Opinion
Case No. 1:03-CV-239.
January 25, 2005
MEMORANDUM
Plaintiffs Brenda and C. Lebron Skiles (collectively "Plaintiffs") bring this action to recover benefits under the terms of the DuPont BeneFlex Employee Life Insurance Plan (the "Plan") and to assert claims of equitable estoppel and breach of fiduciary duty against Defendant E.I. duPont de Nemours Company ("DuPont"), Mrs. Skiles' former employer and the sponsor and administrator of the Plan. The Plan is an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001- 1461, and insured by Prudential Life Insurance Company of America ("Prudential"). Because the subject matter involves a federal question and arises under ERISA, this Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 29 U.S.C. § 1132(e).
Before the Court are competing motions by Plaintiffs for judgment on the administrative record (Court File No. 16) and by Defendants for judgment on the administrative record and summary judgment (Court File No. 19). Plaintiffs and Defendants each filed a memorandum in support of their respective motion (Court File Nos. 17, 20). Defendants filed a response to Plaintiffs' motion (Court File No. 25) and Plaintiffs filed a response to Defendants' motion (Court File No. 34) to which Defendants replied (Court File No. 31) and Plaintiffs responded with an additional brief (Court File No. 36). For the following reasons, the Court will DENY Plaintiffs' motion for judgment on the administrative record and will GRANT Defendants' motion for judgment on the administrative record and for summary judgment.
I. STANDARD OF REVIEW
A. Motions for Judgment on the Administrative Record
Both Plaintiffs and Defendants seek judgment on the administrative record with respect to Count One of Plaintiffs' complaint asserting a claim to recover benefits under 29 U.S.C. § 1132(a)(1)(B). In Wilkins v. Baptist Healthcare Sys. Inc., 150 F.3d 609 (6th Cir. 1998), the United States Court of Appeals for the Sixth Circuit set forth "suggested guidelines" for adjudicating ERISA benefit denial proceedings brought under § 1132(a)(1)(B). Id. at 619 (Gilman, J., concurring and delivering the opinion of the panel as to the applicability of summary judgment proceedings to ERISA cases). The proper procedure for adjudicating a § 1132(a)(1)(B) action is in the nature of a review of the administrator's decision at issue, not that of a bench trial or a summary judgment determination. A bench trial, during which a court might evaluate evidence not before the plan administrator, would thwart Congress's goal of using ERISA "to provide a method for workers and beneficiaries to resolve disputes over benefits inexpensively and expeditiously" through an administrative procedure. Wilkins, 150 F.3d at 618 (quoting Perry v. Simplicity Eng'g, 900 F.2d 963, 967 (6th Cir. 1990)). Likewise, a summary judgment procedure is inapposite because the goal of its analysis is "to screen out cases not needing a full factual hearing." Wilkins, 150 F.3d at 619. Rather, the court should review a benefits denial decision based "solely upon the administrative record" and "render findings of fact and conclusions of law accordingly." Id. "The district court may consider evidence outside of the administrative record only if that evidence is offered in support of a procedural challenge to the administrator's decision, such as an alleged lack of due process afforded by the administrator or alleged bias on its part." Id.
A denial of benefits decision "is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S. Ct. 948, 956-57, 103 L. Ed. 2d 80 (1989). When discretionary authority is granted, "the highly deferential arbitrary and capricious standard of review is appropriate." Borda v. Hardy, Lewis, Pollard, Page, P.C., 138 F.3d 1062, 1066 (6th Cir. 1998) (quotation marks and citation omitted). Regarding the arbitrary and capricious standard, the Sixth Circuit explained "[t]his standard `is the least demanding form of judicial review of administrative action. . . . When it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious.'" Abbott v. Pipefitters Local Union No. 522, 94 F.3d 236, 240 (6th Cir. 1996) (quoting Perry v. United Food Commercial Workers Dist. Unions 405 422, 64 F.3d 238, 242 (6th Cir. 1995). Under the arbitrary and capricious standard, the plan administrator's decision will be upheld if it was "rational in light of the plan's provisions," Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir. 1997), and was not made in bad faith. Adcock v. Firestone Tire Rubber Co., 822 F.2d 623, 626 (6th Cir. 1987). In reviewing an administrator's decision, the court may only consider "the facts known to the plan administrator at the time he made his decision." Smith, 129 F.3d at 863.
B. Motion for Summary Judgment
Defendants additionally seek summary judgment on Counts Two and Three of Plaintiffs' complaint asserting claims for equitable estoppel and breach of fiduciary duty under 29 U.S.C. § 1132(a)(3). Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Initially, the burden is on the moving party to conclusively show no genuine issues of material fact exist, Leary v. Daeschner, 349 F.3d 888, 897 (6th Cir. 2003), and the Court must view the evidence and draw all reasonable inferences therefrom in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986). However, the nonmoving party is not entitled to a trial merely on the basis of allegations, but must come forward with some significant probative evidence to support its claim. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). If the nonmoving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to summary judgment. Id. at 323, 106 S.Ct. at 2552.
The Court determines whether sufficient evidence has been presented to make an issue of fact a proper jury question, but does not weigh the evidence, judge the credibility of witnesses, or determine the truth of the matter. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202 (1986); Weaver v. Shadoan, 340 F.3d 398, 405 (6th Cir. 2003). The standard for summary judgment mirrors the standard for directed verdict. Anderson, 477 U.S. at 250, 106 S. Ct. at 2511. The Court must decide "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52, 106 S. Ct. at 2512. There must be some probative evidence from which the jury could reasonably find for the nonmoving party. If the Court concludes a fair-minded jury could not return a verdict in favor of the nonmoving party based on the evidence presented, it may enter a summary judgment. Id.; Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994).
II. RELEVANT FACTS
The Plan at issue in this case is a group life insurance plan administered by DuPont and underwritten by Prudential Life Insurance Company of America ("Prudential"). It is not clear from the record when Mrs. Skiles initially enrolled in the Plan, but during the Fall 1999 open enrollment period she applied to increase her coverage from Option B (four times normal annual earnings) to Option A (five times normal annual earnings) and this request was approved in February 2000 (AR at 52). Sometime in 2000, the Plan adopted a new accelerated payment feature called the Living Benefit Option ("LBO"). Under the LBO, which became effective January 1, 2001, a participant who was diagnosed with a terminal illness and given less than twelve months to live could apply for and receive a 50% advance on his or her life insurance coverage up to $250,000, with the balance to be paid to the designated beneficiary upon death (AR at 88, 217). The Plan amendment which added the LBO also contained the following provision:
However, the Terminal Illness Proceeds may be reduced if, within 12 months after the date Prudential receives [proof of terminal illness], a reduction on account of age or change in status, would have applied to the amount of your Employee Term Life Insurance. In that case, the amount of the Terminal Illness Proceeds may not exceed the amount of such insurance after applying the reduction.
The Administrative Record ("AR") in this case consists of 296 pages arranged in reverse chronological order and numbered from AR0001 to AR0296 (Court File No. 20, Attch. 7, Exh., supplemental file), but hereinafter cited simply as "(AR at x)." The Plan is located at Tab 26 (AR at 80-89).
(AR at 88). Defendants claim information on the new LBO was mailed to all DuPont employees in the United States in November 2000, included in 2001 enrollment kits, posted in October 2000 at the front gate of the Chattanooga plant where Mrs. Skiles was employed, and mailed to all employees electronically (Court File No. 20, p. 5). However, Plaintiffs claim they never received any notification as to the availability of the LBO until November 2001 (Court File No. 1, ¶¶ 9, 20).
In March 2001, Mrs. Skiles was diagnosed with Stage IV lung cancer, a terminal illness with life expectancy of less than 12 months ( id. ¶ 10). At that time, she was insured under the Plan for a total of $204,000 ( id. ¶ 11). As a result of her diagnosis, DuPont placed Mrs. Skiles on short-term disability status under which she received disability benefits in lieu of her regular compensation ( id. ¶ 13). Mrs. Skiles underwent surgery and a series of chemotherapy treatments and never returned to work, though Plaintiffs claim she inquired about doing so but DuPont refused ( id. ¶¶ 12-16). Sometime in August 2000, DuPont initiated the process of officially transferring Mrs. Skiles to temporary and permanent ("TP") disability status and effectively terminating her employment ( id. ¶¶ 16-17). Mrs. Skiles' employment with DuPont was terminated effective September 30, 2001 ( id. ¶ 17). Under the terms of the Plan, employees who are terminated due to TP disability are entitled to receive continuing life insurance coverage "in the amount of coverage in effect up to one times Normal Annual Earnings at the time employment was terminated" (AR at 85). Thus, Mrs. Skiles' coverage was automatically reduced to $41,000 (Court File No. 1, ¶¶ 17-18). At this point, Defendants contend Mrs. Skiles had the option of maintaining her previous level of coverage by purchasing an individual supplemental policy but failed to do so (Court File No. 20, p. 7). Plaintiffs appear to deny they were ever presented with any such option, but never state so explicitly.
Plaintiffs claim to have had numerous contacts with various benefits and personnel people at DuPont from the time of her diagnosis through and beyond her termination, but were not informed of the existence of the LBO option (Court File No. 1, ¶¶ 12-21). An LBO application was mailed to Plaintiffs on November 12, 2001, which led them to make a number of inquiries regarding the LBO and the amount of the benefit Mrs. Skiles was eligible for, but they were unable to obtain any clarification ( id. ¶¶ 21-22; see, e.g., AR at 53-54, 59-61). During late December 2001 and/or early January 2002, Mrs. Skiles filled out the LBO application requesting a payment of $102,000, half of the amount for which her life was insured prior to her termination (Court File No. 1, ¶ 21; AR at 63-70). The LBO Claim Form in Mrs. Skiles' application had previously been completed in part (presumably by DuPont) to reflect the extent of Mrs. Skiles' coverage as the basic $41,000, but Mrs. Skiles filled in the blank for supplemental coverage with the figure "$164,000" and crossed out the total coverage number and replaced it with "$205,000" (AR at 68; Court File No. 20, p. 6). Plaintiffs claim Mrs. Skiles' application was initially approved by Prudential (Court File No. 1, ¶ 23), but that decision was countermanded by Defendants and she was ultimately awarded only $20,500, or half of the amount of the basic coverage in effect following her termination (¶ 24). There is no indication of this on the record, though Prudential did engage in some back and forth with DuPont about the exact amount of coverage Mrs. Skiles had ( see AR at 49-50). Prudential approved Mrs. Skiles' claim in the amount of $20,500 in a letter dated January 31, 2002, informing her this amount was arrived at based upon the amount of coverage in effect at the time of her application (AR at 47-48).
On February 18, 2002, Doris Gray, a "Site Benefit Advocate Backup" at the DuPont plant where Mrs. Skiles had worked, wrote a letter on her behalf contending she was entitled to an LBO benefit based upon the amount of coverage in place when she was diagnosed because she had been unaware of the LBO option until after she was terminated and applied as soon as she found out about it (AR at 42) (hereinafter, "Gray Letter"). DuPont responded with a letter dated March 15, 2002, explaining its rationale for approving Mrs. Skiles only for the smaller amount (AR at 41). After some discussion with the human resources people in Chattanooga ( see AR at 38-40), Mrs. Skiles wrote another letter to DuPont on April 23, 2002. In this letter, Mrs. Skiles restated the position previously set out in the Gray Letter and additionally argued she was entitled to the larger LBO benefit based upon the terms of the Plan (AR at 36-37). Mrs. Skiles cited a purported Plan provision stating coverage would remain in force for 31 days following an employee's termination; therefore, Mrs. Skiles argued, her full coverage was still in effect when Plaintiffs first inquired about the LBO on October 30, 2001, and she should be granted benefits based upon that amount ( id.). On May 2, 2002, DuPont sent a letter to Mrs. Skiles confirming receipt of her letter and summarizing the appeal process as follows:
The provision upon which Mrs. Skiles relied is not in the Plan contained in the administrative record, though it does appear in the July 1998 plan summary document at Tab 34 (AR at 290). There is a provision in the Plan itself which states "[a]ny insurance under this Plan shall be cancelled automatically at the end of the month (a) the employee ceases to be an employee of the Company or (b) the employee or assignee discontinues the payment for coverage" (AR at 84). The language employed in the provision cited by Mrs. Skiles would appear to be much more favorable to her position than the one contained in the copy of the Plan before the Court.
Your appeal will be presented for consideration to the DuPont Plans Committee that will decide your appeal within 60 days from the date that it was received. Occasionally, it may take up to an additional 60 days to complete the necessary research, review, and decision. If this occurs, you will be notified within the original 60 day period. (AR at 35). On June 18, 2002, DuPont denied Mrs. Skiles' appeal through the letter located at Tab 3 (AR at 13-14). This letter outlined the nature of Mrs. Skiles' policy, set forth the various nationwide steps taken by DuPont to notify its employees of the LBO option, explained the operation of the LBO, stated the amount of life insurance in effect at the time of her application was $41,000 and not $204,000, and concluded the LBO benefit due was $20,500 ( id.). The letter was signed by Leo J. McDermott, Jr., as Manager of "Contract Administration and Life Insurance" (AR at 14). On August 21, 2002, Dan Hardy, the "Personnel Leader" in Chattanooga, requested another review of Mrs. Skiles' claim but it does not appear any further action was taken (AR at 2-11). Plaintiffs filed the present action on July 9, 2003, seeking the $81,500 balance allegedly owed to Mrs. Skiles under the LBO ( see Court File No. 1).III. DISCUSSION
A. Count One — Denial of Benefits
Both Plaintiffs and Defendants seek judgment on the administrative record with respect to Count One of Plaintiffs' complaint asserting a claim to recover benefits under 29 U.S.C. § 1132(a)(1)(B) (Court File Nos. 16, 19). As stated in Part I, courts are to review an administrator's benefits denial decision based solely upon the administrative record and are not to consider any evidence outside of the administrative record unless offered in support of a procedural challenge ( e.g., alleged lack of due process or bias). Wilkins, 150 F.3d at 619. Additionally, where a plan gives the administrator discretionary authority to determine eligibility for benefits and/or to construe the terms of the plan, the administrator's exercise of that authority will be reviewed under the highly deferential arbitrary and capricious standard. Borda, 138 F.3d at 1066. In this case, the Plan provides DuPont "shall have the discretionary right to determine eligibility for benefits hereunder and to construe the terms and conditions of this Plan" (AR at 87). Plaintiffs concede "the Plan contains language generally deemed sufficient to mandate the deferential arbitrary and capricious standard of review" (Court File No. 17, p. 8), but nevertheless contend de novo review is warranted in this case because (1) "Defendants failed to follow the prescribed appeal and denial procedures that DuPont told Brenda Skiles would be followed in reviewing her claim," and (2) the persons involved in the decision-making process in Mrs. Skiles' case were not "designated as having fiduciary discretion" ( id. at 8-15). Both of these allegations, if proven, could constitute grounds for applying a de novo standard of review in spite of the Plan's language. See Sanford v. Harvard Indus., Inc., 262 F.3d 590, 597 (6th Cir. 2001) (finding de novo standard of review appropriate, irrespective of the degree of discretion afforded by plan language, where "an unauthorized body that does not have fiduciary discretion to determine benefits eligibility renders such a decision"); Buttram v. Central States, S.E. and S.W. Areas Health and Welfare Fund, 76 F.3d 896, 900-01 (8th Cir. 1996) (suggesting deferential standard of review would be unwarranted if plaintiff could point to procedural deficiencies demonstrating "the actual decision was reached without reflection and judgment"); see also Stoll v. Western Southern Life Ins. Co., 2003 WL 21212551, *5 (6th Cir. May 22, 2003) (unpublished decision) (citing Buttram favorably).
Plaintiffs allege Defendants failed to follow stated appeal procedures by not providing a detailed notification of the reasons for denying a claim within 60 days of receiving a request for review of an initial decision denying benefits (Court File No. 17, p. 11). Plan documents contain language generally indicating appeals will be handled in such a manner ( see AR at 269, 296). Plaintiffs argue the Gray Letter constituted Mrs. Skiles' "initial appeal" and DuPont's letter in response (AR at 41) was insufficient in that it "failed to provide the Plan provisions upon which the denial was based' (Court File No. 17, p. 11). DuPont's response letter does not cite specific Plan section, paragraph, or page numbers, but it does clearly articulate the reasoning behind the approval of an LBO benefit of only $20,500 (the letter incorrectly states the amount of the payout as $20,400) ( see AR at 41). Plaintiffs contend the letter "in no way indicates that the actual Plan provision states that the amount of life insurance in force for purposes of computing the LBO benefit may be reduced to the non-contributory [normal annual earnings]" (Court File No. 17, p. 11). To the extent Plaintiffs argue the Plan does not contemplate individuals in Mrs. Skiles' situation having their coverage reduced to 1X earnings, §§ XII and XV clearly do so ( see AR at 84-85), and to the extent they argue the response letter does not adequately state and/or explain this, the third sentence of the second paragraph states "[w]hen a participant leaves DuPont under the Total and Permanent disability plan, her/his life insurance amount is automatically reduced to 1X Pay" (AR at 41). Although it could have been more precise by including citations to the Plan, DuPont's response to the Gray Letter adequately set forth the facts, provisions, and logic underlying its decision. In any event, whatever deficiencies may be found in DuPont's letter they are not so egregious as to suggest DuPont's decision was reached wholly without reflection or judgment as necessary to justify de novo review. See Buttram, 76 F.3d at 901.
The letter acknowledging receipt of Mrs. Skiles' second appeal contains similar language regarding timing and notification and additionally states her appeal would be presented to and decided by the DuPont Plans Committee (AR at 35). Apparently this committee is made up of four individuals: Cynthia Close, Constance Facciolo, Leo McDermott, Jr., and Pamela Murray. Plaintiffs contend the administrative record contains no evidence all of the members of the committee considered Mrs. Skiles' appeal, either jointly or individually, and indicates the decision to deny her appeal was, at best, made by McDermott alone with passing knowledge on the part of Close (Court File No. 17, pp. 12-14). Defendants contend the full committee met to consider Mrs. Skiles' appeal, McDermott was acting on behalf of DuPont and the entire committee when he signed the letter denying her appeal, and any challenge to the authority of McDermott or the committee is untimely (Court File No. 25, pp. 15-19). With respect to Defendants' timeliness argument, the case on which they rely in no way indicates procedural deficiencies must be alleged in the complaint; rather it simply restates the established rule the district court can consider evidence outside the administrative record only where the plaintiff makes a procedural challenge. See Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, 458 n. 3 (6th Cir. 2003). Defendants' factual arguments, however, appear to be well grounded. Defendants have produced an affidavit from McDermott stating the full committee met and considered Mrs. Skiles' appeal and afterwards he circulated a draft letter denying that appeal in which each of the other three members of the committee concurred ( see Court File No. 25, Attch.). Plaintiffs argue the portions of McDermott's affidavit which speak of the other committee members' confirmation of his letter are inadmissible hearsay and should not be considered by the Court, thus leaving only the administrative record which lacks any evidence of consideration by the full committee (Court File No. 34, pp. 4-6). Even assuming McDermott would not be allowed to testify as to the opinions held by the other members of the committee with respect to Mrs. Skiles' claim, he would certainly be able to testify he met with the others, they discussed her appeal, afterwards he drafted a letter denying the appeal, he circulated that letter, and he then signed and mailed that letter. Moreover, the Court notes McDermott's denial letter, which is contained in the administrate record, makes repeated use of the pronoun "we." Thus, there is sufficient admissible evidence to indicate the full committee was involved in the decision to deny Mrs. Skiles' appeal.
As to Plaintiffs contention the committee and/or McDermott were not authorized to decide Mrs. Skiles' appeal, there is no indication they were not so authorized and, in any event, the present case is distinguishable from Sanford. Plaintiffs allege none of the named members of the committee was designated as a fiduciary in the Plan (Court File No. 17, p. 14). Section XX of the Plan provides, in part, DuPont "shall have the authority to control and manage the operation and administration of this Plan and to designate one or more persons to carry out the responsibilities of the operation and administration of this Plan" (AR at 87). McDermott and each of the other members of the DuPont Plans Committee were indisputably DuPont employees, thus the Court fails to see how that structure is inconsistent with the language in the Plan. Moreover, there is nothing in ERISA statutory or case law indicating plans are required to designate each and every individual person who will act in some fiduciary capacity. Section 1102(a) requires a plan to have at least one named fiduciary, but a corporation may be an ERISA fiduciary, see Hamilton v. Carell, 243 F.3d 992, 998 (6th Cir. 2001), and persons may incur liability as fiduciaries even though not formally named as such in the plan. See Seaway Food Town, Inc. v. Medical Mut. of Ohio, 347 F.3d 610, 616-17 (6th Cir. 2003). There is simply no indication McDermott and the other members of the committee were not acting as agents or with the authorization of the fiduciary named in the Plan, DuPont. Moreover, Plaintiffs' allegations regarding lack of authority are far removed from the facts of Sanford. The plan in Sanford contained detailed provisions creating a "central Board of Administration" which would be responsible for making determinations on benefits eligibility. See 262 F.2d at 595. The plan provided a specific composition for the Board's membership (half of members to be appointed by union and other half by employer) and explicitly required each side to give written notice to the other of appointments to the Board. Id. Because Sanford's retirement benefits were rescinded unilaterally by his employer at a hearing on a union grievance, the Sixth Circuit found deferential review was not warranted and remanded his case to the Board to consider his eligibility for benefits. Id. at 596-98. Here, the Plan simply vests authority in the plan administrator, DuPont, and gives it seemingly unbridled freedom to designate which particular individual or group of individuals will be responsible for making benefits determinations. Plaintiffs have not alleged DuPont violated the Plan language by allowing someone other than DuPont or a DuPont employee to make the decision to deny Mrs. Skiles' appeal nor have they produced any evidence indicating her appeal was handled in any way inconsistent with representations in Plan documents or the letter acknowledging receipt of her appeal.
Finally, Plaintiffs argue even if the arbitrary and capricious standard of review is found to apply, it should be "tempered" in order to account for DuPont's conflict of interest as both the decision maker and the funder of the Plan (Court File No. 17, p. 15). Defendants do not respond to this contention directly. Although the Plan does not state exactly who will pay out benefits, it does give DuPont authority to contract with one or more insurance companies "for the purposes of providing any benefits under this Plan" and provides payment upon death "will be made in accordance with the available settlement plans of the Insurance Carrier" (AR at 81, 84). Further, the LBO amendment explicitly states Prudential "will pay" benefits (AR at 88). Thus, it appears DuPont administers claims but Prudential pays those claims, meaning there is no financial conflict of interest. However, even assuming there is a conflict, this would not change the standard of review but would only constitute a factor to consider in assessing the administrator's decision. See Marchetti v. Sun Life Assurance Co., 30 F. Supp. 2d 1001, 1007 (M.D. Tenn. 1998) (citing Miller v. Metro. Life Ins. Co., 925 F.2d 979, 984 (6th Cir. 1991)).
Moving to the merits of Plaintiffs' denial of benefits claim, Defendants argue the decision to award Mrs. Skiles an LBO benefit of only $20,500 (1) was correct because that was half the amount of the coverage in effect at the time of her application and (2) would still have been correct even if she had applied for the LBO previous to her termination because the terms of the Plan specifically provide LBO benefits "may be reduced if, within 12 months after the date Prudential receives such proof, a reduction on account of age or change in status would have applied to the amount of your Employee Term Life Insurance" (Court File No. 20, pp. 12-14; Court File No. 25, pp. 11-15). Plaintiffs contend Defendants' second argument "should not be countenanced" because it was neither mentioned nor relied upon by DuPont until McDermott's final denial letter and, in any event, the provision upon which Defendants rely is "inexplicable" and "inconsistent with other salient provisions" in the Plan (Court File No. 17, pp. 17-19). Be that as it may, Plaintiffs' § 1132(a)(1)(B) claim can be resolved without considering the effect of the LBO reduction provision. Under either de novo or arbitrary and capricious review, DuPont's decisions were in accordance with the terms of the Plan. The Plan clearly states the amount of the LBO benefit will be "equal to 50% of the amount in force on your life on the date Prudential receives the proof that you are a Terminally Ill Employee" (AR at 88). It is undisputed Mrs. Skiles submitted her application in late December 2001 or early January 2002 and, at that time, her life was insured only for $41,000. Therefore, the benefit determination of $20,500 was correct under the terms of the Plan. Section 1132(a)(1)(B) allows an ERISA participant or beneficiary to sue "to recover benefits due him under the terms of the plan" (emphasis added). Here, the actual terms of the Plan clearly require the determination arrived at by DuPont. Thus, irrespective of the standard of review, the reasons for the timing of Mrs. Skiles' application, and/or the effect of the reduction provision, DuPont's benefits determination was imminently reasonable in light of, if not compelled by, the explicit terms of the Plan. Accordingly, the Court will DENY Plaintiff's motion for judgment on the administrative record (Court File No. 16) and will GRANT Defendant's motion for judgment on the administrative record (Court File No. 19) as to Count One.
B. Counts Two Three
The second count of the complaint asserts a claim for equitable estoppel under 29 U.S.C. §§ 1132(a)(1)(b) and (a)(3) (Court File No. 1, ¶¶ 34-44) and the third count of the complaint asserts a claim for equitable restitution under 29 U.S.C. § 1132(a)(3) alleging DuPont breached the fiduciary duties imposed upon it as plan administrator by 29 U.S.C. §§ 1104(a)(1)(A) and (B) (Court File No. 1, ¶¶ 45-52). Defendants have moved for summary judgment on both of these claims (Court File No. 19). The Court will address each claim separately.
1. Count Two — Equitable Estoppel
Equitable estoppel has been recognized as a viable theory in ERISA cases, but is only available where plan documents are ambiguous and a participant relies upon a misleading interpretation of that ambiguity. Sprague v. Gen. Motors Corp., 133 F.3d 388, 403-04 (6th Cir.) (en banc), cert. denied, 524 U.S. 923, 118 S. Ct. 2312, 141 L. Ed. 2d 170 (1998). As detailed above with regard to Plaintiffs' § 1132(a)(1)(B) claim, the terms of the Plan are clear and unambiguous. Accordingly, Plaintiffs cannot rely upon an equitable estoppel claim and the Court will GRANT Defendants' motion for summary judgment on Count Two.
2. Count Three — Breach of Fiduciary Duty
The claim asserted in Count Three of the complaint is characterized by Plaintiffs as a claim for "equitable restitution" based upon alleged breaches of ERISA fiduciary duties brought under § 1132(a)(3) (Court File No. 1, ¶¶ 45-52). Section 1132(a)(3)(B) allows participants to sue "for other appropriate equitable relief," which includes the ability to bring a private right of action for breach of fiduciary duty. See Allinder v. Inter-City Prods. Corp., 152 F.3d 544, 551 (6th Cir. 1998). Participants and beneficiaries may assert claims for breach of fiduciary duty where plan fiduciaries make materially misleading misrepresentations regarding the extent or availability of benefits under the plan. James v. Pirelli Armstrong Tire Corp., 305 F.3d 439, 449 (6th Cir. 2002); Krohn v. Huron Mem. Hosp., 173 F.3d 542, 547 (6th Cir. 1999); Drennan v. Gen. Motors Corp., 977 F.2d 246, 251 (6th Cir. 1992). Although ERISA fiduciaries are under no affirmative obligation to make sure participants understand plan terms on their own initiative, see Electro-Mechanical Corp. v. Ogan, 9 F.3d 445, 452 (6th Cir. 1993), once a participant has initiated an inquiry the fiduciary must give "complete and accurate information in response" and materially "[m]isleading communications . . . regarding plan administration (for example, eligibility under a plan, the extent of benefits under a plan) will support a claim for breach of fiduciary duty." Drennan, 977 F.2d at 251; see also Electro-Mechanical, 9 F.3d at 451 (fiduciary must respond "promptly and adequately"). "[A] misrepresentation is material if there is a substantial likelihood that it would mislead a reasonable employee in making an adequately informed decision in pursuing disability benefits to which she may be entitled." Krohn, 173 F.3d at 547 (citing In Re Unisys Corp. Retiree Med. Benefit "ERISA" Litig., 57 F.3d 1255, 1264 (3d Cir. 1995)). A fiduciary breaches its duties whether its statements or omissions were made negligently or intentionally. Berlin v. Mich. Bell Tel. Co., 858 F.2d 1154, 1163-64 (6th Cir. 1988). To establish a claim for breach of fiduciary duty based on alleged misrepresentations concerning coverage under an employee benefit plan, a plaintiff must show: (1) the defendant was acting in a fiduciary capacity when it made the challenged representations; (2) those representations were material; and (3) the plaintiff relied on those misrepresentations to his or her detriment. James, 305 F.3d at 449.
Although Plaintiffs never specifically asked about the LBO, the facts as alleged would be sufficient to state a claim for breach of fiduciary duty in light of the Sixth Circuit's statements in Krohn:
[O]nce an ERISA beneficiary has requested information from an ERISA fiduciary who is aware of the beneficiary's status and situation, the fiduciary has an obligation to convey complete and accurate information material to the beneficiary's circumstance, even if that requires conveying information about which the beneficiary did not specifically inquire. . . . [T]he `duty to inform is a constant thread in the relationship between beneficiary and trustee; it entails not only a negative duty not to misinform, but also an affirmative duty to inform when the trustee knows that silence might be harmful.'"173 F.3d at 547-48 (quoting Bixler v. Central Pa. Teamsters Health Welfare Fund, 12 F.3d 1292, 1300 (3d Cir. 1993)). Even assuming Defendants had taken adequate steps to inform Plan participants generally about the LBO, Plaintiffs' inquiries in the wake of her terminal lung cancer diagnosis should have been sufficient to put Defendants on notice of Mrs. Skiles' eligibility for the LBO and Defendants' failure to provide information about that benefit option made their communications with Plaintiffs materially misleading. See Krohn, 173 F.3d at 548-51 (holding plan administrator breached its fiduciary duties by providing only information about short-term disability benefits in response to participant's husband's general inquiry about benefits available to his wife and made no mention of participant's participant's entitlement to long-term disability benefits); see also Griggs v. E.I. Dupont de Nemours Co., 237 F.3d 371, 381-84 (4th Cir. 2001) (holding defendant breached its fiduciary duty by leading plaintiff-participant to believe he was eligible for a tax-deferred lump sum distribution of early retirement benefits under ERISA plan and then failing to inform plaintiff once it learned such election was not permitted by tax laws). Thus, at a minimum, Plaintiff has created a genuine dispute of material fact as to whether Defendants' breached their fiduciary duties under ERISA.
Nevertheless, § 1132(a)(3) only permits claims for "appropriate equitable relief." The Supreme Court has narrowly defined the scope of equitable relief available under § 1132(a)(3) as "those categories of relief that were typically available in equity (such as injunction, mandamus, and restitution, but not compensatory damages)." Mertens v. Hewitt Assocs., 508 U.S. 248, 256, 113 S. Ct. 2063, 2069, 124 L. Ed. 2d 161 (1993) (emphasis in original). Plaintiffs phrase their claim as one for "equitable restitution" ( see Court File No. 1, ¶ 52), but Defendants argue Plaintiffs' claim effectively seeks compensatory damages and is therefore not an action "to obtain other appropriate equitable relief" as authorized by § 1132(a)(3)(B). Causes of action for restitution are permissible under § 1132(a)(3), but only where they seek equitable as opposed to legal restitution. See Great-West Life Annuity Ins. Co. v. Knudson, 534 U.S. 204, 212-18, 122 S. Ct. 708, 714-17, 151 L. Ed. 2d 635 (2002). Whether a particular restitution claim is legal or equitable depends on "`the basis for [the plaintiff's] claim' and the nature of the underlying remedies sought. Id. at 213, 122 S. Ct. at 714 (citing Reich v. Cont'l Cas. Co., 33 F.3d 754, 756 (7th Cir. 1994)). As Justice Scalia explained in Great-West, in the days of the divided bench "a plaintiff could seek restitution in equity, ordinarily in the form of a constructive trust or an equitable lien, where money or property identified as belonging in good conscience to the plaintiff could clearly be traced to particular funds or property in the defendant's possession." Id. at 213-14, 122 S. Ct. at 714 (emphasis in original). "Thus, for restitution to lie in equity, the action generally must seek not to impose personal liability on the defendant, but to restore to the plaintiff particular funds or property in the defendant's possession." Id. at 214, 122 S. Ct. at 714-15.
Defendants also raise this argument with respect to Plaintiffs' equitable estoppel claim, but the Court declined to consider the argument in that context since even assuming Count Two seeks "other appropriate equitable relief," an equitable estoppel theory is clearly not available under the facts of this case.
Defendants argue the limitations imposed upon the scope of relief available under § 1132(a)(3) in Great-West preclude Plaintiffs from bringing their present claim (Court File No. 20, pp. 21-23). Defendants argue because DuPont does not have any "money or property identified as belonging in good conscience" to Plaintiffs, their claim is actually for legal damages and is therefore barred by Great-West ( id.). Plaintiffs counter by arguing they are not seeking "consequential damages flowing from the failure to have paid the benefits sought by Mrs. Skiles," but rather seek "specific and identifiable assets, namely the remaining one-half of Mrs. Skiles' Employee Life Insurance" (Court File No. 34, p. 25). Despite their contentions, Plaintiffs' claim is clearly legal in nature within the framework of Great-West. Plaintiffs allege Defendants violated various fiduciary duties by not adequately informing them of Mrs. Skiles' benefits options, which then caused her to lose a specific portion of the benefits to which she would have otherwise been entitled. Effectively, Plaintiffs contend Defendants' omissions and/or misrepresentations caused them to forfeit certain contractual rights and, therefore, Defendants should be ordered to make them whole. "Almost invariably . . . suits seeking . . . to compel the defendant to pay a sum of money to the plaintiff are suits for `money damages,' as that phrase has traditionally been applied, since they seek no more than compensation for loss resulting from the defendant's breach of legal duty. . . . . And `[m]oney damages are, of course, the classic form of legal relief.'" Great-West, 534 U.S. at 210, 122 S. Ct. at 713 (internal citations omitted; emphasis in original). Even though Plaintiffs do not ask for anything more than the amount of the benefits which would have been paid if they had been given a chance to apply in a timely manner (and attorney fees and costs under § 1132(g)(1)), their claim is still for consequential money damages. It just so happens the consequential damages are the benefits denied. The funds at issue simply were never owned or possessed by Plaintiffs, thus, the present restitution claim is not "other appropriate equitable relief," at least under Justice Scalia's limited definition of that phrase.
Although Great-West only specifically addressed an action by a plan fiduciary against a plan beneficiary seeking to enforce a subrogation/reimbursement provision in an ERISA plan, there is no indication Justice Scalia's narrow definition of "other appropriate equitable relief" would not apply equally to claims brought by participants or beneficiaries. In fact, even before Great-West the Sixth Circuit had applied Mertens to foreclose beneficiaries from recovering compensatory damages based upon claims for breach of fiduciary duty brought under § 1132(a)(3). See Allinder v. Inter-City Prods. Corp., 152 F.3d 544, 550-52 (6th Cir. 1998). To this point, the Sixth Circuit has applied the dictates of Great-West strictly and without hesitation. See Crosby v. Bowater Inc. Retirement Plan For Salaried Employees of Great Northern, 382 F.3d 587, 593-97 (6th Cir. 2004) (holding plaintiff-participant's claim seeking refund of improperly withheld benefits where plan administrator had employed incorrect mortality discount in calculating amount of lump sum cash payment due upon early retirement election was not equitable in nature and plaintiff lacked standing under Great-West); Qualchoice, Inc. v. Rowland, 367 F.3d 638, 643-50 (6th Cir. 2004) (applying Justice Scalia's concept of "equitable relief" in its most literal sense and holding a fiduciary's action under § 1132(a)(3) to enforce a plan-reimbursement provision is a legal action even where the defendant participant or beneficiary has already recovered from another entity and possesses that recovery in an identifiable fund); Cmty. Health Plan of Ohio v. Mosser, 347 F.3d 619, 622-24 (6th Cir. 2003) (concluding Great-West deprived fiduciary of standing to bring action seeking to enforce subrogation provision in plan); Caffey v. UNUM Life Ins. Co., 302 F.3d 576, 583-84 (6th Cir. 2002) (holding Mertens and Great-West precluded beneficiary from bringing action under § 1132(a)(3) to recover consequential damages arising from plan administrator's alleged breaches of fiduciary duties); see also Ramsey v. Formica Corp., 2004 WL 1146334, *3-5 (S.D. Ohio Apr. 6, 2004) (concluding Great-West prohibits actions for money damages under § 1132(a)(3) even where brought to recover participant's reliance interest in benefits anticipated based upon administrator's misrepresentations). In a recent unpublished opinion, the Sixth Circuit noted Great-West may very likely leave participants seeking "extracontractual relief based on reliance and prejudice" without any legal recourse, but declined to "wade too deeply into this morass" and instead rejected a participant's § 1132(a)(3) equitable estoppel claim on the merits. Julia v. Bridgestone/Firestone, Inc., 2004 WL 1193961, *2-4 (6th Cir. May 27, 2004).
None of the cases cited by Plaintiffs in support of their standing argument come from the Sixth Circuit nor do they necessarily compel a contrary conclusion in the present matter. See Brown v. Aventis Pharms., Inc., 341 F.3d 822, 826-28 (8th Cir. 2003) (finding district court's order restoring plaintiff-participant's benefits to level she would have maintained had defendant not violated fiduciary duties was "restitution" allowed under § 1132(a)(3) without mention to Great-West); Burstein v. Ret. Account Plan for Employees of Allegheny Health Educ. Research Found., 334 F.3d 365, 384-89 (3d Cir. 2003) (allowing one out of a total of five claims alleging violations of fiduciary duties brought under § 1132(a)(3) to proceed without considering plaintiff's standing in light of Great-West); Empire Kosher Poultry, Inc. v. United Food Commercial Workers Health Welfare Fund of Northeastern Pa., 285 F. Supp. 2d 573, 579-82 (M.D. Pa. 2003) (concluding Great-West did not directly reject Third Circuit's recognition of a limited federal common law equitable restitution claim under ERISA for employers seeking to recover overpayments). The Court notes the Fourth Circuit's holding in Griggs v. E.I. DuPont de Nemours Co. provides some potential support for Plaintiffs' standing argument, 237 F.3d at 384-86 (holding reinstatement of right to an election of benefits may qualify "other appropriate equitable relief"), but the Sixth Circuit's holding in Crosby appears to explicitly reject the sort of reasoning employed in Griggs. 382 F.3d at 596-97 ("Equity, as the pertinent equitable maxim tells us, does not require the doing of a vain act.").
The Court acknowledges the extreme unfairness of the instant result, but is duty bound to apply the law as passed by Congress and interpreted by the higher courts. In sum, the Supreme Court's broad interpretation of the scope of ERISA preemption combined with its narrow construction of the "equitable relief" available under § 1132(a)(3) has created, in the words of Justice Ginsburg, a "regulatory vacuum." Aetna Health Inc. v. Davila, 542 U.S. ___, 124 S. Ct. 2488, 2503, 159 L. Ed. 2d 312 (2004) (Ginsburg, J., concurring). The unfortunate result is that the law as it currently stands does not provide the sort of remedy Plaintiffs seek. In addition to being patently unfair, the Court notes there are serious policy implications in imposing such strict limitations on the ability of participants and beneficiaries to recover consequential damages for breaches of ERISA fiduciary duties. See Cicio v. Does, 321 F.3d 83, 106 (2d Cir. 2003) (Calabresi, J., dissenting) (describing legal void created by Mertens and Great-West as a "gaping wound"). Accordingly, the Court hopes Congress and/or the Supreme Court will direct their attention to these matters and attempt to rectify the shortcomings in the law. However, for present purposes, the Court is powerless to do other than follow the dictates of Great-West and Crosby and will GRANT Defendants' motion for summary judgment on Count Three.
IV. CONCLUSION
For the reasons stated above and with extraordinary reluctance, the Court will DENY Plaintiffs' motion for judgment on the administrative record (Court File No. 16) and will GRANT Defendants' motion for judgment on the administrative record and for summary judgment (Court File No. 19).
An Order shall enter.