McCravy v. Metropolitan Life Insurance Co., No. 10-1074

Decided: July 5, 2012

Debbie McCravy appealed the district court’s holding that her remedies under ERISA § 1132(a)(3) were limited to premiums improperly withheld by MetLife.   As a Bank of America employee, McCravy participated in the company’s life insurance and accidental death and dismemberment plan issued by MetLife.  McCravy elected to buy coverage for her daughter as an eligible dependent child under the plan and paid premiums that were accepted by MetLife from before her daughter’s 19th birthday until she was murdered at the age of 25.  McCravy then filed a claim for benefits as the beneficiary of her daughter’s policy that was denied by MetLife because her daughter was 25 at the time of her death and no longer qualified as an eligible dependent child.  MetLife attempted to refund the premiums they had accepted, but McCravy refused to accept the check.

McCravy then filed suit in federal court alleging breach of fiduciary duty and seeking recovery under § 1132(a)(3), which allows participants and beneficiaries “to obtain other appropriate equitable relief” to redress violations of ERISA or ERISA plans.  The district court ruled that McCravy could recover under § 1132(a)(3), but that her recovery was limited as a matter of law to the life insurance premiums wrongfully withheld from MetLife for the coverage that McCravy never actually had on her daughter’s life.   McCravy then moved for summary judgment regarding the wrongfully retained premiums and reserved her right to appeal the district court’s limitation of her recovery under § 1132(a)(3).  After the district court entered a final order, McCravy appealed and the Fourth Circuit filed an order affirming the district court.  The same day, the Supreme Court of the United States filed Amara, 131 S. Ct. 1866, extending the equitable remedies available under § 1132(a)(3) to encompass remedies traditionally available in courts of equity, expressly including “make-whole” relief such as estoppel and surcharge.

On the basis of Amara, the Fourth Circuit granted McCravy’s petition for panel rehearing.  Upon rehearing, the Fourth Circuit held that after Amara, McCravy was entitled to seek “make-whole relief” under § 1132(a)(3), and that her recovery was not limited as a matter of law to refunds of her premium.  Furthermore, the remedy of equitable estoppel was available to McCravy under § 1132(a)(3) to prevent MetLife from denying her right to convert coverage for her daughter.  The Fourth Circuit vacated the district court’s summary judgment order and remanded the case for further proceedings to determine McCravy’s breach of fiduciary duty claim.

Full Opinion

-Nora Bennani

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