A year after the Supreme Court decided CIGNA Corp. v. Amara, courts continue to weigh the impact of that decision, particularly the scope of the available remedies against breaching fiduciaries under ERISA’s “catch-all” provision, Section 502(a)(3), which authorizes “other appropriate equitable relief.” Because Amara held only that a different section of ERISA – Section 502(a)(1)(B) – did not provide a remedy for plan disclosure violations, its discussion of the relief available under the catch-all provision was seen by the Amara concurrence and commentators as dictum, as we reported in the June 15, 2011 ERISA Litigation Update, available here. On July 5, 2012, the Fourth Circuit Court of Appeals weighed in by adopting Amara’s dictum, holding that ERISA’s catch-all provision allows wide-ranging relief against breaching fiduciaries, including a surcharge (“make-whole relief”) and equitable estoppel. Its decision is McCravy v. Metropolitan Life Insurance Company, 690 F.3d 176 (4th Cir. 2012).
The facts of McCravy are straightforward, though tragic. The plaintiff participated in her employer’s life insurance and accidental death and dismemberment plan. She filed a claim for benefits upon the untimely death of her 25-year-old daughter. The defendant insurer denied coverage because the policy provided only for benefits for dependent children up to age 19, or age 24 if the child was enrolled as a full-time student. The plaintiff sued the insurer under multiple provisions of ERISA, including Section 502(a)(3). The district court ruled that the insurer had violated fiduciary duties, but that under Section 502(a)(3) the plaintiff was entitled only to the premiums wrongfully retained by the insurer.
Before the Amara decision was announced, the Fourth Circuit had affirmed the decision of the district court, limiting the remedy available to the plaintiff under Section 502(a)(3) to the premiums paid to the insurer. Joined by the DOL as an amicus curiae, the plaintiff urged reconsideration, which the Fourth Circuit granted after Amara. The Fourth Circuit began its opinion on reconsideration by noting that, “[b]efore Amara, various lower courts, including this one, had (mis)construed Supreme Court precedent to limit severely the remedies available to plaintiffs suing fiduciaries under Section [502(a)(3)].” It agreed, however, that Amara was “a striking development,” that “expanded the relief and remedies available to plaintiffs asserting breach of fiduciary duty under Section [502(a)(3)].” The Fourth Circuit specifically held “that remedies traditionally available in courts of equity, expressly including estoppel and surcharge, are indeed available to plaintiffs suing fiduciaries under Section [502(a)(3)].” Accordingly, it reversed the district court’s decision on the plaintiff’s claim and remanded the case to the district court to determine the appropriate remedies to which the plaintiff would be eligible.
The Fourth Circuit summarily rejected the argument that Amara’s discussion of the relief available under Section 502(a)(3) should not be controlling because it was dictum. It stated that even if the Supreme Court’s discussion of the relief available under ERISA’s catch-all provision was dictum, it could not “simply override a legal pronouncement endorsed just last year by a majority of the Supreme Court.”