E-Alert Case Updates

Unpaid Insurance Benefits Are Not An Equitable Relief

McCravy v. Metropolitan Life Insurance Company
Nos. 10-1074, 10-1131 (4th Cir. 2011)
by Lydia S. Hu, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Plaintiff, a full-time employee of Bank of America, participated in the Life Insurance and Accidental Death and Dismemberment Plan, which was issued and administered by Metropolitan Life Insurance Company (“MetLife”). Under the plan, she purchased accidental death and dismemberment coverage for “eligible dependent children.” She obtained such insurance coverage for her daughter and paid premiums which were accepted and retained by MetLife.

While named as a covered dependent on the insurance plan, Plaintiff’s daughter was murdered at the age of 25. Plaintiff filed a claim for benefits, which was denied by MetLife because the daughter did not qualify for coverage under the Plan’s “eligible dependent children” provision. The Plan defined eligible dependent children as unmarried dependents who are under the age of 24 if enrolled full-time in school. Because the daughter was 25 at the age of her death, she no longer satisfied the definition of eligible dependent children. Accordingly, MetLife denied Plaintiff’s claim and attempted to refund paid premiums.

Plaintiff refused the refund check and instead filed suit in federal court alleging that MetLife breached its fiduciary duties under the Employee Retirement Income Security Act (“ERISA”).

Plaintiff sought payment for the coverage she argued she was entitled to under 29 U.S.C. § 1132(a)(3). The trial court ruled that Plaintiff was not entitled to recover the full benefits under this particular provision but that she could recover the premiums withheld by MetLife for coverage she never actually held on the life of her daughter.

Plaintiff appealed. Section 1132(a)(3) allows a civil action to be brought:

By a participant, beneficiary, or fiduciary (a) to enjoin any act or practice which violates any provisions of this subchapter or the terms of the Plan, or (b) to obtain other appropriate equitable relief (i) to address such violations or (ii) to enforce any provisions of this subchapter or terms of the Plan. . . .

Plaintiff argued that appropriate equitable relief entitled her to payment of the full benefits under the Plan.

The Fourth Circuit explained that the phrase “other equitable relief” allows recovery for relief that is available in equity, such as injunctions, mandamus and restitution, but not compensatory damages. Equitable restitution involves a claim where the plaintiff seeks money or property but is identified in good conscience to belong to the plaintiff, but is in defendant’s possession. The action must typically not seek to impose personal liability on the defendant but only to restore to the plaintiff funds or property that are in defendant’s possession.

Here, Plaintiff sought a monetary award in the amount of the life insurance benefits lost. However, the Plaintiff is not the true owner of the funds in MetLife’s possession. This type of claim necessarily seeks damages at law. Therefore, Plaintiff’s attempted recovery of the unpaid benefits is a legal claim and not an equitable claim, and therefore it cannot be recovered through § 1132(a) allowing for “appropriate equitable relief.”