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Beneficiary Can Seek Equitable Relief Remedies Under ERISA

By Robyn Hagan Cain on July 06, 2012 | Last updated on March 21, 2019

The Fourth Circuit Court of Appeals ruled this week that equitable relief remedies are available to a life insurance beneficiary to redress violations of Employee Retirement Income Security Act (ERISA) or ERISA plans.

The Fourth Circuit panel vacated its earlier stance this week after rehearing the case.

Debbie McCravy participated in the Bank of America's life insurance and accidental death and dismemberment (AD&D) plan issued and administered by MetLife. Under the plan, an insured could purchase coverage for "eligible dependent children." McCravy elected to buy coverage for her daughter, Leslie, and paid premiums to MetLife, from before Leslie's nineteenth birthday until she was murdered in 2007 at age 25.

Following Leslie's death, McCravy, the beneficiary of the policy insuring her daughter, filed a claim for benefits. MetLife denied McCravy's claim, contending that Leslie did not qualify for coverage under the plan's "eligible dependent children" provision.

According to the summary plan description, "eligible dependent children" are children of the insured who are unmarried, dependent upon the insured for financial support, and either under the age of 19 or under the age of 24 if enrolled full-time in school." MetLife claimed that, because Leslie was 25 at the time of her death, she no longer qualified as an "eligible dependent child," and denied McCravy's claim.

Since the company had accepted McCravy's money for years, it attempted to refund the premiums for Leslie's coverage. McCravy, however, refused to accept the refund check. Instead, she sued in federal court.

In the complaint, McCravy alleged that she didn't know that Leslie was not eligible to participate in the plan, that she believed Leslie had life insurance, and that she would have purchased different insurance otherwise. McCravy asserted that MetLife's actions constituted a breach of fiduciary duty, and sought recovery under ERISA. She claimed entitlement to recovery under waiver, estoppel, "make whole," and other equitable relief remedies, as well as under state law theories.

The district court granted summary judgment to McCravy, but it limited her damages to the return of her premiums. The Fourth Circuit Court of Appeals initially affirmed summary judgment last year, according to 401(K) Fiduciary News.

In light of the Supreme Court's CIGNA Corp. v. Amara decision, the Fourth Circuit granted re-hearing. Upon reconsidering the matter, the appellate court vacated its previous decision. The Fourth Circuit noted that the portion of Amara in which the Supreme Court addressed ERISA civil remedies "stands for the proposition that remedies traditionally available in courts of equity, expressly including estoppel and surcharge, are indeed available to plaintiffs suing fiduciaries under [ERISA]."

The Fourth Circuit Court of Appeals concluded that McCravy's potential recovery in the case is not limited, as a matter of law, to a premium refund and that she may seek equitable estoppel.

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