Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_04-cv-00490/USCOURTS-alsd-1_04-cv-00490-0/pdf.json

Parties Involved:
CHS/Community Health Systems, Inc.
Defendant
Ouida S. Richerson
Plaintiff
The Canada Life Assurance Company
Defendant

Document Text:

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

OUIDA S. RICHERSON, :

Plaintiff, :

vs. : CIVIL ACTION NO. 04-0490-C

THE CANADA LIFE :

ASSURANCE COMPANY, et al.,

:

Defendants.

MEMORANDUM OPINION AND ORDER

This cause is before the Court on the defendants’ joint motion to dismiss

(Doc. 21; see also Doc. 22), plaintiff’s brief in opposition to the motion to

dismiss (Doc. 25), the defendants’ reply brief (Doc. 29), plaintiff’s surresponse brief (Doc. 30), the parties’ oral arguments on March 16, 2005,

plaintiff’s amended complaint (Doc. 33), plaintiff’s supplemental brief in

opposition to the motion to dismiss (Doc. 34), and CHS/Community Health

Systems, Inc.’s (hereinafter, “CHS/”) supplemental brief in support of the joint

motion to dismiss (Doc. 36). The parties have consented to the exercise of

jurisdiction by the Magistrate Judge, pursuant to 28 U.S.C. § 636(c), for all

proceedings, including disposition of this motion. (Doc. 35 (“In accordance with

the provisions of 28 U.S.C. 636(c) and Fed.R.Civ.P. 73, the parties in this case

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 1 of 23
2

consent to have a United States Magistrate Judge conduct any and all

proceedings in this case, including the trial, and order the entry of a final

judgment, and conduct all post-judgment proceedings.”); see also Doc. 37

(order of reference signed by Senior United States District Judge Charles R.

Butler, Jr., on April 28, 2005)) Upon consideration of the contents of the briefs

and the arguments of counsel, the Court GRANTS IN PART and DENIES IN

PART the joint motion to dismiss.

FINDINGS OF FACT

1. Ouida S. Richerson filed a four-count complaint in this Court on

July 27, 2004, against The Canada Life Assurance Company and CHS/arising out

of the denial of her claim for long term disability benefits. (Doc. 1) Count I of

the complaint was a statutory penalty claim arising under 29 U.S.C. § 1132(c)(1)

due to the Plan Administrator’s failure or refusal to provide those documents

requested by plaintiff pursuant to 29 U.S.C. § 1024(b)(4) (id., ¶¶ 27-31); Count

II of the complaint was a claim for wrongful denial of long-term disability

benefits pursuant to 29 U.S.C. § 1132(a)(1)(B) (id., ¶¶ 32-36); Count III of the

complaint was a claim for breach of fiduciary duty (id., ¶¶ 37-42); and Count IV

of the complaint was a claim for fraud in the inducement under Alabama law (id.,

¶¶ 43-47). The specifically-plead facts underlying the four causes of action

were, as follows:

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 2 of 23
1 The plan is entitled: “COMMUNITY HEALTH SYSTEMS, INC. GROUP LONG

TERM DISABILITY INSURANCE PLAN.” (Doc. 24, Exhibit A, CL00061) The policy contains a

statement to insureds that The Canada Life Assurance Company has issued “GROUP DISABILITY

INCOME POLICY 13648 LTD” to Community Health Systems, Inc. (id. at CL00064); the plan

nowhere else contains any mention of CHS (see id. at CL00065-CL00110) until the reader gets to the

page entitled “SUMMARY PLAN DESCRIPTION INFORMATION” same reading as follows:

1. The Name of the Plan is Group Long Term Disability Plan.

2. The Name and Address of the Policyholder is:

Community Health Systems, Inc.

155 Franklin Road Suite 400

Brentwood, TN 37027

3. The Employer Identification Number is 76-0137985.

4. The Plan Number is 504.

3

10. Beginning in June of 1998, Plaintiff was employed

at South Baldwin as a registered nurse, becoming a full-time

employee in January of 1999.

11. Upon information and belief, Defendant, CHS,

purchased South Baldwin and took over administrative operation

of the hospital in May of 2000.

12. Plaintiff suffered a series of heart attacks beginning

in November of 1999, requiring a series of medical leaves from

work.

13. In May of 2000, representatives of CHS addressed

a group of South Baldwin employees, including Plaintiff, in a

series of meetings regarding insurance coverages offered under

the Plan. The discussions included coverage offered for long

term disability insurance for South Baldwin employees through

Canada Life.1

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 3 of 23
5. The type of Plan is Group Long Term Disability Benefits.

6. The type of Administration is Policyholder Administered.

Benefits under this plan are provided through insurance in accordance with the terms

and conditions of the group contract issued by the Claims Administrator who is The

Canada Life Assurance Company, Atlanta, Georgia 30348.

You must be eligible in order to be entitled to benefits under the plan. The eligibility

requirement of the plan and the benefits You are insured for are explained in detail in

the General Definitions portion of this booklet.

7. The Name, Address and phone number of the Plan Administrator is:

Community Health Systems, Inc.

155 Franklin Road Suite 400

Brentwood, TN 37027

(615) 373-9600

8. The Agent for Service of Legal process on the Policyholder is:

Community Health Systems, Inc.

155 Franklin Road Suite 400

Brentwood, TN 37027

(Id. at CL00107)

4

14. At one or more of these meetings, Plaintiff and

other South Baldwin employees inquired about coverage for long

term disability insurance, particularly with respect to the

applicability of any pre-existing condition exclusions associated

with such insurance coverage.

15. In response to the inquiries regarding pre-existing

condition exclusions, the CHS representatives represented to

Plaintiff and other South Baldwin employees that all pre-existing

condition exclusions for all insurance would be waived, but that

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 4 of 23
5

this was the only time that South Baldwin employees could sign

up for insurance with a waiver of the pre-existing condition

exclusion.

16. At the meetings, Plaintiff and other South Baldwin

employees were provided with packets containing applications

for various types of insurance, including long term disability

insurance.

17. Plaintiff, in reliance upon representations by CHS’

representatives regarding the waiver or non-applicability of preexisting condition exclusions, completed applications for various

types of insurance, including long term disability insurance

through Canada Life.

18. The application for long term disability insurance

did not contain any questions regarding Plaintiff’s health or health

history, and did not contain any reference to an exclusion for preexisting medical conditions.

19. Plaintiff signed the application for long term

disability insurance and delivered same to the human resources

department of South Baldwin.

20. Pursuant to Plaintiff’s application, Canada Life

issued a policy of insurance providing long term disability

benefits (hereinafter “the Policy”), and Plaintiff began to pay

premiums on such Policy.

21. At the time Plaintiff signed and delivered the

application for long term disability insurance, she requested

personnel in the human resources department at South Baldwin to

provide her with a copy of the Policy or a certificate of insurance

for the Policy. Plaintiff repeated this request on numerous

occasions thereafter, but was never provided with a copy of the

Policy or a certificate of insurance.

22. Plaintiff continued to experience heart problems,

and, in February of 2002, underwent bypass surgery. Following

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 5 of 23
2 This letter reads, in relevant part, as follows:

We are writing you regarding your Long Term disability (LTD) claim, and further to our

recent telephone conversation. We have reviewed your claim and determined that you

are not eligible for benefits under this policy due to an exclusion for Pre-existing medical

conditions.

According to policy 13648:

PRE-EXISTING CONDITION EXCLUSION

No amount of Monthly Income Benefit will be payable for any disability which is

caused by, contributed to by, or resulting from a Pre-Existing Condition. A Pre-Existing

Condition is any Injury, disease, Sickness, Pregnancy or mental disorder for which You

did or an ordinarily prudent person would have done any of the following within 12

months prior to the date on which You became insured under this policy:

1. visited or consulted a physician, hospital or medical facility or

2. took clinical tests or received treatment. This includes (but is not limited to)

taking pills, injections or other medication to treat any condition.

This exclusion will not apply if the Elimination Period for the disability begins after the

6

the bypass surgery, Plaintiff was permanently and totally disabled,

and Plaintiff’s doctor advised her that she would not be able to

return to any type of work.

23. In or around mid-May of 2002, Plaintiff filed a

claim under the Policy for total disability with Canada Life. At

this time, Plaintiff again requested a copy of her disability Policy

from the human resources department at South Baldwin, but did

not receive a copy.

24. By letter dated August 21, 2002, Canada Life

denied Plaintiff’s claim for long term disability benefits based

upon Plaintiff’s pre-existing heart condition, citing an alleged

exclusion in the terms of the Policy.2

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 6 of 23
earlier of the following:

1. The date on which You have been insured under this policy for at least twentyfour months, or 

2. The date You have been free of treatment for a Pre-Existing Condition for a

period of twelve consecutive months while Insured under this policy.

As you were insured under this policy since June 1, 2000, and you became disabled

within twenty-four months of coverage, your claim was subject to a Pre-existing

condition investigation. The period June 1, 1999 through May 31, 2000 was under

review. It was noted that you underwent a surgical procedure, Coronary Balloon

Angioplasty for Coronary Artery Disease on May 10, 2000.

Based on the medical information provided, as you received treatment within 12 months

of becoming insured, your disability falls under the Pre-Existing Condition policy

exclusion and your claim is therefore denied. We regret that our decision could not

have been more favorable.

(Doc. 24, Exhibit A, Administrative Record, at CL 00013-00014) 

The disability claims analyst who wrote the denial letter, Danielle Leclerc, copied Deborah

Gillen in the Human Resources Department at South Baldwin Regional Medical Center with same. (Id.

at CL 00015-00016)

3 The plan documents contain the following “STATEMENT OF ERISA RIGHTS”:

As a participant in this Group Plan, You are entitled to certain rights and protections

under the Employee Retirement Income Security Act of 1974. ERISA provides that all

plan participants shall be entitled to:

1. Examine, without charge, at the Plan Administrator’s office and at other

locations (work sites and union halls), all plan documents, including

7

25. By letter dated January 14, 2003, Plaintiff, through

counsel, responded to the denial of claims letter and requested

production of the Policy, enrollment forms, Plaintiff’s

application and other documents relating to the Policy and Plan.3

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 7 of 23
insurance contracts and copies of all documents filed by the plan with

the U.S. Department of Labor, such as annual reports and plan

descriptions.

2. Obtain copies of all plan documents and other plan information upon

written request to the plan administrator. The administrator may make a

reasonable charge for the copies. 

3. Receive a summary of the plan’s annual financial report. The plan administrator

is required by law to furnish each participant with a copy of this summary

financial report.

4. File suit in federal court, if any materials requested are not received

within 30 days of the participant’s request, unless the materials were

not sent because of matters beyond the control of the administrator.

For violations that occur after July 29, 1997, the court may require the

plan administrator to pay up to $110.00 for each day’s delay until the

materials are received. For violations that occurred on or before July

29, 1997, the court may require the plan administrator to pay up to

$100.00 for each day’s delay until the materials are received.

In addition to creating rights for plan participants, ERISA imposes obligations upon the

persons who are responsible for the operation of the employee benefit plan. These

persons are referred to as “fiduciaries” in the law. Fiduciaries must act solely in the

interest of the plan participants and they must exercise prudence in the performance of

their plan duties. Fiduciaries who violate ERISA may be removed and required to make

good any losses they have caused the plan.

Your employer may not fire You or discriminate against You to prevent You from

obtaining a welfare benefit or exercising Your rights under ERISA.

(Doc. 24, Exhibit A, Administrative Record, CL 00109) 

8

An identical request for documents was made to the human

resources department at South Baldwin, also by letter dated

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4

(See also Doc. 25, Exhibit B, Affidavit of Kerin L. Hoffman, at ¶¶ 3-7 (“It is the usual

business practice of Mr. March to dictate correspondences. I then type the correspondence and

present it to Mr. March for his review and signature. [] Once the correspondence is signed by Mr.

March, it is my usual business practice to make a copy of the signed correspondence for the file before

mailing it to the addressee. [] A file copy of the correspondence is only placed in the appropriate file,

after it has been mailed. If a copy of any correspondence is in the file, it indicates that it has been mailed

by the addressee. [] Two letters dated January 14, 2003, copies of which are attached hereto as

Exhibit 1, appear in the file of Ouida Richerson. One is addressed to Ms. Pam Brunson, Director of

Human Resources at South Baldwin Regional Medical Center, 1613 North MacKenzie Street, Foley,

Alabama 36535. The other is addressed to Ms. Danielle Leclerc, Disability Claims Department at

Canada Life Assurance Company, P.O. Box 105025, Atlanta, Georgia 30318-5025. [] The fact that

copies of these letters appear in the file indicate that they were mailed, complying with the usual

business of Mr. March and myself.”)) 

9

January 14, 2003.4

26. Neither Canada Life nor CHS has provided Plaintiff

with copies of any documents relating to the Plan or the Policy

issued to Plaintiff thereunder, nor otherwise responded to

Plaintiff’s requests for information.

(Id., at ¶¶ 10-26)

2. Plaintiff amended her complaint on March 30, 2005. (Doc. 33)

In the amended complaint, Richerson makes the same factual allegations, save

with respect to factual allegations 9, 10, 16, 19, and 24 (which were factual

allegations 10, 11, 17, 20, and 25 in the original complaint). (Compare id. at ¶¶

9-25 with Doc. 1 at ¶¶ 10-26)

9. Beginning in June of 1998, Plaintiff was employed

by Foley Hospital Corporation d/b/a South Baldwin Regional

Medical Center (“South Baldwin”) as a registered nurse,

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 9 of 23
10

becoming a full-time employee in January of 1999.

10. Upon information and belief, Defendant, CHS,

purchased South Baldwin, or otherwise became affiliated with

South Baldwin, and took over administrative operation of the

hospital in May of 2000.

. . .

16. Plaintiff, in reliance upon representations by CHS’

representatives regarding the waiver of pre-existing condition

exclusions, completed applications for various types of

insurance, including long term disability insurance through

Canada Life.

. . .

19. Pursuant to Plaintiff’s application, Canada Life

Assurance Company (“Canada Life”) issued a policy of insurance

providing long term disability benefits (hereinafter “the Policy”),

and Plaintiff began to pay premiums on such Policy.

. . .

24. By letter dated January 14, 2003, Plaintiff, through

counsel, responded to the denial of claims letter and requested

production of the Policy, enrollment forms, Plaintiff’s

application and other documents relating to the Policy and Plan.

An identical request for documents was made to CHS through the

human resources department at South Baldwin, also by letter

dated January 14, 2003.

(Doc. 33, ¶¶ 9-10, 16, 19 & 24) 

3. In the complaint, as amended, plaintiff pursues no claims against

Canada Life (see Doc. 33) and her sole claims against CHS/ are a statutory

penalty claim arising under 29 U.S.C. § 1132(c)(1) due to the Plan

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 10 of 23
5 The defendants collectively filed the motion to dismiss but subsequent thereto plaintiff

amended her complaint to name CHS/ as the sole defendant and to assert only a statutory penalty claim

and a breach of fiduciary duty claim against CHS/. Accordingly, all claims originally asserted against

Canada Life are DISMISSED WITH PREJUDICE and the state-law and denial of benefits claims

stated against CHS/ are, as well, DISMISSED WITH PREJUDICE.

11

Administrator’s failure or refusal to provide those documents requested by

plaintiff pursuant to 29 U.S.C. § 1024(b)(4) (id. at ¶¶ 26-30) and a breach of

fiduciary duty claim (id. at ¶¶ 31-36). In the brief accompanying the amended

complaint, plaintiff makes clear that she is asserting a breach of fiduciary duty

claim under the “catch all” provision of ERISA, 29 U.S.C. § 502(a)(3). (Doc. 34,

at 5) 

CONCLUSIONS OF LAW

A. Motion to Dismiss Standard.

1. The defendants’ joint motion to dismiss is made pursuant to Rule

12(b)(6) of the Federal Rules of Civil Procedure. (Doc. 21)5 Accordingly,

“[t]he allegations in the complaint must be taken as true and construed in the

light most favorable to the plaintiff.” Hoffman-Pugh v. Ramsey, 312 F.3d 1222,

1225 (11th Cir. 2002) (citation omitted); see also Smith v. United Parcel

Service, 296 F.3d 1244, 1246 (11th Cir. 2002) (“This court must accept the

allegations set forth in the complaint as true for the purposes of a motion to

dismiss.”), cert. denied, 537 U.S. 1172, 123 S.Ct. 1000, 154 L.Ed.2d 914

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 11 of 23
12

(2003); Lotierzo v. Woman’s World Medical Center, Inc., 278 F.3d 1180,

1182 (11th Cir. 2002) (“We must accept the allegations set forth in the

complaint as true for purposes of a motion to dismiss.”). “A motion to dismiss

may be granted only when a defendant demonstrates “‘beyond doubt that the

plaintiff can prove no set of facts in support of his claim which would entitle

him to relief.’” Kirwin v. Price Communications Corp., 391 F.3d 1323, 1325

(11th Cir. 2004) (citations omitted). 

Although a plaintiff is not held to a very high standard in a motion

to dismiss for failure to state a claim, some minimal pleading

standard does exist. [C]onclusory allegations, unwarranted

deductions of facts or legal conclusions masquerading as facts

will not prevent dismissal. To survive a motion to dismiss,

plaintiffs must do more than merely state legal conclusions; they

are required to allege some specific factual bases for those

conclusions or face dismissal of their claims.

Jackson v. BellSouth Telecommunications, 372 F.3d 1250, 1262-1263 (11th

Cir. 2004) (internal quotation marks and citations omitted).

B. Statutory Penalty Claim.

2. 29 U.S.C. § 1024(b)(4) provides that “[t]he administrator

shall, upon written request of any participant or beneficiary, furnish a copy of

the latest updated summary plan description, and the latest annual report, any

terminal report, the bargaining agreement, trust agreement, contract, or other

instruments under which the plan is established or operated.” (footnote

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 12 of 23
13

omitted). The failure or refusal of the plan administrator to provide such

documentation to a requesting party subjects it to the civil penalties set out in

29 U.S.C. § 1132(c)(1). “Any administrator . . . (B) who fails or refuses to

comply with a request for any information which such administrator is required

by this subchapter to furnish to a participant or beneficiary (unless such failure

or refusal results from matters reasonably beyond the control of the

administrator) by mailing the material requested to the last known address of the

requesting participant or beneficiary within 30 days after such request may in

the court’s discretion be personally liable to such participant or beneficiary in

the amount of up to $100 a day from the date of such failure or refusal, and the

court may in its discretion order such other relief as it deems proper.” Id.

3. In her complaint, as amended, plaintiff has asserted the statutory

penalty claim solely against CHS/, as plan administrator of the South Baldwin

Regional Medical Center Employee Benefits Plan. (Doc. 33, at ¶ 30) The

parties are now in agreement that CHS/ was the plan administrator of the longterm disability plan at issue in this case. (See Doc. 36, CHS/’s Supplemental

Brief in Support of the Joint Motion to Dismiss, at 2 (“[T]here is no evidence

that CHS/, in its capacity as Administrator of the LTD Plan, manifested an intent

to the Plaintiff that the director of Human Resources at the Foley Hospital

Corporation d/b/a South Baldwin Regional Medical Center . . . was its agent for

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 13 of 23
14

purposes of accepting requests for plan documents and other information or to

respond to such requests under Section 104(b)(4) of ERISA[.]”)) This

recognition is in line with the contents of the long-term disability policy which

specifically identifies CHS/ as the plan administrator and, therefore, a statutory

penalty claim can be pursued against CHS/. 

4. Plaintiff made a written request for plan documents to the Human

Resources Director at South Baldwin Regional Medical Center, Pam Brunson,

as opposed to making such a request directly to CHS/. The defendant makes the

facially-appealing argument that since plaintiff made no written request to it for

plan documents, plaintiff can state no statutory penalty claim against it.

However, it is clear that “[u]nder appropriate circumstances, a § 1132(c) penalty

may be based on information requests . . . that were not directed to the plan

administrator.” Wilcott v. Matlack, Inc., 64 F.3d 1458, 1461 (10th Cir. 1995)

(citations omitted); see also Conowall v. Administrative Committee for the

General Instrument Corp. Pension Plan (1985) for Salaried and Hourly

Nonunion Employees (G.I. Plan), 1989 WL 79800, *2 (E.D.Pa. 1989) (“[A]

proper request need not be mailed directly to the administrator in order to

invoke application of section 1132(c)(1)(B).”); see McKinsey v. Sentry Ins.,

986 F.2d 401, 404 (10th Cir. 1993) (“If in practice, company personnel other

than the plan administrator routinely assume responsibility for answering

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 14 of 23
6 While this Court requested the parties to address whether the South Baldwin Regional

Medical Center’s Human Resources director had the apparent authority to act as the plan administrator

for purposes of plaintiff’s statutory penalty claim and such authority has been found to exist, “‘whenever

a principal manifests to a third person that an officer or agent may act in its behalf, and the third person

in good faith believes that the authority exists[,]’” United States v. Gil, 657 F.2d 712, 715 (5th Cir.

1981); see also Taylor v. Peoples Natural Gas Co., 49 F.3d 982, 989 (3rd Cir. 1995) (“It is well

settled that apparent authority (1) ‘results from a manifestation by a person that another is his agent’

and (2) ‘exists only to the extent that it is reasonable for the third person dealing with the agent to

believe that the agent is authorized.’”), upon further reflection, the Court finds that it need not explore

the possible application of that doctrine under the circumstances of this case.

15

requests from plan participants and beneficiaries, a plaintiff’s suit against the

plan administrator will not necessarily fail[.]”).6 In this case, the enrollment

package given to Richerson specifically provides that “CHS and any of its

affiliates, in their sole discretion, reserve the right to terminate, change,

interpret, withdraw or add to any of the plans, policies or procedures described

in these pages . . . at any time, without prior notice or consultation with any

employee.” (Doc. 21, Exhibit A to Declaration of Pam Waterman, at CHS00053

(emphasis supplied)) Plaintiff alleges in her complaint, as amended, that CHS/

took over administrative operation of South Baldwin in May of 2000 and, during

oral arguments on March 16, 2005, counsel for CHS/ admitted that CHS/ and

South Baldwin are affiliated companies. In fact, it appears clear from the

administrative record, more specifically the Disability Claim Employer

Statement, that South Baldwin Regional Medical Center is a subsidiary or

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 15 of 23
7 The enrollment package which plaintiff received on May 17, 2000, describes South

Baldwin Regional Medical Center as a CHS Hospital (Doc. 21, Exhibit 1 to Waterman declar., at

CHS00077) and, states, moreover, with respect to employee benefits that “[t]his summary will help

you understand more about what it means to be part of Community Health Systems” (id. at

CHS00074). This package also contained a Salary Reduction Agreement to be signed by the

employee and an authorized Human Resources individual in order to receive benefits under the plan.

(Id. at CHS00065)

8 Cf. Hamilton v. Allen-Bradley Co., Inc., 244 F.3d 819, 824 (11th Cir. 2001)

(“Hamilton offers testimony by Lee to the effect that Allen requires its employees to go through its

human resources department in order to obtain an application for disability benefits. This fact places

Allen in sufficient control over the process to qualify as the plan administrator notwithstanding the

language of the plan booklet.”).

16

division of CHS/. (Doc. 24, Exhibit A, Administrative Record, at CL00028)7

When such association is combined with the import of the package of

information given to Richerson and with the fact that Canada Life copied South

Baldwin’s Human Resources Department with all of their letters and, in turn,

made all document requests to that department8and not CHS/ (see Doc. 24,

Exhibit A, Administrative Record, at CL00004-CL00006 (documenting

telephone conversations between Canada Life and South Baldwin’s Human

Resources Department); CL00013-CL00016 (Canada Life’s denial letter copied

to Deborah Gillen in South Baldwin’s Human Resources Department); CL00017

(Canada Life letter to Smith copied to Deborah Gillen); CL00022 (Canada Life

letter to Smith copied to South Baldwin’s Benefits Department requesting a

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 16 of 23
9 The administrative record establishes that though the enrollment forms contain CHS/’s

name, they were in the possession of South Baldwin. (Compare id. with Doc. 24, Exhibit A,

Administrative Record, at CL00025-CL00027)

10 Richerson concedes that she has no standing to assert a breach of fiduciary duty under

§ 502(a)(2) of ERISA, 29 U.S.C. § 1132(a)(2). Therefore, the only question is whether she may assert

a breach of fiduciary duty claim under § 502(a)(3), 29 U.S.C. § 1132(a)(3).

17

copy of the Group Life Enrollment Form);9 CL00024 (fax cover sheet from

Deborah Gillen at South Baldwin to Danielle LeClerc at Canada Life to which

she attached the enrollment forms LeClerc requested on plaintiff)), the Court

is led to the conclusion on motion to dismiss that Richerson’s written request

for plan documents to South Baldwin’s Human Resources Department was

effective as to CHS/ such that CHS/ can be held liable, as plan administrator, for

the statutory penalty set forth in 29 U.S.C. § 1132(c)(1)(B). 

C. Breach of Fiduciary Duty.

10

5. The Supreme Court in Varity Corp. v. Howe, 516 U.S. 489, 515,

116 S.Ct. 1065, 1079, 134 L.Ed.2d 130 (1996) determined that § 502(a)(3) “is

a ‘catchall’ provision that authorizes only ‘appropriate’ equitable relief, and,

thus, ‘where Congress elsewhere provided adequate relief for a beneficiary’s

injury, there will likely be no need for further equitable relief, in which case

such relief normally would not be “appropriate.”’” Jones v. American Gen’l Life

& Acc. Ins. Co., 370 F.3d 1065, 1073 (11th Cir. 2004); see also Hamilton,

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 17 of 23
18

supra, 244 F.3d at 826 (“[T]he Supreme Court[, in Varity,] concluded that any

losses, the remedy of which was not contemplated within ERISA, provide a

private right of action through the catch-all phrase of 29 U.S.C. § 1132(a)(3).”);

Wanza v. Aetna Health, Inc., 352 F.Supp.2d 1320, 1322 n.4 (S.D. Fla. 2005)

(“The Supreme Court held in Varity that the ‘catch-all’ provision under §

1132(a)(3) could also provide for an individual remedy for breach of fiduciary

duty, but only if no other provisions in ERISA provided appropriate relief.”). 

[T]he relevant concern in Varity, in considering whether the

plaintiffs had stated a claim under Section 502(a)(3), was whether

the plaintiffs also had a cause of action, based on the same

allegations, under Section 502(a)(1)(B) or ERISA’s other more

specific remedial provisions. As the Court explained, the purpose

of Section 502(a)(3) was to “act as a safety net, offering

appropriate equitable relief for injuries caused by violations [of

ERISA] that § 502 does not elsewhere adequately remedy.” Id.

at 512, 116 S.Ct. at 1078 (emphasis added). The relief that the

plaintiffs sought in their complaint was not relevant to this

inquiry.

As we recently explained in Ogden v. Blue Bell Creameries

U.S.A., Inc., 348 F.3d 1284 (11th Cir. 2003), and as Varity itself

makes clear, “[t]he central focus of the Varity inquiry involves

whether Congress has provided an adequate remedy . . . elsewhere

in the ERISA statutory framework.” Id. at 1288 (internal

quotations omitted) (emphasis added); see also Varity, 516 U.S.

at 515, 116 S.Ct. at 1079 (stating inquiry as whether “Congress

elsewhere provided adequate relief for a beneficiary’s injury”)

(emphasis added). Thus, for purposes of establishing whether

the Appellants had stated a claim under Section 502(a)(3),

the district court should have considered whether the

allegations supporting the Section 502(a)(3) claim were also

sufficient to state a cause of action under Section

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 18 of 23
11 In reaching this determination, the Court notes that “the availability of relief under

Section 502(a)(3) [is] in no way dependent on the success or failure of the Section 502(a)(1)(B) claim

because ‘the availability of an adequate remedy under the law for Varity purposes, does not mean, nor

does it guarantee, an adjudication in one’s favor.’” Ogden v. Blue Bell Creameries U.S.A., Inc., 348

F.3d 1284, 1287 (11th Cir. 2003) (citations omitted); see Katz v. Comprehensive Plan of Group

Ins., 197 F.3d 1084, 1089 (11th Cir. 1999) (“At the time the December 17, 1997, order was entered,

Mrs. Katz had an adequate remedy under § 1132(a)(1)(B), a position which she was strenuously

asserting in Count I of her complaint. As it later turned out, we know that she did not prevail on the

merits of that claim. However, the availability of an adequate remedy under the law for Varity

purposes, does not mean, nor does it guarantee, an adjudication in one’s favor.”). Therefore, the fact

19

502(a)(1)(B), regardless of the relief sought, and

irrespective of the Appellants’ allegations supporting their

other claims.

Jones, supra, 370 F.3d at 1073-1074 (emphasis supplied); see Kennedy v.

Metropolitan Life Ins. Co., 357 F.Supp.2d 1346, 1349 (M.D. Fla. 2005) (“In

determining whether Plaintiff can state a claim under § 1132(a)(3), the relevant

inquiry is whether Plaintiff ‘also has a cause of action, based on the same

allegations, under Section 502(a)(1)(B) or ERISA’s other more specific

remedial provisions.’”).

6. It is clear to the Court that plaintiff’s allegations, as set forth in

the complaint, as amended, support not only a claim under § 502(a)(3) but, as

well, a claim under § 502(a)(1)(B). Accordingly, plaintiff cannot maintain a

breach of fiduciary claim against CHS/ under § 502(a)(3). In other words, this

Court finds that plaintiff has an adequate remedy under § 502(a)(1)(B) and,

therefore, she cannot alternatively plead and proceed under § 502(a)(3).11 See

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 19 of 23
that plaintiff has now amended her complaint to take out the claim for benefits under § 502(a)(1)(B) is

of no moment.

20

Ogden, supra, 348 F.3d at 1288 (“We hold that the Ogdens had no cause of

action under Section 502(a)(3) because Congress provided them with an

adequate remedy elsewhere in the ERISA statutory framework.”); Kennedy,

supra, 357 F.Supp.2d at 1349 (“Applying the Jones analysis to Plaintiff’s

proposed Count One, it is apparent that the allegations supporting Plaintiff’s §

1132(a)(3) claim are sufficient to state a claim under § 1132(a)(1)(B),

‘regardless of the relief sought, and irrespective of the [Plaintiff’s] allegations

supporting [her] other claims.’”).

7. The relief requested by the plaintiff in Count II, specifically an

order “declaring that the pre-existing condition exclusion contained in the Plan

is waived” (Doc. 33, at ¶ 36), is legal relief as opposed to equitable relief. See

Caffey v. UNUM Life Ins. Co., 302 F.3d 576, 583-584 (6th Cir. 2002) (“In

Mertens [v. Hewitt Assocs., 508 U.S. 248, 113 S.Ct. 2063, 124 L.Ed.2d 161

(1993)], the Supreme Court held that the term ‘equitable relief’ in 29 U.S.C. §

1132(a)(3) refers only to ‘those categories of relief that were typically

available in equity (such as injunction, mandamus, and restitution, but not

compensatory damages).’ . . . Mertens made clear that compensatory and

punitive damages are not considered ‘equitable relief’ for the purposes of 29

Case 1:04-cv-00490-C Document 38 Filed 05/02/05 Page 20 of 23
21

U.S.C. § 1132(a)(3). . . . Although the Mertens Court did conclude that

‘equitable relief’ included restitution, the Supreme Court has recently explained

that only traditionally ‘equitable’ restitutionary remedies are available under this

section. . . . In order to give the term ‘equitable relief’ meaning, the Court

explained, courts must ‘limit restitution to the return identifiable funds (or

property) belonging to the plaintiff and held by the defendant–that is, . . . limit

restitution to the form of restitution traditionally available in equity.’”); cf. Flint

v. ABB, Inc., 337 F.3d 1326, 1331 (11th Cir. 2003) (“The [Supreme] Court [in

Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708,

151 L.Ed.2d 635 (2002)] instructed that, in determining whether relief ‘is legal

or equitable in a particular case (and hence whether it is authorized by §

502(a)(3)) remains dependent on the nature of the relief sought,’ and the Court

resisted plaintiffs’ attempt to characterize their claim for enforcement of a

reimbursement provision of an ERISA plan as one for equitable restitution.”),

cert. denied, 540 U.S. 1219, 124 S.Ct. 1507, 158 L.Ed.2d 153 (2004). In other

words, the Court agrees with CHS/ that the relief requested by plaintiff in her

amended complaint is nothing more than an attempt to circumvent the Knudson

decision which precludes an award of compensatory damages under § 502(a)(3)

of ERISA. Because CHS/ did not issue the LTD Policy and is not the insurer, an

award by this Court waiving the pre-existing condition exclusion against CHS/

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22

would compel CHS/ to pay the disability benefits plaintiff claims she should

have received under the disability policy; that is, it would compel the payment

by CHS/ of compensatory damages. Because an award of compensatory damages

is not “appropriate equitable relief” under § 502(a)(3), see Knudson, 534 U.S.

at 210, 122 S.Ct. at 713 (“‘Almost invariably . . . suits seeking (whether by

judgment, injunction, or declaration) 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.’”), plaintiff has failed to state a

claim for relief under § 502(a)(3).

CONCLUSION

In light of the foregoing, the joint motion to dismiss (Doc. 21) is

GRANTED IN PART and DENIED IN PART. The motion is DENIED with

respect to plaintiff’s statutory penalty claim stated against CHS/. The motion is

GRANTED with respect to all claims originally asserted against The Canada

Life Assurance Company, the state-law fraud claim originally asserted against

CHS/ and the denial of benefits claims asserted against CHS/.

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23

DONE and ORDERED this the 2nd day of May, 2005.

 s/WILLIAM E. CASSADY 

UNITED STATES MAGISTRATE JUDGE

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