ERISA Issues Affecting Practices Nationwide
By Thomas J. Force, Esq. & Giulia Palermo, Esq. The Force Law Firm, P.C.
Todd Rochow et al. v. Life Ins. Co. of North America
As you know, we have been carefully reviewing and analyzing recent case law and have found a very interesting case dealing with remedies under ERISA for denial of benefits. We have written about other ERISA issues in the past.
Recently the 6th Circuit in; Todd Rochow et al. v. Life Ins. Co. of North America, case number 12-2074, (6th Cir. 2013); ruled that being awarded damages, injunctions and disgorgement under both §502 (a)(1)(B) and §502 (a)(3) is permissible. A plan beneficiary need not limit his/her damages to the plan benefits only.
In this case, the Plaintiff, a plan beneficiary, was denied his disability benefits under his employer’s insurance plan for five years.
The District Court found that the insurance company wrongfully denied disability benefits and awarded the beneficiary around $3.8 million dollars based upon remedies set forth in ERISA §502 (a)(1)(B) and §502 (a)(3). The insurance company appealed the ruling stating that ERISA §502 (a)(1)(B) precluded the use of §502 (a)(3), they claim the Plaintiff is already being paid what he was owed under the plan under §502 (a)(1)(B).
The insurer argued that by adding additional remedies under §502 (a)(3), which equity amounted to the insurer’s profit, would be a double recovery. The 6th Circuit Court ruled that damages awarded under both sections was permissible.
According to the Court, ERISA §502(a)(1)(B) only afforded a plan participant a recovery due under the terms of the plan; to enforce their rights under the terms of the plan, or to clarify their rights to future benefits under the terms of the plan.
It did not provide an equitable remedy for the situation like the instant case where an insurance company breached their fiduciary duties.
The award of additional damaged, according to the Court, prevented the insurance company from being unjustly enriched. Therefore, the Court reasoned, ERISA §502(a)(3) would allow for disgorgement of profits and prevent the insurance company from being unjustly enriched.
Since both of these sections provide for a different kind of relief, they were appropriate to use in this case and were not mutually exclusive.