A doctor’s widower can seek $350,000 in supplemental life insurance payments after the Eleventh Circuit on Tuesday ruled that ERISA authorizes claims for equitable relief based on alleged fiduciary breaches in the benefit plan enrollment process.
The widower can use the Employee Retirement Income Security Act’s equitable relief provision to challenge NCHMD Inc.'s alleged failure to provide the doctor with the necessary paperwork to enroll in coverage, the US Court of Appeals for the Eleventh Circuit ruled, resolving an issue of first impression.
That provision, Section 1132(a)(3), authorizes a plan beneficiary to seek money equal to the insurance benefits lost as a result of the defendants’ alleged breach of fiduciary duty, the unanimous three-judge panel said.
The dispute follows the death of Justin Polga, an NCHMD doctor who elected to pay for more than $350,000 in supplemental life insurance coverage from the company. Although NCHMD deducted premiums from Polga’s paychecks and sent him benefit statements reflecting this coverage amount, it never told him that he was required to submit an “evidence of insurability” form in order to receive the coverage.
When Polga died, the plan’s insurer cited the lack of an insurability form in declining to pay supplemental benefits to his widower, Raniero Gimeno.
Gimeno conceded that this paperwork failure meant he had no valid claim for ERISA benefits under the terms of the plan. He nevertheless argued that he could receive the $350,000 under ERISA’s equitable relief provision because NCHMD breached its fiduciary duties in failing to inform Polga about the required form.
The Eleventh Circuit agreed that Gimeno could proceed under this provision, reversing a lower court’s dismissal of the suit.
“Gimeno asserts that the defendants breached their fiduciary duties by failing to adequately notify his spouse about the form and providing misinformation about his benefits,” the court said. “Gimeno argues that he lost life insurance benefits because of those breaches and seeks monetary relief equivalent to those lost benefits. Because he has sufficiently alleged that the defendants are fiduciaries, Gimeno can sue for lost benefits under Section 1132(a)(3).”
In reaching this conclusion, the court analyzed the US Supreme Court’s 2011 decision in CIGNA Corp. v. Amara, which held that ERISA’s equitable remedies provision could authorize relief similar to plan benefits in instances in which there’s no viable claim for benefits under the statute.
According to the Eleventh Circuit, “every circuit court to address the issue” since Amara —including the Second, Fourth, Fifth, Seventh, Eighth, and Ninth circuits—has recognized that ERISA allows claims for monetary relief based on breaches of fiduciary duty.
Dabdoub Law Firm PA represents Gimeno. FordHarrison LLP represents NCHMD.
The case is Gimeno v. NCHMD, Inc., 11th Cir., No. 21-11833, 6/28/22.