by (a) asserting new grounds for denial of his LTD benefits at the last level of appeal and (b) failing to identify the independent medical reviewer who recommended denying Manuel’s claims on appeal. The district court dismissed these claims because it concluded that Manuel had raised his complaints under the wrong provision of ERISA—for breach of fiduciary duty under ERISA § 502(a)(3) rather than for plan benefits under ERISA § 502(a)(1)(B). The district court concluded that the document deficiency claim could have been brought only against Turner.

Manuel argues that all of these claims were brought under the correct provision of ERISA and that both defendants were properly subject to suit. It is easiest to analyze each of the alleged breaches in turn (i.e ., consider Manuel’s claim for document failures as to both defendants and then consider his contentions about Prudential’s claims administration procedures). But first it is helpful to lay out ERISA’s principles and the district court’s general misconstruction of them.

A. ERISA and the District Court’s Error

The district court dismissed Manuel’s claims for breach of fiduciary duty against Prudential for two reasons. First, it concluded that circumstances in which an ERISA § 502(a)(3) and an ERISA § 502(a)(1)(B) action may be maintained simultaneously represent a "rare exception." Applying its "rare exception" gloss on Fifth Circuit and Supreme Court precedent, it dismissed at least some of Manuel’s claims under ERISA § 502(a)(3) because they were duplicative of claims available under ERISA § 502(a)(1)(B). Second, the district court concluded that Turner, as Manuel’s employer, was the plan administrator and was solely "responsible for any defects in the plan." For this reason, it concluded that Prudential was not responsible for at least some of the alleged ERISA § 502(a)(3) violations because "Prudential could not have breached any fiduciary duty pursuant to ERISA § 502(a)(3) when no fiduciary duty was owed."

The relationship between these two grounds for dismissal is unclear, as the district court seems to suggest that the first ground applies to one set of Manuel’s ERISA § 502(a)(3) claims and the second ground applies to his "remaining [ERISA] § 502(a)(3) claim." But the discussion of each ground for dismissal identifies the same set of claims—the document deficiency issues. The district court’s opinion does not address Manuel’s other ERISA § 502(a)(3) claims against Prudential, which include allegations of procedural irregularity at the claims administrative level. Complicating matters even further, in disposing of the claims against Turner, the district court merely adopted the "reasons set forth in the Court’s Ruling on Prudential’s Motion to Dismiss ."

As Manuel correctly points out, if some or all of his ERISA § 502(a)(3) claims can be dismissed only with respect to Prudential because Turner and not Prudential is the plan administrator, the same justification cannot be used to dispose of those same claims as they were made against Turner. The district court tacitly acknowledged this in response to Manuel’s motion for reconsideration/new trial, noting that it "dismissed all of [Manuel’s ERISA § ] 502(a)(3) claims against Prudential" because they were duplicative of his ERISA § 502(a)(1)(B) claim for plan benefits.

But the Supreme Court has construed ERISA § 502(a)(1)(B) narrowly, pointing out that its plain language focuses on the ERISA "plan" itself. See, e.g. , CIGNA Corp. v. Amara , 563 U.S. 421, 435–36, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011). An ERISA plan is best thought of as a "written instrument" which includes the "basic terms and conditions" governing a set of benefits offered by an employer. Id. at 437, 131 S.Ct. 1866. Claims under ERISA § 502(a)(1)(B) are generally limited to actions "respect[ing] ... the interpretation of plan documents and the payment of claims." Varity Corp. v. Howe , 516 U.S. 489, 512, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996).

But ERISA includes numerous requirements beyond the mere payment of benefits in accord with a plan’s written terms. See e.g., Shaw v. Delta Air Lines, Inc ., 463 U.S. 85, 91, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983) (noting that, among other things, ERISA "sets various uniform standards, including rules concerning reporting, disclosure, and fiduciary responsibility"). ERISA § 502(a)(3), which sounds in equity, creates a broad cause of action for certain injuries that result from some of these other ERISA violations. Varity , 516 U.S. at 512, 116 S.Ct. 1065 (describing ERISA § 502(a)(3) as a "catchall"). Generally, an ERISA § 502(a)(3) claim for equitable relief may not be maintained when ERISA § 502(a)(1)(B) "affords an adequate remedy." Estate of Bratton v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA , 215 F.3d 516, 526 (5th Cir. 2000) ; see also Varity 516 U.S. at 512, 116 S.Ct. 1065 (noting that ERISA § 502(a)(3) offers "appropriate equitable relief for injuries caused by violations that [ERISA] § 502 does not elsewhere adequately remedy").

"[A] claimant whose injury creates a cause of action under [ERISA § 502(a)(1)(B) ] may not proceed with a claim under [ERISA § 502(a)(3) ]." Innova Hosp. San Antonio, Ltd. P’ship v. Blue Cross & Blue Shield of Ga., Inc. , 892 F.3d 719, 733 (5th Cir. 2018) (emphasis added) (citation omitted). By looking at the underlying alleged injury, it is possible to determine whether a given claim is duplicative of a claim that could have been brought under ERISA § 502(a)(1)(B). So, for example, in Innova this court held, while dismissing a claim under ERISA § 502(a)(3), that the plaintiff had "an adequate mechanism for redress under" ERISA § 502(a)(1)(B) for "fail[ure] to reimburse [the plaintiff] under the terms of [the] plan[ ]." Id . at 733–34.

B. Document Deficiency Issues

Manuel claims that Prudential and Turner violated ERISA by deficiently maintaining a document called an SPD—which must be provided to a participant "within 90 days" of participation. ERISA § 104(b)(1)(A). An SPD is designed to "reasonably apprise ... participants and beneficiaries of their rights and obligations under the plan." ERISA §...